Your Ultimate Guide to 80C Investments: How to Save Tax Efficiently in 2024

The hardest thing in the world to understand is the income tax — Albert Einstein

Section 80C of the Income Tax Act allows taxpayers to reduce their taxable income by making specific investments or incurring certain expenditures. The maximum deduction available under this section is ₹1.5 lakhs per financial year under the Old Tax regime. This guide explores various 80C investment options, how to invest in them, and examples to illustrate their benefits.

1. Voluntary Provident Fund (VPF)

What is VPF?

Voluntary Provident Fund (VPF) is an extension of the Employee Provident Fund (EPF). While EPF is mandatory, VPF is optional and allows salaried individuals to contribute more than the statutory limit. Contributions to VPF earn the same interest as EPF.

Benefits of VPF

• Interest Rate: 8.1%
• Lock-in Period: 5 years
• Tax on Interest: Tax-free up to ₹2.5 lakhs

Eligible Criteria

• Who can invest: Only salaried individuals
• Contribution limit: No upper limit, but tax-free interest up to ₹2.5 lakhs