The Income Tax Act Section 80C: Exemption, Benefits, Goal, Eligibility & More
The Income Tax Act’s Section 80C: Read this blog to find out more about Section 80C of the Income Tax and how to claim a deduction under Section 80C. The Indian government introduced a number of deductions that allow taxpayers to benefit from tax exemptions on taxable income in an effort to promote investments and savings among Indian taxpayers. One such income tax law that helps eligible people to lower their tax liability is Section 80C deductions. A property buyer is eligible to apply for many redemptions under Section 80C of the Income Tax Act, including exemptions from the stamp duty and registration fees that must be paid when purchasing real estate.
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Section 80C of the Income Tax Deduction
What does Section 80C of the Indian Income Tax mean?
On April 1, 2006, Section 80C of the Income Tax went into effect. One of the most advantageous provisions of the Indian income tax law permits deductions for a variety of investment plans. Taxpayers who carefully consider their investments and invest in PPF, NSC, etc. are eligible to deduct up to Rs 1.5 lakh per year from their total taxable income. Only individual taxpayers & Hindu Undivided Families (HUFs) may use Section 80C. Corporate entities, partnership firms, and other enterprises are not eligible for a tax deduction under Section 80C.
Qualification for Section 80C
Hindu Undivided Families (HUFs) and individuals are both qualified for Section 80C deductions. Both Indian residents & non-resident Indians have access to this part of the Income Tax Act in India.
Investment-related deductions under Section 80C
In order to reduce your tax liability, you have a number of investing alternatives available to you under Section 80C of the Indian Income Tax Act. You can plan your investment intelligently & save tax under Section 80C by looking at the investment possibilities provided below:
| Investment Options | Lock-In Period (Minimum) | Rate of Interest (ROI) | Risk Rate |
| National Savings Certificate | 5 years | 6.8% | Low |
| Sukanya Samriddhi Yojana | 21 years | 7.6% | Low |
| Unit Linked Insurance Plan | 5 years | Ranging between 8% to 10% | Moderate |
| Senior Citizen Savings Scheme (SCSS) | 5 years | 7.40% | Low |
| National Pension System (NPS) | Till the age of 60yrs | 8% to 10% | High |
| Public Provident Fund | 15 years | 7.1% | Low |
| Fixed Deposit | 5 years | Upto 8.40% | Low |
| Equity Linked Savings Scheme (ELSS) | 3 years | Ranging between 12% and 15% | High |
Provident Fund
Your monthly salary will be automatically reduced by the amount for the Provident Fund (PF). Both the employee & the employer make PF contributions under this investment plan. Under Section 80C of the Income Tax Code, the employee’s PF contribution is eligible for deduction.
The ability of employees to make voluntary payments to their PF Account, also known as the Voluntary Provident Fund (VPF), is another advantage of the Provident Fund programme. Section 80C allows for tax deductions on both the VPF amount and its component.
Public Provident Fund
The Public Provident Fund is another investment strategy that qualifies for a deduction under Section 80C of the Income Tax Code. This investment choice is the most popular since it provides guaranteed profits. In the Public Provident Fund, the maturity time is 15 years, and the interest is compounded annually. You can donate as little as Rs. 500 towards the PPF plan and as much as Rs. 1.5 lakh.
Payment of the Life Insurance Premium
Under Section 80C of the Income Tax Act, you are entitled to a deduction for the premium you pay towards the life insurance policy you have acquired for your parents, spouse, or children. Additionally, you can combine your multiple life insurance plans to qualify for a Section 80C deduction worth up to Rs 1.5 lakh annually.
Equity Linked Savings Scheme (ELSS)
There aren’t many mutual fund investing plans created with tax savings in mind. The Equity Linked Savings Scheme (ELSS) is one of the most well-liked programmes. Under this programme, a person may claim an income tax deduction of up to Rs. 1.5 lakh.
Certificate of National Savings
NSCs, or National Savings Certificates, are another well-liked programme that allows people to reduce their tax obligations. A National Savings Certificate has a 5- or 10-year maturity period. There is no maximum investment amount in this certificate; the minimum is Rs. 100. Therefore, you can receive a National Savings Certificate for any amount you deposit in this programme.
