The Government of India provides certain exemption on some investment in order to encourage savings and for better life. The tax benefits under section 80C allow one a maximum investment of Rs 1.5 lakh per financial year.
What is 80C deduction?
Under the Income Tax Act, 1961, 80C any investment made under this category are exempt from tax up to the limit of Rs 1.5 Lac per annum.
Please note that all these instruments put together and the entire amount of Rs 1.5 lakh will be deducted from your taxable income.
Here is quick chart of deduction from total income available under section 80C. This chart will give you a fair idea of deduction which will help you while planning your tax.
|Section||Eligible Assessee||Nature of deduction|
|80C||Individual/HUF||General deduction for investment in PPF,PF,Life Insurance, ULIP, Fixed deposits for 5 years, bonds etc|
|80C||Individual/HUF||Retirement plans form Mutual Funds|
|80CCC||Individual/HUF||Pension Fund of LIC of India or any other private insurer|
|80C||Individual/HUF||ELSS, such as ELSS are–SBI Magnum Tax Gain|
|80C||Individual/HUF||Paying EMI (equated monthly installment) on a home loan|
|80C||Individual/HUF||Any amount paid as tuition fee for the education of first two kids|
|80CCD||Individual||Contribution by an employee or any other individual towards notified pension scheme.|
1) Investment Made In ULIP
ULIPS are interesting combination of insurance and investment. If the maturity amount exceeds 10% of the sum assured in any of years, it will be fully taxable.
2) There are many retirement benefit plan offered by many mutual funds which are eligible under 80C for tax deduction. Say for example, UTI Retirement Benefit Plan and Templeton India Pension Plan.
3) Provident Fund is one of the popular investment avenue under Sec 80C. The current rate of return on EPF is 8.67 per cent while that on PPF is 8.7 per cent.
4) Pension policies offered by insurance companies where benefits were earlier available under section 80CCC.
5) Life Insurance Premiums All premiums paid for life insurance are eligible under 80C, but the policy should not be surrendered within three years of buying it.
6) If you are paying equated monthly installment (EMI) on a home loan. Please note that only principal part of the EMI is eligible u/s 80C. Also, the interest part is also eligible for tax deduction u/s 24B.
7) Many tax payers are not aware of tuition fee paid during the year are eligible for tax deductions under 80C.
8) Some change made in budget 2015, made NPS an attractive investment, investment made under this is eligible under 80CCD.
9) Other investments like 5 year tax savings fixed deposits from banks and post office. National Savings Certificate are also eligible under the 80C.