List of Various Deductions Under Section 80C – Tax Saving Guide

Section 80C of the Income Tax Act, 1961, provides taxpayers with an opportunity to reduce their taxable income by claiming deductions for certain investments, expenses, and payments. This section encourages individuals to save and invest for their future while simultaneously reducing their tax liability. In this tax-saving guide, we will provide a comprehensive list of various deductions available under Section 80C and explain the eligibility criteria and limits associated with each deduction.

1. Life Insurance Premium:

Premiums paid for life insurance policies, whether for self, spouse, or children, are eligible for deduction under Section 80C. The following points should be noted:

• The policy should be in the name of the individual, spouse, or any child (including stepchildren).
• The deduction is applicable only for policies issued by an approved insurance provider.
• The maximum deduction allowed is up to Rs. 1.5 lakh.

2. Employee Provident Fund (EPF):

Contributions made by salaried individuals towards their Employee Provident Fund (EPF) are eligible for deduction under Section 80C. The key details are as follows:

• The employee’s contribution towards EPF qualifies for the deduction.
• The maximum deduction allowed is up to Rs. 1.5 lakh.

3. Public Provident Fund (PPF):

Investments made in a Public Provident Fund (PPF) account are eligible for deduction under Section 80C. The following details should be noted:

• Contributions made to a PPF account, including the interest earned, qualify for the deduction.
• The current maximum limit for PPF contributions is Rs. 1.5 lakh per financial year.

4. National Savings Certificate (NSC):

Investments made in National Savings Certificates (NSCs) are eligible for deduction under Section 80C. The key points are:

• NSCs have a fixed maturity period, and the interest earned is taxable.
• The invested amount and interest accrued up to the date of maturity qualify for the deduction.

5. Tax-saving Fixed Deposits (FDs):

Investments made in tax-saving fixed deposits offered by banks for a minimum period of five years are eligible for deduction under Section 80C. Consider the following:

• Only specific banks offer tax-saving fixed deposits.
• The maximum deduction allowed is up to Rs. 1.5 lakh.

6. Equity-linked Saving Scheme (ELSS):

Investments made in Equity-linked Saving Schemes (ELSS) offered by mutual funds are eligible for deduction under Section 80C. Consider the following:

• ELSS investments have a lock-in period of three years.
• The returns earned on ELSS investments are subject to capital gains tax.

7. Tuition Fees:

Deductions can be claimed for tuition fees paid for the education of up to two children. The following details should be noted:

• The deduction is applicable for full-time courses in any educational institution in India.
• The maximum deduction allowed is up to Rs. 1.5 lakh.

8. Repayment of Home Loan Principal:

Repayment of the principal amount on a home loan is eligible for deduction under Section 80C. The key points are:

• The deduction is available only for the principal component of the home loan EMI.
• The property should not be sold within five years from the date of possession.

9. Senior Citizen Savings Scheme (SCSS):

Investments made in the Senior Citizen Savings Scheme (SCSS) are eligible for deduction under Section 80C. Consider the following details:

• The scheme is available to individuals aged 60 years or above.
• The maximum deduction allowed is up to Rs. 1.5 lakh.

10. Sukanya Samriddhi Yojana (SSY):

Investments made in the Sukanya Samriddhi Yojana (SSY) for the welfare of the girl child are eligible for deduction under Section 80C. The key points are:

• The scheme is available for girls aged 10 years or younger.
• The maximum deduction allowed is up to Rs. 1.5 lakh.

11. Five-year Fixed Deposit with Post Office:

Investments made in a five-year fixed deposit with the post office are eligible for deduction under Section 80C. Consider the following details:

• The interest earned is taxable.
• The maximum deduction allowed is up to Rs. 1.5 lakh.

12. Contribution to Employee’s Provident Fund (EPF) by Self-employed:

Self-employed individuals can claim a deduction for their contributions to their own Employee’s Provident Fund (EPF) account. The following points should be noted:

• The maximum deduction allowed is up to Rs. 1.5 lakh.
• The EPF account should be in the individual’s name.

Conclusion:

Section 80C offers taxpayers an array of deductions that encourage savings and investments while reducing their tax burden. Understanding the eligibility criteria, limits, and requirements associated with each deduction is crucial for taxpayers to make the most of these tax-saving opportunities. It is advisable to consult a tax professional or refer to the Income Tax Act and related guidelines to ensure accurate and compliant utilization of Section 80C deductions.