Alternative Options Available Under Sec 80C of Income Tax Act

There are many other alternatives available to save tax under section 80C of income tax act besides tax saving fixed deposits which can offer you fixed return, less lock-in period, tax free returns, loan facility, etc.

Some of them are as follows:

1. Public Provident Fund (PPF): It offers a guaranteed fixed return which changes from time to time as decided by government. The returns are also tax free. It has a maturity period of 15 years. Minimum amount of contribution is Rs 500 and maximum is Rs 1,50,000.
2. Provident Fund (PF) : Automatically deducted from the salary. Employee's contribution is counted towards section 80C investments.
3. National Savings Certificate: It offers a fixed rate of return. It comes in two duration the five years and 10 years and currently offering an interest rate of 8.50% p.a. on 5 year NSC and 8.80% p.a. on 10 year NSC which is compounded half yearly. The interest earned is however taxable.
4. Life Insurance Premium or unit-linked insurance plan (ULIP): Life insurance premium paid for an individual, his/her spouse or children can be claimed as a rebate.
School/college Tuition Fee: Tuition fee can be claimed as deduction under section 80C.
5. Senior Citizen Saving Scheme: It is a small saving scheme available only to senior citizens. It offers 9.30% p.a. as interest. The interest rate is slightly higher than NSC.
6. Equity Linked Savings Scheme (ELSS): Mutual funds offer special schemes created for offering tax savings called ELSS and investment under such scheme is eligible for deduction under Sec 80C. There is a mandatory lock-in period of 3 years in this scheme.
7. Home Loan Principal Repayment: The principal component of the EMI of home loan qualifies for rebate under Sec 80C.
8. Post Office Time Deposit: Time deposits with a post office for 5 year or more is also eligible for tax benefit under section 80C.
9. Sukanya Samriddhi Yojana: Sukanya Samriddhi Yojana is a deposit scheme offering guaranteed returns along with income tax benefit under section 80 C of the Income Tax Act, 1961. It is a deposit scheme for Higher Education and Marriage of Girl Child. A pAny parent, natural or legal guardian of the girl child, who has not reached the age of 10 years, can open this account. Sukanya Samriddhi Yojana account can be opened for two girl children and can be extended to a third if twins are involved. Its maturity benefit is totally Tax-Free.
10. Stamp Duty, Registration Charges and Other Expenses: The amount paid towards stamp duty, registration charges and other expenses for the purpose of transfer of house property to the owner also qualifies for tax exemption under Section 80C of the Income Tax Act, 1961. The deduction can only be claimed once the property construction is complete and you are legal owner of the house. Only Individuals and HUF assesses are allowed to claim deductions of Stamp Duty and Registration Charges paid. Joint owner can individually claim deduction of the expenses in the proportion of their shares in the house property maximum upto Rs 1.50 lakhs each.