Section 80C forms most important when you need tax benefits. The section offers tax deduction of up to Rs.1 Lakh by means of investment in specific plans. These plans range from insurance policies, pure debt to pure equity options. However, while investing in plans mentioned under section 80C and 80GGC, investor usually limit the ability of the plan to only offer them tax benefits. But to make the right decision investors have to understand that a tax saver plan offers much more than just tax deductions. Any investment you make is a long term decision(if you are looking for tax benefits). So making a sensible choice by looking at the other benefits of the plan will help you in the long run.
Financial security –
Saving up for the future and ensuring the safety of one’s family is an important responsibility of ever individual. To ensure individuals easily meet this goal, Section 80C and 80D have included such plans under the tax deduction slab. So any tax payer investing in such tax saver plans is more likely to meet his financial goals as well. Individuals who are looking for safer investment options can opt for fixed deposits, PPF, NSC, Life insurance etc. and those who have an appetite for risk can go for tax saver plans like mutual funds etc. Since all tax saving plans need you to invest for a long term, you can ensure you have enough amount accumulated for the future.
Retirement corpus –
Retirement can also pose a big financial problem before you and your regular income ceases to come. But by investing in a retirement plan you can be sure of saving enough for your future. The plan focuses mainly of availing you a regular income in the later years. Tax saving investment like PPF (Public Provident Fund) and SCSS (Senior Citizen Savings Scheme) and pension plans are mainly designed for this purpose. Retirement plans are popular amongst investors who want to build a retirement corpus. At maturity, one-third of the amount from the pension fund is tax-free and the rest is used to buy annuity plans.
Regular investment –
If you invest in an SIP for an ELSS, you not only get the ease of investing smoothly in the booming equity markets, but also get the discipline of regular savings. Moreover, you even get the benefit of diversified investment and professional management for your portfolio. You have a lower lock in period to serve (just 3 years), higher chances of getting better returns, flexibility to invest in small amounts and the facility of availing an income even in the lock in period. To top this all the tax saver plan can also get you a tax deduction of up to Rs.30, 900.
A tax saver plan does much more than saving tax