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PPF
Returns: 8.6%
Positives: Higher
returns than NSCs, FDs.
Negatives: Only for
those above 60, interest
is taxable.
The stamp duty and registration charges incurred during the time of transferring a
house in your name are also allowed as deduction under Section 80C. These charges
can vary between 4% and 8% of purchase price (depending on the state). These expenses can be claimed only in the financial year in which the expenses were incurred. The
expenses over and above `1.5 lakh cant be carried forward to the next year.
The EMI of your home loan consists of two partsinterest for that month and part of
principal. The principal component is allowed as deduction under Section 80C. If you
have a running home loan, the `1.5 lakh limit is taken care of. This benefit is available
only to investors who take a home loan from a financial institution.
Retirement
mutual
funds
ELSS
funds
HIGH
HIGH
Returns: 8.6%
Positives: High interest rate,
tax-free returns.
Negatives: Only for girl child
up to 10 years, long lock-in
period till child is 18.
Sukanya
Samriddhi
Yojana
FLEXIBILITY
Returns: 8.8%
Positives: Tax-free
returns, no risk.
Negatives: Locked
in till you quit working.
NPS
Ulips
RETURN
There are expenses that are allowed as deduction under Section 80C.
However, the overall cap of `1.5 lakh applies to them too.
Returns: 5-6%
Positives: Tax-free income,
forced saving habit.
Negatives: Very low returns,
locks up money for long term.
Returns: 8.1%
Positives: Tax-free
returns, no risk.
Negatives: Long
maturity of 15 years.
EPF and
VPF
Senior
Citizen
Savings
Scheme
Unit-linked
Pension
Plans
BUYING A HOME
EXPENSES
LOW
Insurance
policies
Returns: 8.1%
Positives: Ultra safe
option, easily available,
lock-in period of five
years.
Negatives: Interest
fully taxable.
NSCs
Tax
Saving
FDs
Post Office
5-year Time
Deposit
Returns: 7.9%
Positives: Ultra safe
option, easily available, lock-in period of
five years.
Negatives: Interest
fully taxable.
Returns: 7.5-8%
Positives: Very low
risk, easily available,
assured returns
Negatives: Income
fully taxable
LOW
The tax-saving investments under Section 80C have different attributes. Narendra Nathan
plots them on a matrix of risk, return, flexibility and liquidity. Find out which suits you best.
16
HIGH
LIQUIDITY
LOW
HIGH
RISK
LOW