When you are in the highest tax bracket, which is 30%, you might feel the pinch of taxes

if you dont
plan for them well in advance. Also, because the Rs. 1.5 lakh deduction under Section 80C of the
Income Tax Act is not going to be enough at all, you need to plan those investments first and get
them out of the way. Here are some of the investments that you could consider.
Section 80C
If youre in the highest tax bracket, you have no choice but to exhaust your 80C limit. But careful
planning can help maximise returns from these investments under Section 80C in the long run. Also,
some investments are more suited to those with high income. Here are some of the best investments
under 80C for the rich.
ELSS
If you are in the highest tax bracket and have high disposable income, Equity Linked Savings Scheme
(ELSS) of Mutual Funds are ideal for you. Even though these come with higher risks, you will get
good returns in the long run. These funds usually manage to beat inflation by a wide margin when
you remain invested for 5 or more years. Consider this: the 5-year return of Axis Long Term Equity
Fund, which is an ELSS, stands at 21.7%, which is almost 3 times the amount you will get from your
Provident Fund. The top 10 ELSS funds have given an average return of 18.4% in the last 5 years.
You can choose to invest in Mutual Funds directly through the Asset Management Companies
(AMC). This will help you save the commission paid to agents which is part of the cost involved in
buying these funds.
ULIP
United Linked Insurance Plan (ULIP) is a product that combines insurance as well as investment for
better returns and benefits. A part of the money you invest in ULIPs will go towards investments in
Mutual Funds while the other part will take care of your insurance cover. This will, of course, be done
after charges for the investment have been deducted. With limits being placed on ULIP charges, you
can be sure that the insurance firm isnt charging you a bomb. Also, online ULIP plans are cheap as
opposed to the ones you get offline. Most insurance firms offer 5-6 funds that you can invest in.
These will include equity and debt funds.
Just like ELSS, ULIP will have a lock-in period of 3 years. However, you will be allowed to switch
between the funds. So, if you feel the fund you invested in is underperforming, you can switch to
another. Most firms allow you to switch free of cost for the first 6 switches. The charge per switch
(after the free ones) is usually nominal (mostly Rs. 50 Rs.300). ULIPs might be better than pure
term plans for young earners with less or no dependents.
PPF

Public Provident Fund (PPF) is one of the most tax-efficient investments in India. It comes under the
Exempt-Exempt-Exempt or EEE category. This is because this investment is exempt from tax and
the same is true for the interest earned and the maturity amount. Currently, the interest rate for PPF
is 8.1% and will be compounded on an annual basis. You cannot open a joint account and the
maturity period is 15 years. You can, however, take a loan against your PPF and withdraw from it
under certain circumstances such as for medical expenses and education.
Section 80CCG
If you are a first-time equity investor in equities (it doesnt matter whether it is equity shares or
equity Mutual Funds), you can also make use of the Rajiv Gandhi Equity Savings Scheme (RGESS)
under Section 80CCG. You can get an exemption of up to Rs. 25,000 or 50% of the amount invested,
whichever is lesser. You can claim such investments for 3 consecutive years. However, note that this
is only for those whose annual income is less than or equal to Rs. 12 lakh.
Even though the investment will be locked in for 3 years, you will be allowed to trade in them after a
year. You can avail deductions under this section even if you already have a demat account. The only
condition is that you shouldnt have made any equity transactions. You can use Form A to designate
your demat account as one under the RGESS scheme.
Section 80CCD
The National Pension Scheme (NPS) comes under the Exempt-Exempt-Taxable category and is a
good investment for high net-worth individuals. The contribution to NPS and the interest earned on
it are tax-free. However, the 40% of the maturity amount will be taxable. But if you use the total
withdrawal amount to buy an annuity, you neednt pay any tax. You can claim a tax deduction of up
to Rs. 1.5 lakh in a financial year if you make contributions to NPS.
Since the maximum deduction allowed is 10% of salary, this investment is ideal for those earning
high income. You can also claim an additional contribution of Rs. 50,000 made to NPS. This is over
and above the Rs. 1.5 lakh and will come under Section 80CCD (1B). The employers contribution to
your NPS can be also be claimed as deduction. However, the amount is restricted to 10% of your
salary. You can even contribute to your NPS account using your Credit Card.
Section 80D
You can claim the premium paid for the Health Insurance policy taken in your name as well the
names of your spouse and dependent children. You can claim deductions of up to Rs. 25,000. If you
takeinsurance in the name of your parents (it could be for your mother or father or both), you can
claim an additional deduction of Rs. 15,000 (if they are less than 60 years old) and Rs. 20,000 (if
they are more than 60 years of age). Under this section, you can claim the costs incurred for your
preventive medical check-up, but the limit is set at Rs. 5,000.

Section 80E
Under this section, you can claim the interest paid on your Education Loan as deduction. You can
claim this deduction for as many as 8 years. The best part is that there is no restriction on the
amount that you can claim under this section.
Section 80DD/DDB
Under Section 80DD, you can claim deduction for treatment of handicapped dependent relatives.
For disability between 40% and 80%, the deduction will be Rs. 75,000 and if the disability is over
80%, you can claim a deduction of up to Rs. 1.25 lakh.
Under Section 80DDB, you can claim deductions for medical treatment of specified illnesses such as
Parkinsons disease. This could be for yourself or a dependent relative. The limit is set at Rs. 40,000.
You need a certificate from a doctor to claim this deduction. If you are a senior citizen, you can claim
up to Rs. 80,000.
Section 24
This section covers the interest portion of your Home Loan. You can claim interest of up to Rs. 2 lakh
for your self-occupied home. You can claim this deduction only after the house is completed and it
needs to be completed within 3 years of taking the loan. You can claim pre-construction interest that
you paid (as pre-EMI) after the house is completed.
If you didnt know, you can claim the principal portion of your Home Loan under Section 80C. This
interest is claimed on an accrual basis. This means that even if no payment is made, the deduction
can be claimed. Note that there is no limit on the interest deduction that can claimed for a let-out
property. This is precisely the reason why many high net-worth individuals go for a second home.
Note that if your home is not self-occupied because you work in another place, then your interest
deduction will be restricted to Rs. 2 lakh.
Additional reading: Home Loan Handbook: All Questions Answered
Always plan your taxes at the start of the financial year so that your cash flows are in order. It will be
better for you to make provisions for taxation so that your disposable income is not spent out of turn.
If you have limited financial knowledge and time, take the help of a financial expert. Always have
your investments documented for future use. We are sure that with these pointers you can save a ton
on taxes while ensuring that your investments keep earning money.