Scheme for Sukanya Samriddhi
You can register an account for your girl kid under the Sukanya Samriddhi Scheme starting on the day she was born. The lowest investment amount in this programme is Rs 1,000, while the maximum investment amount is Rs 1.5 lakh. Any interest income from this scheme is also eligible for tax deductions under Section 80C of the Income Tax Act.
Stamp duty and property registration fees
The stamp duty & registration fees you incur when buying a property are deductible from your taxable income under Section 80C.
Rural Bonds Investment Plan of NABARD
The National Bank for Agriculture & Rural Development is known as NABARD. This investment plan offers two different types of bonds: Bhavishya Nirman Bonds and NABARD Rural Bonds. However, under Section 80C of the Income Tax Act, only NABARD Rural Bonds are permitted as a tax deduction. The deduction is only available up to a limit of Rs. 1.5 lakh.
Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme, a specific investment programme for senior citizens in India, has also been launched by the government. In comparison to other investment plans, this one offers rather attractive returns, and the Senior Citizen Savings scheme pays interest on a regular basis. People over 60 can invest in this programme and qualify for tax benefits of up to Rs 1.5 lakh.
Investment Plan for 5 Year Post Office Time Deposits
One of the most well-known and established investment plans is the Post Office Deposit Scheme. This investment plan resembles a fixed deposit plan that banks provide more. The post office deposit scheme has a term of one to five years, and under Section 80C of the Indian Income Tax Act, the interest earned on a five-year post office time deposit investment plan is tax deductible.
Section 80C of the Income Tax Act’s Subsections
It is time to look at the several sub-categories & the investments that are eligible for deductions after looking at the investment plans suitable for deductions under Section 80 of Income Tax:
| Sub-Section | Deduction | Limit of Deduction |
| Section 80E | Interest on education loan | Interest paid for 8 years |
| Section 80TTA (1) | A profit from the savings account’s interest | Up to Rs.10,000 |
| Section 80EE | Home loan interest (applied to first-time buyers) | Rs 50,000 |
| Section 80CCC | A pension payment from a fund listed in Section 10 (23AAB) that is put in LIC’s or any other insurer’s annuity plan may be deducted. | |
| Section 80CCD (1B) | A further deposit into the National Pension Scheme account | Rs 50,000 |
| Section 80CCG | Rajiv Gandhi Equity Scheme | Whichever is less: Rs. 25,000 or 50% of the amount invested in equity shares. |
| Section 80 TTB | Interest from banks, the post office, etc. is exempt. The only candidates are senior citizens. | Up to Rs.50,000 |
| Section 80DD | Medical care for dependents with disabilities | If the disability is greater than 40% but less than 80%, up to Rs. 75,000 may be claimed. Rs. 1.25 lakh can be claimed if it is higher than 80%. |
| Section 80GGB | Corporate Contribution to political parties | The contribution amount |
| Section 80CCD (1) | Contributions made by employees to their National Pension Scheme (NPS) accounts are limited to Rs. 1 lakh. | |
| Section 80G | Donations to socially conscious organisations | Donation given by any payment method other than cash of up to Rs. 2,000 |
| Section 80GGC | Individuals’ contributions to political parties | The contribution amount |
| Section 80CCD (2) | Employer’s Contribution to the National Pension Scheme Account | Up to 10% of the salary |
| Section 80D | Health Insurance | Rs.25,000 for oneself, one’s spouse, one’s children, and Rs.50,000 for parents who are at least 60 years old. |
| Section 80U | Self-disability suffering | In the event of a mental or physical disability (including blindness), Rs. 75,000; for those with severe disabilities, Rs. 1.25 lakh |
Conclusion of the Income Tax Act’s Section 80C
It is crucial to comprehend the various types of deductions under Section 80C of Income Tax as well as all other fine details involved if you are considering or are already repaying a loan for a home or your children’s college tuition, or if you invest in mutual funds or UTI that are eligible for deduction under Section 80C. You can claim deductions under Section 80C of the Income Tax Act, but you need to know how to minimise your tax liability.
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