Deductions under Section 80C in respect of prescribed contributions to savings instruments, for example, insurance premiums, Provident Fund, PPF, NSC, subscription to bonds issued by the National Bank for Agriculture and Rural Development, as notified by the Central Government in the Official Gazette, deposits in accordance with a notified scheme of fixed deposits for a fixed period of not less than 5 years with a scheduled bank, investments in Post Office Time Deposit Rules, 1981 and Senior Citizens Savings Scheme Rules, 2004 etc. are available, subject to prescribed conditions.

The aggregate deduction under section 80C, however, cannot exceed Rs. 1,00,000 under any circumstances.

ELSS emerges as a preferable tax-saving tool because of its potential for higher capital appreciation. The lock-in period (3 years) is also lower in the case of ELSS as compared to other tax savings instruments. Furthermore, the dividend income received from units of a mutual fund registered with the Securities and Exchange Board of India is exempt in the hands of the unit holder. Long-term capital gains arising on the transfer of units of an ‘equity oriented’ mutual fund is exempt from income tax, if the Securities Transaction Tax is paid on such transaction.

To know more about the various options which are appropriate for your specific needs and are in line with your profile, click here. Our Relationship Manager will get in touch with you shortly.

Disclaimer: The Hongkong and Shanghai Banking Corporation Limited in India (HSBC) has issued this note. This note is for general information only and is not meant to constitute and therefore should not be construed as an advice on tax matters. Prior professional tax advice analyzing individual facts and circumstances should be sought before taking any decision. As the tax laws keep changing by virtue of amendments in law, issue of administrative circulars and notifications and court rulings, there can be no assurance about the validity of the tax information contained in this publication subsequent to its release. No obligation or liability of any nature whatsoever is assumed by HSBC in releasing this publication. Whilst reasonable care has been taken in compiling the information, HSBC makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness.