How to save Income Tax through Section 80C?

Section 80C of the Income Tax Act of India is a clause which indicates various expenses and investments which are exempt from income tax. It allows a maximum deduction of up to Rs. 1.5 lakh each year from the total taxable income of an investor.

Article 80C only applies to individual taxpayers and undivided Hindu families. Legal persons, general partnerships and other companies are not entitled to benefit from tax exemptions under article 80C.

These are certain sub-sections also.

Tax saving sections Eligible investments for tax exemptions
Section 80CInvestments 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 80CCCPayment made towards pension plans, as well as mutual funds.
Section 80CCDPayment made towards certain Government-backed schemes such as National Pension System, Atal Pension Yojana, etc.

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

Life insurance premiums:

Premiums paid toward all life insurance policies are eligible for tax benefits under Section 80C. This deduction can be claimed for premiums paid to insured oneself, one’s spouse, dependent children and any member of the undivided Hindu family. Premiums paid for all life insurance policies are eligible for tax benefits under section 80C. This deduction can be claimed for the premiums paid to

  • ·       Insure oneself,
  • ·       One’s spouse,
  • ·       Dependent children and
  • ·       Any member of the undivided Hindu family.

Public Provident Fund

Contributions to the Public Provident Fund (PPF) are eligible for tax deductions under Article 80C. PPF accounts have a maximum deposit limit of Rs. 150,000 per year, therefore all deposits made to your PPF account can be claimed as deductions under section 80C. The money you put in a PPF account will be blocked for 15 years. Partial withdrawals are allowed after 7 years.

NABARD Rural Bonds 

NABARD, or the National Bank for Agriculture and Rural Development, offers two types of bonds, viz. Bhavishya Nirman Bonds and NABARD Rural Bonds. However, only the latter is eligible for tax deductions under Section 80C of the Income Tax Act, and the maximum amount you can claim as deductions is Rs.1.5 lakh.

Unit Linked Insurance Plans (ULIPs)

The unit-linked insurance plan offers the double advantage of life coverage and an investment advantage. Under Section 80C, it also offers an income tax saving benefit, up to Rs. 1.5 lakh, on the amount invested. You can enjoy tax deductible benefits of up to 10% of the sum insured or annual premiums, whichever is lower. Investing in ULIPs will help you enjoy the flexibility of maximizing your savings through a variety of market-linked fund options. Max Life Fast Track Super Plan (UIN: 104L082V04) (Unit Linked Non-Participating Individual) offers you the possibility to invest in 6 types of funds and allows you up to 12 free transfers per year.

National Savings Certificate –

All investments made under the National Savings Certificate can also be claimed under section 80C deductions. Not only the amount of the investment, but also the interest accrued during the first 4 years is eligible for deduction under section 80C of the Income Tax Act. You can reduce the taxable income up to Rs. 1.5 lakh (limit of article 80C).

Tax Saving FD –

Tax Saver Fixed deposits (FD) also fall under the Section 80C deduction. Any deposit you make with a bank for 5 years is eligible for tax deductions, up to the specified limit stated in section 80C of the Income Tax Act 1961.

EPF

Under Section 80C of the Income Tax Act, employee contribution to the EPF account is also eligible for 80C deductions. Whereas the employer’s contribution remains tax-exempt but is not available as a deduction of 80C.

Infrastructure Bonds

Section 80C of the Income Tax Act allows tax exemptions on infrastructure bonds, provided the investment is equal to or greater than Rs 20,000. The limit of Rs.1.5 lakh also remains applicable for these long terms covered bonds.

Senior Citizens Savings Scheme 

All investments made under the Savings Plan for Seniors Citizens (or SCSS) are eligible for tax exemption up to the maximum allocated limit under section 80C, that is Rs. 1.5 lakh. People over the age of 60 (people opting for a voluntary pension scheme are eligible to participate in the SCSS after the age of 55) are eligible to benefit from the SCSS, which has a minimum period of immobilization of 5 years.

Principal repayment made towards home loan 

The tax benefit for the repayment of the principal amount of home loans is eligible for the deduction under section 80C, but the deduction is only available for home loans taken out for the acquisition of residential property and also from specified entities, including banks and housing finance companies. In contrast, the interest deduction under Section 24 (b) is available for money borrowed from anyone, including your friends and relatives. The u / s 24 (b) interest deduction is available even for money borrowed for the repair, renovation of any property, including commercial property.
Stamp duties and registration fees –

Stamp duties and registration fees can be considered the two most important expenses incurred in owning a property. The Indian government allows a tax deduction up to the limit of 80C on stamp duties and registration fees paid for the purchase of housing. However, exemptions can only be claimed in the year in which these duties are paid; otherwise, it will not be eligible for consideration under the Section 80C deduction.

Sukanya Samriddhi Yojana

Investments made in Sukanya Samriddhi Yojana, which is a savings plan for girls, are eligible for tax deduction under Section 80C of the Income Tax Act 1961. A parent or legal guardian can open the account of a girl who has not reached the age of 10. The Sukanya Samriddhi Yojana account can be opened for two girls (one account per girl) and can be extended to a third if twins are involved.

Tuition fees of two children  

You can claim a deduction for the tuition fees paid for your children, but only for two children for full time education in India. So, in case you have more than two children, although the deduction for other children cannot be claimed by you, your spouse can ask if they are also a taxpayer.

With all these if your Rs. 150000 is not reach, than still you have chance to complete your limit through section 80CCC

What is Section 80CCC?

Section 80CCC of the Income Tax Act, allows individuals to claim tax deductions for contributions made to certain pension funds.

This section offers a tax deduction up to a maximum of Rs. 1,50,000 in a year on costs incurred to purchase a new policy or to maintain an existing scheme that pays a pension or periodic annuity

What is section 80CCD?

Article 80CCD deals with contributions made to two public pension schemes: the National Pension Scheme (NPS) and Atal Pension Yojana (APY). To encourage investment in NPS, Section 80CCD of the Income-tax Act allows an additional deduction of Rs 50,000 over and above the Rs 1.5 lakh available under Section 80CC

Reference:

https://www.incometaxindia.gov.in/Pages/tools/deduction-under-section-80c.aspx

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