Saturday, 16 November 2013

Deductions from Taxable Income (Section 80C)


Saving Scheme
Sec. under which Tax Benefit available
Return
Tax benefits for earnings (i.e. interest received / dividend received)
Lock in Period and other Remarks
National Saving Certificates -  ( NSC scheme  )
Section 80C
8.50% for VIII Series 5 Year NSCs; and  8.80% for 10 year NSCs for FY 2013-14
Taxable
5 years (reduced wef  Dec 2011 from 6 years to 5 years for new investments).  The yield on these NSCs will now be revised every year and will be 25 bps above the 5 year government bond yields
Equity Linked Savings Schemes (ELSS)
Section 80C
Varies from year to year  (Market linked)
Dividend is tax free
3 years


Life Insurance Policies
Section 80C
Varies from year to year
Varies from scheme to scheme
Varies from scheme to scheme
Unit Linked Insurance Plan (ULIP)
Section 80C
Varies from year to year
Varies from scheme to scheme
Varies from scheme to scheme (15 to 20 years)
Infrastructure Bonds
Section 80C
Varies from issue to issue. These were around 8%+ in Dec 2011.   These have lost their charm as Additional Tax rebate of Rs 20,000 is NOT given now from FY 2012-13 onwards. 
Taxable
3 to 5 years
Contribution to EPF / GPF / Voluntary PF
Section 80C
8.50%
Interest earned is tax free
Till retirement (loans are permitted only after 5 years)
Insurance Policies
Section 80C
6 to 7% only
Earnings are tax free in most of the cases
Locked till maturity
ULIPS
Section 80C
Market linked
Earnngs are tax free
Partiail withdrawal allowed
Public Provident Fund (PPF)
Section 80C
Decreased to 8.70% for FY 2013--14
Interest earned is tax free
15 years and extendable.  Withdrawals allowed after 7 years.  Yield on PPF will vary and will be fixed at 25 basis point above the 10 year government bonds.
NPS
Section 80C
Market Linked
Interest earned is tax free
Withdrawal not permitted before maturity
Tuition Fees including admission fees or college fees paid for full time education of any two children of the assessee.
Section 80C
Not applicable
Not applicable
Not applicable
Repayment of Housing Loan (Principal)
Section 80C
Not applicable
Not applicable
Not applicable
Bank Fixed Deposits - 5 Years
Section 80C
Varies  from bank to bank (around 8.00% - 9.00%)
Nil
5 Years
Senior Citizens Savings Scheme 2004 (from financial year 2007-08)
Section 80C
9.20% for FY 2013-14
Taxable
As per the guidelines issued in December 2011, there will be spread of 100 basis points above the 5 year bonds yields for this scheme.
Post Office Time Deposit Account (from financial 2007-08)
Section 80C




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