What is Section 80C

In order to encourage savings, the government gives tax breaks on certain financial products
under Section 80C of the Income Tax Act. Investments made under such schemes are
referred to as 80C investments. Under this section, you can invest a maximum of Rs l lakh
and if you are in the highest tax bracket of 30%, you save a tax of Rs 30,000. The various
investment options under this section include:

Provident Fund & Voluntary Provident Fund

Provident Fund is deducted directly from your salary by your employer. The deducted
amount goes into a retirement account along with your employer's contribution. While
employer's contribution is exempt from tax, your contribution (i.e., employee's contribution)
is counted towards section 80C investments. You can also contribute additional amount
through voluntary contributions (VPF). The current rate of interest is 8.5% per annum and
interest earned is tax-free.
Public Provident Fund
An account can be opened with a nationalized bank or Post office. The current rate of interest
is 8%, which is tax-free and the maturity period is 15 years. The minimum amount of
contribution is Rs 500 and the maximum is Rs 70,000.
National Savings Certificate
These are 6-year small-savings instrument, where the rate of interest is 8% and is
compounded half-yearly. The interest accrued every year is liable to tax but the interest is
also deemed to be reinvested and thus eligible for section 80C deduction.
Equity-Linked Savings Scheme
Mutual funds offer you specially-created tax saving funds called ELSS. These schemes invest
your money in equities and hence, return is not guaranteed. Money invested here is locked for
a period of three years.
Life Insurance Premiums
Any amount that you pay towards life insurance premium for yourself, your spouse or your
children can be included in section 80C deduction. If you are paying premium for more than
one insurance policy, all the premiums can be included. Besides this, investments in unitlinked insurance plans (ULIPs) that offer life insurance with benefits of equity investments
are also eligible for deduction under Section 80C.
Home Loan Principal Repayment
Your EMI consists of two components, namely principal and interest. The principal
component of the EMI qualifies for deduction under Section 80C.
Stamp Duty and Registration Charges For Home

The amount you pay as stamp duty when you buy a house, and the amount you pay for the
registration of the documents of the house can be claimed as deduction under section 80C.
However, this can be done only in the year in the year of purchase of the house.
Five-Year Bank fixed deposits
Tax-saving fixed deposits (FDs) of scheduled banks with a tenure of five years are also
entitled for section 80C deduction.
Others
Apart from the above, things like children's education expenses that can be claimed as
deductions under Section 80C. However, you need receipts to claim the same.