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Some hidden schemes which is not popular u/s. 80C of Income Tax Act

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Section 80C of Income tax popularly known to the person who comes in tax brackets either 10%,20% or 30% but only two three schems they are popularly known If an individual falls in the 30% tax bracket and has exhausted the maximum limit of Sec 80C, one can save Rs 30,900 in taxes. We runs you through the provisions of Section 80C. However, we highlight those schemes that are little known and which many investors avail of sparingly.Stamp duty and registration charges

The first and foremost provision that many taxpayers are not aware of is stamp duty and registration charges. According to the law, ‘the amount paid towards stamp duty, registration fees and other expenses for the purpose of transfer of house property to the owner also qualifies for tax exemption’. This is over and above the principal payment that qualifies under Section 80C. But deduction u/s. 80C for total amount including Principal Loan Repayment and stamp duty and registration charges can not exceed Rs. One Lakh.
Exemption for interest payment towards home loan is permissible under another section hence the above limit of Rs 1 lakh does not apply to it.
Let us take an example, Mr A purchases a house property of Rs 32 lakh and takes a home loan of Rs 25 lakh at 10%. His stamp duty and registration charges on this work out to approximately Rs 1.75 lakh. The interest for the first year comes to Rs 2.48 lakh and principal payment comes to Rs 41,376.
Thus, Mr A can claim maximum tax exemption of Rs 1.5 lakh on his interest payment under Sec 24. The entire principal payment (not more than Rs 1 lakh) of Rs 41,376 can be claimed under Sec 80C.
Nonetheless, it still leaves Rs 58,624 to be invested in other tax-saving instruments to reduce overall tax liability. In reality, buying a house is quite often an expensive affair, leaving little cash with the homebuyer. On top of it, if one has to make additional investment to save on tax, it becomes difficult.
But with the inclusion of registration and stamp duty fees under Section 80C, it not only reduces tax liability but also saves the property buyer from further cash outgo.
Fixed-deposit with HUDCO or any housing board
Another provision that would be eligible for exemption under Section 80C is ‘any sum paid towards fixed-deposit schemes of HUDCO or to any housing board, which is constituted in India for the purpose of planning, development or improvement of cities or towns’.
Typically, these schemes are promoted by state housing boards to promote long-term social sector objectives, or for infrastructure development of city. In fact, principal payment towards home loans taken from Housing and Urban Development Corporation (HUDCO) also qualifies for exemption under Sec 80C.
Even subscription to a home loan account scheme of the National Housing Bank (NHB) or contribution to any notified pension fund set up by the NHB also meet the requirements. Hence, if these two offer home loans at competitive rates, one can avail loan from them as well.
Contribution to a non-commutable deferred annuity plan
Further, contribution to a non-commutable deferred annuity plan is also an option to avail tax exemption. In normal parlance, this is nothing but a standard pension plan eligible for tax exemption under Section 80C.
This includes schemes such as Jeevan Suraksha by LIC or Pension Plus plan by HDFC Standard Life. Contribution to an approved superannuation fund is also a way to claim tax benefit.
Typically, large organisations maintain superannuation funds and contribute to them. In case employees want to make a higher contribution; they can do so to the extent of 15% of basic plus dearness allowance. Besides these lesser-known options, the other commonly used options are contribution to employee provident fund, life insurance premium, or payment of tuition fees. Five-year tax saving fixed deposits issued by banks can also be bought.
With a 6-7 .75% quarterly compounding interest rate, these FD’s have an edge over NSC with a one-year lesser lock-in period. However, the NSC has an edge because of the fact that interest accrued is also eligible for 80 C limit for the first five years that is not the case with FDs.
Equity-linked savings scheme MF or Ulips
Besides, these low risk options, one can go for high-risk return schemes such as equity-linked savings scheme MF or even Ulips. ELSS usually provides a higher return in the long run than small savings schemes and carries a lower lock-in period of three years.
Small savings schemes offer a lower return of around 8 to 8.5%. Further, there is a relatively long lock-in period -15 years for the PPF and six years for NSC. The advantage with these schemes is that they offer a guaranteed return unlike equity-based products where there is no guaranteed return and one can lose money like when the markets tumbled in 2008.
Risk profile and investment strategy are the key determinants for allocating funds to any scheme. Also, one must consider inflation-adjusted returns before taking a decision.

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