Income Tax Section 80C – Deductions on Investments :
Section 80C is one of the most popular and favorite sections among st the taxpayers as it allows to reduce taxable income by making tax saving investments or incurring eligible expenses. It allows a maximum deduction of Rs 1.5 lakh every year from the taxpayers total income.What is 80C : 80C, under the Income Tax Act, 1961, lists the investments and expenses against which you can claim tax deductions.
Read More : Income Tax Deduction on section 80C, 80D, 80CCD & 80CCC & More
Eligible investments for tax deductions Under 80C
80C allows deduction for investment made in⇓
- Life Insurane Premium (LIC)⇨ You can claim tax deductions under Section 80C against premiums paid for life insurance policies of self, spouse and children.any amount given as a life insurance premium for self, wife or children is approved as a discount under the section 80C. The amount of the premium must be less than 10% of the assured amount but you need to remember, then you will get deduction.
- PPF ( Public Provident Fund ) ⇨ You can invest up to Rs 1.50 lakhs in your PPF every year.You will get a discount on the annual exemption amount in the public provident fund. This project is fully guaranteed by the central government and the amount of balance is not subject to attachment in accordance with any order or decree of the court. The minimum amount of deposits stands at Rs 500 annually and the amount of deposit is not the maximum limit. The account can also be opened in the name of minor children and parents can act as guardians. Investors can take the Loan in the PPF from the third financial year to the sixth financial year by promising account security security. This account can either be opened at any bank or post office across India. You can deposit a total of Rs.1,50,000 Cannot be deposited more than 1,50,000 in annul.
- EPF- Employees’ Provident Fund : Employees contribution to Provident fund is also eligible for deduction under section 80C. This contribution amounts to 12% of the salary. At present, the interest rate in EPF contribution is 8.8%
- School Tution Fees for Maximum 2 Children: Tuition fee up to your two children is allowed as cut under section 80C. Fees can be paid any place in India at school, college, university or educational institution. This is only if you get a fee for a full -time course you will get to rebate.
- Equity linked saving scheme ⇨ ELSS is an equity mutual fund with a lock-in period of 3 years. ELSS mutual funds’ asset allocation is mostly towards equity (more than 60 to 65% of your amount would be invested in equity) and equity-linked securities.
- Principal amount payment towards home loan ⇨ Those repaying a home loan can claim deductions of up to Rs 1.50 lakhs per annum against home loan principal repayment.
- stamp duty and registration charges for purchase of property,
- Sukanya smriddhi yojana (SSY) ,
- National saving certificate (NSC) ,
- National Pension Scheme (NPS)
- Senior citizen savings scheme (SCSS),
- ULIP,
- Tax saving FD for 5 years,
- Infrastructure bonds etc ⇨ Investment in infrastructure bonds can be claimed for a discount under 80C in accordance with section 1961, which means you will get it. Investment of Rs 20,000 in infrastructure bonds will be eligible for income tax discount.
Section 80C provides a deduction of Rs. 1.5 lakh per year from your income tax. Comparatively, the same section 80CCC provides exemption of up to Rs. 1.5 lakh per annum per individual contribution to certain pension funds. It has already been discussed how much deduction you will get on the remaining items, you can read our other post about the remaining sections such as 80cc, 80ccd, read more by clicking on the link above.
Section 80C : Deduction in respect of investment or contribution, this deduction will be applicable only to Individual (any type) / HUF. Deduction Amount: Rs. 1,50,000 or the amount paid / deposited, whichever is less. Limit Rs.1,50,000/-] Amount actually paid. Should be invested in -Life insurance premium [yourself, your spouse, and children (can be dependent or non-dependent, married or unmarried)] Deduction limit: Life insurance premium or 10% of capital assured. Maximum policy type. As on 31-3-2012 20% of the issued capital is guaranteed to be eligible for premium deduction. Policy issued on or after 1-4-2012 10% of face value assured for policy life issued on or after 1-4-2013.
Example :
Life Insurance Capital Sum Assured Amount EligiblePremium (p.a.) for Deduction
Rs. 15,000 Rs. 2,00,000 : 10% of 2,00,000 = Rs.
20,000 Rs. 15,000
Rs. 30,000 Rs. 2,00,000 : 10% of 2,00,000 = Rs. 20,000 Rs. 20,000
Rs. 1,60,000 Rs. 17,00,000 : 10% of 17,00,000 = Rs. 1,70,000 Rs. 1,50,000 (Max)
How to work 80C in Housing Properity:
Now you know how much money limit section 80c, in what investment you will get deduction. Now knowing that if you have a home loan, if you pay the home loan then how to take it at 80c. Suppose you have given a home loan of Rs 100,000 lakh in the previous financial year, out of which you have given interest of Rs 20,000 thousand, you can check your loan statement to see how much is the principal and how much is the interest. So the deduction you will get in 80C is total Rs 100000, if you want to take interest rebate then you have to deduct your principal amount.
for example:
your paying amount 1 Lakh, if you full rebate rs 1 lakh,then you don't have rebate interest. 100,000- 20,000 = 80,000 thousand Principal Amount (80C) and rs. 20,000 thousand housing properity.
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