Most people associate Section 80C with regular tax saving instruments such as PF, PPF & ELSS (Equity Linked Savings Schemes) . These are all popular choices, but just a few amongst a wide range of 80C instruments that exist . In this article, we’ll explore the less talked about 80C options, strategies to maximize deductions and how companies can integrate these into their financial wellness programs.
What is Section 80C
- Under the old tax regime Section 80C allows individuals to reduce taxable income by investing or spending in specified instruments.
- The limit is ₹1,50,000 per financial year.
80C Deductions
Here are some options that can help get more benefit or balance risk inside 80C.
Option | Pros | Things to watch |
Provident Fund / Voluntary Provident Fund (VPF, EPF) | Very safe and grows steadily with compounding. Deductions happen automatically from your salary, and there’s no lock-in once you leave the job. | Returns lower compared to equity instruments. Withdrawal rules apply. |
Public Provident Fund (PPF) | Offers guaranteed returns and full tax exemption at every stage — investment, growth, and maturity. Good for steady long-term wealth building. | 15-year lock in period. Partial withdrawal rules apply. Inflation can erode real returns. |
Life Insurance Premiums | Dual benefit: protection + tax saving. Useful especially if you have a dependent family | Premiums need to be reasonable vs sum assured. Don’t overpay just for tax saving. |
Sukanya Samriddhi Yojana (SSY) | For those who have a daughter. Secure scheme with decent returns | Long duration and low flexibility |
Home Loan – Principal Repayment | If you have a home loan, the principal part of EMI can be claimed as deduction | Needs planning, interest isn’t covered only the principal |
National Savings Certificate (NSC) | Fixed returns, government-backed, low risk. | Lock-in of 5 years. Interest is taxable. |
Tax Saving Fixed Deposits | A safe instrument. Good for cautious investors. | Lower returns than equity. Interest is taxable |
ULIPs (Unit Linked Insurance Plans) | Combines investment and insurance. For those comfortable with market exposure and want insurance cover. | Charges (premium allocation etc.) sometimes can be high. Performance dependent on market. |
Equity Linked Savings Scheme (ELSS) | Great for long-term wealth growth, with just a 3-year lock-in. Let’s you invest regularly through SIPs and build wealth through equity markets. | Returns depend on the market and can go up or down. Not ideal for short-term goals. |
Smarter 80C Planning
- Leverage Early in the Year: Start investments early so you don’t rush at year-end. Also gives you more compounding period.
- Watch Expenditure Deductions: 80C also includes certain expenses. Ex: School fees for up to two children can be claimed as deductions. So, plan your budget considering expenses that already eat into 80C.
- Sector-Specific Schemes: Explore small savings schemes (e.g. SSY, SCSS). They usually have fixed or government-guaranteed returns and are safer.
- Lock-in Awareness: ELSS has a 3-year lock in, PPF has long horizons, home loan principal may be tied to asset & legal conditions. Ensure you’re okay with the liquidity constraints.
Role of Corporate Financial Wellness Programs
Here’s where employers can help, and actually improve both employee satisfaction and retention, while helping employees save smartly.
- Educate Employees about 80C Options
If HR runs workshops as part of financial wellness programs for employees, explaining these options well ,they will ensure more financial participation and improve outcomes. - Provide Tools
Having financial counselors or tools (calculators, comparison charts etc.) can help employees see what suits their situations — e.g. risk tolerance, cash flow needs, future goals (education, home, retirement). - Offer Incentives or Matching Contributions
If a company contributes to PF, or offers voluntary PF / pension schemes, matching incentives can encourage employees to put more money into safe instruments. Also encourage use of NPS so they can avail extra deduction under 80CCD(1B). - Flexible Payroll Deductions
Salary deductions for PPF, ULIPs, tax-saving FDs etc., make it easier and automated rather than employees having to set up separate transfers. When it’s seamless, people tend to use it. - Annual Reviews as Part of Wellness
Each year, corporate wellness programs can include sessions to review tax-saving status. Check how much 80C is used, whether other sections like 80D/80E are maximized. This helps employees avoid last minute scrambles and underutilization.
