Section 80C is the most popular tax saving option. The maximum deduction allowed is of Rs 1,50,000. It includes:
- Employee Provident Fund (EPF)
EPF is a savings scheme for retirement for all salaried employees. You receive compounded tax-free interest on the amount.
You and your employer contribute equally towards this provident fund. Employer’s contribution is tax exempt and your contribution is claimed in Section 80C investments. You can also increase your contribution through voluntary contributions (VPF).
- Public Provident Fund (PPF)
PPF is a popular long-term investment option backed by Government of India which provides tax-free returns. Interest is compounded annually and it has a maturity period of 15 years.
The minimum annual investment is Rs. 500 and the maximum annual investment allowed is Rs 1,50,000.
- Principal repayment of housing loan
Principal repayment of loan taken for buying or constructing a residential house property is also eligible in Section 80C.
- Stamp duty and registration charges for house
Stamp duty, registration fees and other expenses while buying a house can be claimed as deduction under section 80C in the year of purchase of the house.
- Life insurance premium
All life insurance premium payments including Unit Linked Insurance Plan (ULIPS) for self, spouse and children are eligible for tax benefits under section 80C.
- 5 year tax saving Fixed Deposit (FD)
Tax saving Fixed Deposit (FD) with bank or post office is eligible for section 80C deduction. These deposits have a mandatory lock in period of 5 years.
- Tax saving mutual fund Equity Linked Saving Investments (ELSS)
Investment in Equity Linked Savings Scheme (ELSS) mutual funds is eligible for deduction under section 80C. These mutual funds have lock in period of 3 years.
- National Savings Certificate (NSC)
National Savings Certificate (NSC) is an investment which can be purchased from designated post office. It has a maturity period of 5 to 10 years. Interest earned is taxable and is compounded annually. However, if the accrued interest is reinvested it qualifies for deduction under Section 80C.
- Contribution to Sukanya Samriddhi Account
Sukanya Samriddhi Account is a special account for a girl child. Parents can deposit minimum Rs. 1000 to maximum Rs.150000 to this account. The interest earned is compounded annually and is fully exempt from tax.
- Tuition fees for children’s education
A tuition fee paid for any two children is eligible for deduction, which covers any school, college, university or other educational institution in India.
- Contribution to certain pension funds
Investment in certain pension funds is eligible for deductions under section 80 C.
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