Investments that can be made under Section 80C

Section 80C is basically used for claiming Income Tax Deductions. This section can be used to claim the deduction for all categories of taxpayers and the maximum amount that can be claimed for deduction is Rs. 1,50,000. You can invest in more than one instrument under Section 80C.

1. Equity Linked Mutual Funds

The deduction under Section 80C is allowed for investment in Equity Linked Mutual Funds, which are also known as ‘ELSS Funds’. These funds can be held in both physical form as well as demat account. These can be purchased from agent. There are some online share trading accounts that sell mutual funds online. There is a lock-in period of 3 years in these equity linked mutual funds and they cannot be sold before three years from the date of purchase.

2. Life Insurance Premium

The Life Insurance Premium can also be claimed for deduction under Section 80C. The Life Insurance Premium for self, spouse and children can be claimed for deduction while the life insurance premium for parents cannot be claimed for deduction under this section.

3. Public Provident Fund

Investment in Public Provident Fund (PPF) can also be done under Section 80C and it allows interest to those who invest in it. The rate of interest on PPF is decided by the Government and keeps changing on regular intervals. Its rate is slightly higher than the rate on Fixed Deposits. It has a lock-in period of 5 years.

4. Employee Provident Fund

It is a retirement benefit scheme and is only available only to salaried employees. Both the employer and the employee invest a portion of their salary every month and get interest at regular intervals on the amount which is in the EPF account.

5. Stamp Duty

The amount paid as Stamp Duty on the purchase of a house or as the registration of the documents can also be claimed for deduction under this section.

6. Repayment of the Principal amount of the Home Loan

The deduction under Section 80C is used for repayment of the part of the Principal amount of the home loan.

7. National Savings Certificate

National Savings Certificate is the fixed income earning instrument issued by the Government of India. Deduction under Section 80C is allowed for investment in NSCs. There are two types of NSCs: One with duration of 5 years and the other with duration of 10 years.

8. 5 Year Tax Saving Fixed Deposit

The deduction under Section 80C is allowed for investment in 5 year fixed deposit. It should be noted that it is only for fixed deposits of more than 5 years and not for all fixed deposits.

9. Senior Citizens’ Savings Scheme

Senior Citizen Savings Scheme is a fixed income earning instrument on which the interest is paid regularly. They can be opened in any post office across India and in selected branches of banks.

10. Payment of Education Fees of Children

The Deduction under Section 80C is allowed for payment of school fees of up to 2 children. This deduction is allowed in the year in which the payment is made. It is only available for the fees paid for full-time education of children in India. For part time coaching or for education outside India, this deduction is not allowed.

For any help on ITR Filing feel free to consult the tax experts at Taxraahi. You can file ITR yourself via our ITR software or get CA’s help on filing income tax return. You can also use the option of Business Return, Bulk Return or Revised Return Filing.