The document discusses various tax saving investment options available under Section 80C of the Indian Income Tax Act. It provides details on popular instruments like Public Provident Fund (PPF), Equity Linked Saving Schemes (ELSS) Mutual Funds, Tax Saving Fixed Deposits, National Savings Scheme (NSC), and ULIP/LIC insurance plans. It compares these options on parameters like lock-in period, typical returns, taxation status, and suitability for different risk profiles. ELSS funds are highlighted as offering the lowest lock-in of 3 years, highest post-tax returns in the long run, and best taxation status among the different 80C investment avenues. The document concludes by providing tips on choosing

1. Best Tax Saving Investments
A Financial Planning Webinar

2. Importance of 80(C) Tax Savings

3. Tax Savings with Section 80 (C)
• Reduce your income tax by up to ₹46,350 every year with Section 80 (C)
investments
• Investments up to a total of ₹1.50 lakh in 80 (C) are exempt from taxable
income
• ₹1.50 lakh investment can double to ₹3.02 lakh in just 5 years!
• Section 80 (C) popular for tax savings => first investment for many
• PPF, ELSS Mutual Funds, Tax-saving FDs, NSC, ULIP popular schemes for 80 (C)
savings

4. Comparison of 80 (C) tax saving instruments

5. Public Provident Fund (PPF)
• Small savings scheme offered by banks
• 15 years Lock-in period for investments
• Fixed return; interest rate changes every quarter
• Interest rate on PPF - 7.60% for Q4 FY17–18
• Interest earned on PPF is also tax-exempt

6. Equity Linked Saving Scheme (ELSS) Mutual Funds
• Special category of mutual funds that offer tax exemption under section 80(C)
• Invests primarily in equity or equity-linked products
• Offer higher returns than other 80 (C) instruments
• 3 years lock-in period for investments
• Investment tax-exempt up to ₹1.50 lakh
• Returns tax-free as well

7. Tax Saving Fixed Deposits (FD)
• Special category of FD with 5-year lock-in period
• Premature withdrawals NOT allowed
• Returns taxable unlike PPF and ELSS funds
• Interest taxed at marginal income tax rate (30% rate for annual income > 10 lakh)
• Tax Deduction at Source (TDS) also applies to interest
• Interest Rates between 6%-6.50% (leadings banks like SBI, ICICI, HDFC, Axis)

8. Other 80 (C) Instruments
National Savings Scheme (NSC)
• Similar to PPF but with 5 years lock-in
• Interest rate @ 7.6% currently
• Returns taxable unlike ELSS funds and PPF
ULIP / LIC (Insurance)
• Combination of life insurance with investment
• 5 year lock-in period
• Insurance cover more expensive than term plan (pure insurance)
• Investment returns less than comparable mutual funds

9. Comparison
Instrument PPF ELSS Mutual Funds Tax Saving FD NSC ULIP/LIC Insurance
Lock-in period 15 years 3 years 5 years 5 years 5 years
Typical Return 7.60% 12-20% 6.00% - 6.50% 7.60% 0-7%
After 5 years ₹2.16 lakh ₹3.01 lakh ₹1.87 lakh ₹1.96 lakh ₹1.82 lakh
Taxation No Tax No Tax Interest is taxable Interest is taxable No Tax
Systematic Plan Manual Automated SIP Not possible Not possible Automated
Risk & Returns
No Market Risk.
Inflation Risk
present.
Returns are
guaranteed but low
Market risk present;
Returns are not
guaranteed but high
in the long term
No market risk;
Inflation Risk is High.
Fixed very low
returns;
No Market Risk.
Inflation Risk
present.
Returns are
guaranteed but low
Market risk present.
Returns are not
guaranteed and still
low
Suitable for
Conservative or risk
averse individuals
Most Individuals
looking for good
returns with some
risk-taking ability
Extremely
conservative
individuals satisfied
with very low returns
Extremely
conservative
individuals satisfied
with very low returns
No one; Investment &
Insurance shouldn’t
be clubbed
ELSS Mutual Funds have lowest lock-in, highest returns and best taxation among various options

10. Top ELSS Mutual Fund vs PPF – A Comparison
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11. Choosing the best ELSS mutual funds

12. Factors to consider
How to choose best ELSS funds:
• Past Returns - 5 years, 3 years, 1 year returns – higher is better
• Risk (Volatility) – standard deviation (5 years, 3 years, 1 year) – lower is better
• Risk weighted returns – Sharpe Ratio – higher is better
• Fund Manager – Other schemes managed, overall performance
• Assets Under Management (AUM) of the fund should be > 300 crores to avoid redemption pressure and
high expense ratio
How to decide the optimal investment in ELSS mutual funds
• Deduct your contribution to Provident Fund (PF) – typically 1,800 * 12 = 21,600. 12% of basic salary in
other companies
• Deduct premium paid for any term life insurance, principal amount for any housing loan
• Invest the remaining amount in ELSS mutual funds
• Ideally, divide the required amount by 12 and start monthly SIP from April itself

13. Top ELSS Mutual Funds for 2018
Upwardly has published the best ELSS funds for 2018.
Top 3 ELSS Mutual Funds

14. Reach out to us at:
aditya.agrawal@upwardly.in
hello@upwardly.in, +91 73377 40002
Thank you
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