Deductions on Section 80C

The most popular income tax deduction is section 80C. Deduction under this section is allowed to individual and HUF. Deductions allowed under the income tax act help you reduce your taxable income. You can avail the deductions only if you have made tax-saving investments or incurred eligible expenses. There are a number of deductions available under various sections. 80C allows deduction for various investments and payments

  • Life insurance premium payment

  • Annuity plan of LIC or any other notified insurer(Jeevan Dhara, Jeevan Akshay etc.)

  • Unit Linked Insurance Plan (ULIP) of UTI or ULIP of LIC mutual fund u/s 10(23D) contribution

  • PPF (Public Provident Fund) contribution

  • Non-commuted deferred annuity plan payment

  • Amount deducted from government employee salary for the purpose of securing him of deferred annuity

  • SRF/RPF contribution

  • Tution fees payment

  • Repayment of housing loan

  • Superannuation Fund contribution

  • Senior Citizen Scheme investment

  • PPF investment

  • 5 year FD investment

  • Sukanya Samridhi Yojna investment

  • Mutual Funds (Equity Linked Saving Scheme) investment

  • Subscription to any deposit scheme/pension fund of National Housing Bank (NHB)

  • Subscription to bonds issued by National Bank for Agriculture and Rural Development (NABARD)

  • Subscription to notified deposit scheme of Public Sector Housing Finance Company and Housing Development Authority of cities, towns and villages

  • Subscription to equity shares or debentures of Public Company or any Public financial institution forming part of an eligible issue of capital approved by Board where proceeds are utilized for infrastructure company.

  • Stamp duty, registration fee incurred for the purpose of transfer of such house property to the assessee.

Investments eligible for deduction under Section 80C of The Income Tax Act

Investment options Interest Minimum lock-in period Assured return Associated risk
ELSS 12% to 15% (depending on market fluctuation) 3 years No High
NPS 8% to 10% Till the investor reaches 60 years of age (retirement) No High
SCSS 8.60% 5 years Yes low
PPF 7.90% 15 years Yes Low
NSC 7.9% 5 years Yes Low
ULIP 8% to 10% (depending on market fluctuation) 5 years No Moderate
Fixed deposit Up to 8.40% 5 years Yes Low
Sukanya Samriddhi Yojana 8.50% 8 years Yes Low

You can claim a deduction of Rs 1.5 lakh your total income under section 80C. In simple terms, you can reduce up to Rs 1,50,000 from your total taxable income, and it is available for individuals and HUFs.

If you have paid excess taxes, but have invested in LIC, PPF, Mediclaim, paid your children’s tuition fees etc. and have missed claiming a deduction for the same, you can do so while filing your Income Tax Return. The Income Tax Department will refund the excess money to your bank account.

Subsections of Section 80C

Tax saving sections Eligible investments for tax exemptions
Section 80C Investments in Provident Funds such as EPF, PPF, etc., payment made towards life insurance premiums, Equity Linked Saving Schemes, payment made towards the principal sum of a home loan, SSY, NSC, SCSS, etc.
Section 80CCC Payment made towards pension plans, as well as mutual funds.
Section 80CCD(1) Payment made towards certain Government-backed schemes such as National Pension System, Atal Pension Yojana, etc.
Section 80CCD(1B) Investments of up to Rs.50,000 in NPS is considered for exemption under this section.
Section 80CCD(2) Employer’s contribution towards NPS (up to 10%, comprising basic salary and dearness allowance, if any) is exempted under this category.

Download Payroll Software with TDS Now!