Under this post, we are going to learn about some savings/investment schemes which are eligible to be deducted under section 80C. whatever investment you choose, whatever may be the investment amount you had paid, the maximum limit that can be deducted under this section is INR 150000.
Provident Fund (PF):
PF is deducted by the employer on your behalf (12% of Basic pay) and is remitted to the PF department along with the employer’s contribution (12% of Basic pay). Your employer’s contribution is already exempted from tax, so you can claim your contribution from the salary under section 80C. Current rate of interest received under PF is 8.5% per annum.
Public Provident Fund (PPF):
If your savings amount is very less and you are in a search of guaranteed kind of savings scheme, PPF is the best option you have in hand.
RATE OF INTEREST ON PPF DEPOSITS: 8.70% COMPOUNDED YEARLY
MINIMUM INVESTMENT: INR 500/ANNUM
MAXIMUM INVESTMENT: INR 150000/ANNUM
Life Insurance Premiums:
All the premiums paid by you in any mode cash/cheque/ credit card for the policies in your name/ your spouse name/children name can be included in the total premium paid calculations(subject to submission of required documents). The maximum exemption one can claim is INR 150000 irrespective of higher amount paid. For better understanding on this part please click here life insurance under section 80c
Equity Linked Savings Scheme (ELSS):
To get qualified for the exemption under 80c, you have to choose the MF with tax benefits specially inbuilt. These schemes normally comes up with a lock in period. These schemes are called as ELSS schemes
Home Loan Principal Repayment:
The housing loan EMI you pay every month consist of two parts- Principal amount and the interest part. The amount deducted under the principal can be deducted under section 80c. The interest component is deducted under Section 24of the income tax Act.
Stamp Duty and Registration Charges for a home:
The document registration fee and the stamp duty paid by you for purchasing a house can also be exempted under section 80c.
Sukanya Samriddhi Account:
This is a special plan launched by the Government of India to benefit the girl child in Indian family. it was launched in the year 2015.
Minimum Investment: INR 1000
Maximum investment amount: INR 150000
Lock in period: 14 years
Rate of interest : 9.1% compounded annually.
Sukanya Samriddhi Account plan is also exempted in under section 80C
National Savings Certificate (NSC)
Rate or interest
5 year: 8.50%pa compounded half yearly
10 year: 8.80% pa compounded half yearly
Minimum investment: INR 100
Maximum investment: No limits
Any amount invested under this scheme is eligible for deductions under section 80c
These Bonds are issued by public sector infrastructure companies. The amount invested in this Bonds are also eligible for deduction under section 80c
Pension Funds – Section 80CCC:
Section 80ccc is a sub section of section 80C. Hence the INR 150000 limit is arrived at clubbing the investments under both the sections. This section covers all the investments done in pension funds. This includes pension plans from various insurance companies. Know more on section 80CCC
5-Yr bank fixed deposits (FDs):
Any bank FD with a lock in period of 5 years or greater than 5 years are eligible to be deducted under the section 80C. However the interest earned under this FD are taxable.
Senior Citizen Savings Scheme 2004 (SCSS):
A scheme designed to encourage deposits from the senior citizens of India. This SCSS scheme is added under section 80C in recent years only. ROI is 9.20%. The interest in this plan accumulates quarterly and is payable on regular basis. Hence there is accumulation or interest paid for the unclaimed interest earned in the in-between period.
5-Yr post office time deposit (POTD) scheme:
There are POTD schemes for duration of 1, 2, 3 and 5 years. But only 5 year schemes are eligible for the deductions under section 80C. The interest is compounded on quarterly basis and is taxable.
NABARD rural bonds:
NABARD Rural Bonds and Bhavishya Nirman Bonds (BNB) are the 2 schemes run by NABARD. Only NABARD Rural Bonds qualify under section 80C.
Unit linked Insurance Plan:
This is a modern day mix of an MF and Insurance plan. Since the introduction of private players into the insurance industry, there have been so many improvements and product changes happening every year. ULIP is a outcome of some change. To know more click here ULIP and section 80C.
Tuition Fees paid:
The tuition fee in the school fees can be exempted under section 80 C