How to Invest to Save Your Taxes (under Section 80C) in 3 Easy Steps!

Saving taxes is one of the foremost things on our mind every year. Nobody wants to let the Rs. 1.5 Lakh deduction under Section 80C go unused.

Here’s how you can plan for it easily through your own Tax Save goal on Goalwise. And you don’t have to wait until the end of the year to get a start.

Step 1: Adding a new Goal from the Goalwise Dashboard

When you sign in to your Goalwise account, you will be taken straight to your Dashboard. Here, you will see the ‘Add a goal’ button in the bottom right corner of the page, just below the notifications bar (Not signed up yet? Take a minute to do it here).

Click on ‘Add a goal’.

‘Tax Save’ is the fourth goal on the ‘Add a new goal’ pop-up, under the ‘Essential goals’ category. Everyone likes to save tax, which makes it one of our most popular goals.

Click on the ‘Tax Save’ goal card, and then click on ‘Proceed to Goal Plan’.

Step 2: Personalising your Goal Plan on the Goal Plan page

Since only certain special equity Mutual Funds (known as Equity Linked Savings Scheme, or ELSS) are eligible for tax saving under Section 80C, all investments in this goal are made in such equity funds. You don’t need to select a Risk Level option as you would in your other goals, because all ELSS are equity funds, and there is no need for any asset allocation.

You can change your desired Monthly Investment amount, and the Time Horizon.

Your Monthly Investment amount should take into consideration any other Section 80C expenses or investments you have made. Some common ones that may be relevant are:

  1. Life Insurance Premium (whether Term, ULIP or Money-Back/Endowment)
  2. Provident Fund contribution (PPF/EPF)
  3. Principal repayment of housing loan
  4. Child’s tuition fees

For example, if you have:

  1. Term Life Insurance with an annual premium of Rs. 10,000
  2. A monthly EPF contribution from your employer of Rs. 2,000 (Rs. 24,000 annually)
  3. Annual payment of Rs. 30,000 towards your daughter’s school tuition fees

you can invest 1.5 lakhs - (10,000 + 24,000 + 30,000) = Rs. 86,000 in your Tax Save goal to fully claim the deduction of Rs. 1.5 Lakh in taxable income under Section 80C.

The recommended (and default) Time Horizon is 3 years, because ELSS Mutual Funds have a lock-in period of 3 years (compared to more than 10-20 years for other popular 80C instruments, like PPF/EPF, ULIPs and Money-Back policies). If you want read more about the different tax saving options and which one is best for you, we have discussed it in a blog post here.

You can also see the current fund selection and allocation under the Investment Breakdown table. We spent a lot of sleepless nights rigorously testing our fund selection algorithms (which you can read more about here), so you can rest assured that our recommendations are the cream of the crop.

Once you are satisfied with the plan, click the blue ‘Add as Goal’ button at the bottom.

This creates a new goal ‘Tax Save’ with the current plan and adds its goal card on your dashboard.

You have successfully created a Tax Save Goal! You’re now just one step away from saving big on your taxes!

Step 3: Start investing through a Monthly SIP or make a One-Time investment

Click on the Tax Save goal card on your dashboard to proceed.

This is the Goal Information page for your very own Tax Save Goal. In addition to what you saw on the ‘Personalised Goal Plan’ page, you will also see here goal projections under different market scenarios. If you want to make any changes to your Goal Plan, you can do so by going to the Goal Planning Tool. If not, you’re ready to invest!

To begin investing towards your Tax Save Goal, click on the blue ‘Invest Now’ button.

The Amount to Invest, Monthly Investment (SIP) option and Duration (in months) are preset as per the Goal Plan that you decided on earlier. We recommend not changing anything here as it will affect your goal plan.

Choose the start date that is convenient for you, out of the available options, agree to the standard terms and conditions, and click 'Invest Now'.

Every month, on the date you select, money will be transferred automatically from your account directly to the Mutual Funds. Once the Mutual Funds confirm the transactions, the investment will appear under your ‘Tax Save’ goal in your Goalwise account. Goalwise provides bank-grade security to guarantee the safety of each transaction.

One-time Investments

In addition to a monthly SIP, you can also choose to make a one-time lumpsum payment towards this goal. This is especially useful near the end of the year, when you know exactly how much deduction you can still claim under Section 80C. You can then invest that amount in ELSS funds to fully claim the deduction in taxable income.

On the Payment Details page, select the ‘One-time’ option under ‘Payment Mode’, and enter the ‘Amount to Invest’ according to your requirement.

You can now choose between ‘NACH’ and ‘Net Banking’ as your mode of payment. If your NACH mandate has already been setup, we recommend using ‘NACH’ as the mode of payment, for a one-click investment experience. If not, you can do it as a regular net banking payment too, which will take you to your bank’s payment gateway.

Click the check box to agree to the standard terms and conditions, and then click the blue ‘Invest Now’ button.

Congratulations! You’re now on your way to reaching your Tax Save goal!

Easy peasy! That’s all it took for you to save up to Rs. 46,350 in taxes every year! ELSS Mutual Funds give you the shortest lock-in period and the highest potential for returns, compared to all other Section 80C instruments.

Now just sit back, and relax. We designed Goalwise to be a ‘set and forget’ system for you. Once you have set-up a goal, Goalwise does all the hard work of managing it from start to finish.