What Is 80c

The Income Tax Act of 80C offers a provision for specific deductions from the gross income in the form of savings. These deductions are only limited to tax-paying individuals and Hindu Undivided Families (HUF). There are various investment options available that can help in saving for the future as well as get handsome returns. The other tax deduction provisions that are linked to 80C are 80CCC and 80CCD.

Type Of Investments To Fully Utilise Tax Deductions Under 80c

The different investment benefits available under section 80C are based on different risk factors.
  1. Insurance Policy -
    Investments made any insurance company registered under the Insurance Regulatory and Development Authority of India (IRDAI) is to be considered here.
  2. Equity Linked Savings Scheme (ELSS) -
    This is a form of mutual fund where the returns are also entirely tax-free, thereby making it a lucrative investment option.
  3. Provident Fund -
    It includes all the investments made in Statutory Provident fund/Public Provident Fund/Recognized Provident Fund contributions.
  4. Savings Certificates -
    Contributions to the National Savings Certificates and Senior Citizens’ Savings Scheme.
  5. Fixed Deposits -
    Any investment made to fixed deposit with a lock in period of 5 years have a tax benefit of up to 1.5 lakh. Though the interest earned is taxable.
  6. Sukanya Samriddhi Yojana -
    If you have opened an account under this scheme for your daughter, get a complete tax benefit of 1.5 lakhs.
  7. Tuition fees
    Tuition fees paid to any university, college, school or other educational institution within India for full-time education for a maximum of two children have tax benefits.
  8. Home loan
    Home loan repayments including stamp duty, registration fee and other expenses, along with the money paid to DDA for purchasing a home under any scheme also qualifies for tax benefits.
  9. Pension Fund
    • Under Section 80CCC – Any investment into the pension or annuity funds from a taxable income is covered under this section. Here, the investment can be made up to 1.5 lakhs, but keeping into consideration that the total investment under 80C, 80CCC and 80CCD should not cross the 1.5 lakh mark. This tax deduction benefit is available only to individual taxpayers.
    • Under Section 80CCD – In this section, the investments made under central government pension schemes, notably the National Pension Scheme (NPS) and Atal Pension Yojana (APY) are included. However, in order to get this benefit, the employer’s contributions should not exceed 10% of your basic salary + dearness allowance. Here even an investment of 1.5 lakhs can be exceeded only in Tier-1 account of NPS by contributing an additional 50,000 rupees, thereby making 2 lakhs of investment.
As seen above, there are a host of investment options available to fully utilise tax deductions under Section 80C of the Indian Income Tax Act. Invest well and cut down on your tax liabilities.

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DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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