Taxes confusing you? Fear not! We can make them easy and even help you save more money in your pocket. And that is the hotly debated Section 80C of the Income Tax Act. StartupFlora, your friends to your startup and small business success, here to demystify Section 80C and tell you how you can be helped by it. We initiate fresh investment and awareness regarding taxes in the ambit of tax benefit under planning finance.
What is the Big Idea of Section 80C?
Section 80C allows you to save tax by investing in some media that the government accepts. That is how the government is able to get people to invest and save, and express gratitude by giving some relief in tax. A fair deal, of a kind! You are not required to pay tax on some investments, so your tax payable income reduces, and hence the amount of tax payable. Very much sought-after tax concession by all.
Section 80C: How It Will Save You Money
Let’s say your total income is ₹5,00,000. If you invest ₹1,50,000 in Section 80C-eligible investments, your tax income falls to ₹3,50,000. You pay tax on the lesser amount, and that is a huge saving. You are being given a rebate on your tax as if!
Where to Invest Under Section 80C
There are different investments where Section 80C tax relief can be availed. This provides you with options depending on your needs and the level of risk you are willing to take. Some of the popular ones are mentioned below:
- PPF (Public Provident Fund): Long-term savings scheme, completely not risky.
- EPF (Employee Provident Fund): Retirement savings scheme for working employees of firms.
- NSC (National Savings Certificates): Another safe government-backed scheme.
- Life Insurance Premiums: Premium on your life insurance on you, spouse, and children.
- ELSS (Equity Linked Savings Scheme): Investment of the total amount in equity with tax advantage.
- Home Loan Principal Repayment: repayment of your home loan principal and not interest.
- Tuition Fees: School tuition fee of your child.
- Senior Citizen Savings Scheme: Saving scheme only for senior citizens.
Related Article: HOW TO UTILIZE SEED FUNDS?
How Much You Can Invest Under Section 80C
Max you can invest under Section 80C is ₹1,50,000 per year. That’s the combined max for all your Section 80C investments.
Important Points to Keep in Mind Regarding Section 80C
- The Cap: ₹1,50,000 is the combined amount that you can claim.
- It’s All Cumulative: That is the combined max for all your Section 80C investments.
- Financial Year: You need to invest between 1st April and 31st March so that it reaches before the tax of the year.
Section 80C and Startups: What’s the Connection?
Section 80C is a tax exemption of a startup or a startup tax exemption but can be helpful for the founder as well as the employees of a startup.
If you are working in a startup india company and have a salary, the investment benefits of these are available to cut down your income tax. Startups tax relief is another but a significant point which should be kept in mind. Even though 80C may not have special tax relief for startups or even a tax benefits scheme for startups, wise management of money is the success mantra of startups. Recall that there is no such firm in India that is completely tax-exempt, but wisely planning to keep your personal tax saved can release more money for your business. Certificate of exemption from tax is not used here, 80C is being utilized while filing your income return. The startup India registration does not consider 80C but every person requires good personal funds, even startup founders. Wise Planning Your Investments.
You must invest under Section 80C at the start of the year. Don’t wait! Keep in mind your investment objectives, risk tolerance, and when you may need money before investing.
StartupFlora: Your Smart Financial Planning Buddy
We at StartupFlora know that money planning is not for all. We can connect you with money planners who will provide you with individualized guidance on tax planning and investment planning, and Section 80C optimization. We don’t advise you on finance directly, but we provide you with access and information to allow you to make your own decisions. Call us today to learn more!