Section 80C

From this year 2005-06 (assesment year 2006-07) onwards all the tax saving instruments in india have been clubbed under section 80C with overall limit of 1 lakh (100,000 rupees). There are no more sub section limits (like pension scheme 10,000 or infrastructure bonds 10,000 ) like last year. One the key bonanza for higher income tax payers is there's no longer a limit on your income to claim tax benefit (last year rebates are given only if you're within 5 lakhs etc).

Some of the key things covered by the 80C secion are

(1) Life insurance policies (including pension schemes)
(2) National saving certificates (NSC)
(3) Public Pension Fund (PPF)
(4) House principal repayment to accredited financial institutions
(5) Equity Linked Saving schemes (ELSS from mutual funds)
(6) Unit Linked Insurance Plans (ULIPs from insurance companies)
(7) Infrastructure bonds (from ICICI)
(8) Employee's contribution to Provident Fund (PF)

This allows the flexibility for the tax payer a choice of how to invest his funds and provide tax saving also. The principal repayment which was allowed only upto 40 thousand now can be used to the max 1 lakh limit (and no income limit either) will encourage home ownership.