Let us look at the investment options that enjoy the EEE tax benefits:
These mutual funds primarily invest in equities. Thanks to Section 80C of the Income Tax Act of 1961, investments in ELSS funds up to ₹1,50,000 are completely tax-free.
Additionally, the three-year lock-in period for ELSS can be waived in exchange for partial withdrawals that are also tax-free.
PPF is a highly favoured EEE investment option for people aiming to save for retirement and other long-term goals. It provides complete investment security, zero risk, and consistent corpus growth.
Under India's EEE tax regime, PPF investments are tax-free and enjoy tax-free status during the investment phase and when generating returns or income.
Employers are legally obligated to deduct 12 per cent of an employee's salary as an EPF contribution in the corporate sector. Investments made in the EPF are exempt from taxation under Section 80C of the Income Tax Act. Investors highly seek after this investment option because it also provides tax-free interest payments.
A ULIP is a versatile policy that provides tax advantages and allows investors to allocate funds to various market-linked assets for long-term objectives.
ULIPs come with a lock-in period of five years, although they can extend to 15, 20, or even longer. If you surrender the policy (permitted after 5 years) or when it matures, the fund value remains exempt from taxation, subject to prevailing tax norms.
Note: ULIP maturity amount is tax-exempt if the total premiums paid during the financial year are below ₹2.5 lakhs.