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Deductions Under Section 80 C in India

Section 80C Income Tax Deductions
April 07, 2017

Section 80C of the Income Tax Act provides avenues for income tax payers to directly reduce their taxable income to the tune of their contribution to the various permissible tax saving instruments under this section. Provisions for tax deductions on a number of payments, with both individuals and Hindu Undivided Families being eligible for these deductions can be availed. Eligible taxpayers can claim deduction under section 80C up to Rs 1.5 lakh per year. This amount can be a combination of deductions under section 80C, 80 CCC and 80 CCD.

The Income Tax Section 80C investments that are considered as eligible for tax deduction include payment made towards life insurance policies for yourself, your spouse or children, payment made towards a superannuation or provident fund, tuition fees paid to educate a maximum of two children, payments made towards construction or purchase of a residential property, payments made towards a tax saver fixed deposit with a minimum tenure of 5 years and also a number of additional deductions like investment in mutual funds, senior citizens saving schemes, purchase of NABARD bonds, etc.

There are also various subsections under Section 80C such as section 80 CCC that provides scope for tax deductions on investment in pension funds. Such pension funds can be availed from any insurer and a maximum deduction limit of Rs 1.5 lakh can be claimed here too. However, only individual taxpayers are eligible for this deduction. The return on investment from such pension schemes is usually exempt from tax as per the tax structure in India.

Under Section 80 CCD, incentives for investing in pension schemes initiated by the Central Government are available. These are primarily meant to encourage savings and contributions made by an individual and his/her employer are both are eligible for tax deduction, provided that this deduction is less than 10% of the salary of the person. Again, only individual taxpayers are eligible for this deduction in taxable income.

Both Hindu Undivided Families and Individuals can utilize Section 80 CCF, which contains provisions for tax deductions on subscription of long-term infrastructure bonds which have been notified by the government. The maximum deduction under this Section is capped at Rs 20,000.

Finally, Section 80 CCG of the Income Tax Act permits a maximum deduction of Rs 25,000 per year, with specified individual residents eligible for this deduction. Investments in equity savings schemes notified by the government are permitted for deductions such as Rajiv Gandhi Equity Savings Scheme or RGESS, subject to the limit being 50% of the amount invested.

Thus, the section 80C of the Income Tax act, various avenues for saving tax as well as making long term investments for retirement saving are provided that individuals can use to pay as less income tax as possible depending on the income bracket and corresponding income tax rate that fall under.Using insurance plans, equity linked savings schemes and more, one can not only save on tax but also get high returns depending on their appetite for risk.

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