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A person can take advantage of tax deductions under section 80C of Income Tax Act to save taxes and generate more wealth out of his income.

Benjamin Franklin has rightly said, “A penny saved is a penny earned”.

Each penny of tax that an investor saves will add to his/her personal wealth. A smart investor is one who makes efficient use of the tax-saving strategies to either avoid or postpone taxes. It is the art of keeping as much of your hard earned money as you possibly can within the ambit of law.

Of course, you should not change your financial behavior solely to avoid taxes. Truly effective tax planning strategies are those that permit you to do what you want while reducing tax liability along the way.

Let’s take an example. You want to invest in a diversified equity mutual fund and at the same time, you have not exhausted the limit of Rs.1,50,000/- of deduction under Section 80C of Income Tax Act. In such case, you can invest in an ELSS mutual fund which also provides tax benefit under Section 80C. By doing so, you will save tax and that saving can be further invested which will add to your accumulated wealth in future.

To learn more on various deductions available under section 80C, Click Here

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