How to Save Income Tax FY 2017-18 | Tax Benefits Instruments Under Section 80C of Income Tax Act 1961
List of instruments with tax benefits under Section 80C of Income Tax Act 1961
Provident Fund (PF) : Automatically deducted from the salary. Employee's contribution is counted towards section 80C investments.
Voluntary Provident Fund (VPF): Employee also has the option to contribute additional amount through voluntary contribution (VPF).
Public Provident Fund (PPF): Public Provident Fund (PPF) is one of the best options. Current rate of interest is 8.10% compounded yearly which has a maturity period of 15 years. Minimum amount of contribution is Rs 500 and maximum is Rs 1,50,000. This interest rate is guaranteed but keeps changing year on year.
Bank Fixed Deposit(Bank FD): Bank FD having maturity period of 5 years or more can be claimed as deduction under section 80C.
School/college Tuition Fee: Tuition fee can be claimed as deduction under section 80C.
National Savings Certificate (NSC-VIII Issue): It has a maturity period of 5 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.
Health Insurance Premium: Health insurance premium paid for individual, spouse and children is eligible. One can claim deduction up to Rs. 25,000 per year for medical insurance premium instalments. For a senior citizen (60 years or above) spouse, this limit increases to Rs. 30,000 per year.
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.
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.
Home Loan Principal Repayment: The principal component of the EMI of home loan qualifies for rebate under Sec 80C.
Stamp Duty and Registration Charges for a home: The amount paid as stamp duty and registration charges on buying a house are eligible under section 80C.
Infrastructure Bonds: An investment under such bonds is eligible for deduction under Sec 80C.
Sukanya Samriddhi Investment: It is a special deposit scheme launched by Prime Minister Narendra Modi on 22.01.2015 for girl child in which money to be deposited for 14 years and fixed return of 9.1% per annum compounded annually is offered. Moreover, the interest earned on account is also tax free. The amount deposited under this scheme qualifies for rebate under Sec 80C.
Retirement benefit plan offered by mutual fund: An investment under such bonds is eligible for deduction under Sec 80C.
Senior citizen savings scheme (SCSS): Available only to senior citizens. It offers 9.30% p.a. as interest.
Post Office Time Deposit: Time deposits with a post office for 5 year or more is also eligible for tax benefit under section 80C.