• Feb
  • 27
  • 2014

Investments which qualifies for deduction u/s. 80C

Posted In Income Tax | , | 77 Comments » Print Friendly and PDF

CA Sandeep Kanoi

Under this section, you can invest a maximum of Rs l lakh and if you are in the highest tax bracket of 30%, you save a tax of Rs 30,000. The various investment options under this section include:

Public Provident Fund (PPF):  Interest earned is fully exempt from tax without any limit. Annual contributions qualify for tax rebate under Section 80C of income tax. Contributions to PPF accounts of the spouse and children are also eligible for tax deduction. Balance in PPF account is not subject to attachment under any order or decree of court. But, Income Tax authorities can attach the account for recovering tax dues. The highest amount that can be deposited is 1,00,000. Tax bracket for PPF is EEE (i.e. Exempt,Exempt,Exempt). So contribution is exempted under 80C, Interest earned is tax exempted and withdrawal is also tax exempted.

One can withdraw the investment made in 1st year only in 7th year. However, loan against investment is available from 3rd financial year. If liquidity is not an issue, you should invest as much as you can in this scheme before looking for other fixed income investment options.

Life Insurance Premiums:
Any amount that you pay towards life insurance premium for yourself, your spouse or your children can also be included in Section 80C deduction. Please note that life insurance premium paid by you for your parents (father / mother / both) or your in-laws is not eligible for deduction under section 80C. If you are paying premium for more than one insurance policy, all the premiums can be included. It is not necessary to have the insurance policy from Life Insurance Corporation (LIC) – even insurance bought from private players can be considered here.

Equity Linked Savings Scheme (ELSS): There are some mutual fund (MF) schemes specially created for offering you tax savings, and these are called Equity Linked Savings Scheme, or ELSS. The investments that you make in ELSS are eligible for deduction under Sec 80C. Equity Linked Saving Schemes (ELSS) of mutual funds are diversified equity funds that have a lock-in period of three years and provide tax benefit. Since a major portion of the corpus is invested in equities / equity stock markets , the earning potential is higher (though at a higher risk) as compared to other tax saving investments. Investors can invest up to 1,00,000 in an ELSS fund and deduct the investment from their taxable income u/s 80C of Income Tax Act, thereby effectively reducing their tax liability. Long-term capital gains and dividends received on these investments are tax-free in the hands of the investor as per the current tax laws.

Provident Fund (PF) & Voluntary Provident Fund (VPF) : PF is automatically deducted from your salary. Both you and your employer contribute to it. While employer’s contribution is exempt from tax, your contribution (i.e., employee’s contribution) is counted towards section 80C investments. You also have the option to contribute additional amounts through voluntary contributions (VPF).

Home Loan Principal Repayment: The Equated Monthly Installment (EMI) that you pay every month to repay your home loan consists of two components – Principal and Interest.The principal component of the EMI qualifies for deduction under Sec 80C. Even the interest component can save you significant income tax – but that would be under Section 24 of theIncome Tax Act. Please read “Income Tax (IT) Benefits of a Home Loan / Housing Loan / Mortgage”, which presents a full analysis of how you can save income tax through a home loan.

Stamp Duty and Registration Charges for a home: The amount you pay as stamp duty when you buy a house, and the amount you pay for the registration of the documents of the house can be claimed as deduction under section 80C in the year of purchase of the house.

National Savings Certificate (NSC): National Savings Certificates popularly known as NSC is a saving bond , primarily used for small saving and income tax saving investment in India, part of the Postal savings system of Indian Postal Service (India Post). These can be purchased from a post office by an adult in his own name or in the name of a minor, a minor, a trust, two adults jointly.These are issued for five and ten year maturity and can be pledged to banks for availing loans.  The interest accrued every year is liable to tax (i.e., to be included in your taxable income) but the interest is also deemed to be reinvested and thus eligible for section 80C deduction.

Infrastructure Bonds: These are also popularly called Infra Bonds. These are issued by infrastructure companies, and not the government. The amount that you invest in these bonds can also be included in Sec 80C deductions.

Pension Funds – Section 80CCC: This section – Sec 80CCC – stipulates that an investment in pension funds is eligible for deduction from your income. Section 80CCC investment limit is clubbed with the limit of Section 80C – it maeans that the total deduction available for 80CCC and 80C is Rs. 1 Lakh.This also means that your investment in pension funds upto Rs. 1 Lakh can be claimed as deduction u/s 80CCC. However, as mentioned earlier, the total deduction u/s 80C and 80CCC can not exceed Rs. 1 Lakh.

5-Yr bank fixed deposits (FDs): Tax-saving fixed deposits (FDs) of scheduled banks with tenure of 5 years are also entitled for section 80C deduction.

Senior Citizen Savings Scheme 2004 (SCSS): A recent addition to section 80C list, Senior Citizen Savings Scheme (SCSS) is the most lucrative scheme among all the small savings schemes but is meant only for senior citizens. An individual who has attained the age of 60 years or above on the date of opening of a/c or an individual who attained the age of 55 years or more and who has retired under VRS/SPL. VRS, can open an account individually or jointly with spouse. A retired personnel of Defence Services (excluding Civil Defence Employees) can subscribe to the scheme irrespective of the age limit subject to fulfilment of specificed conditions. Account can be closed after expiry of 5 years from the date of opening of account and account can be extended for next 3 years. Premature closure is permissible after one year subject to certain conditions. Deposits qualify for deduction u/s 80-C of Income Tax Act on the deposits made in new accounts opened on or after 8th December 2007.

Current rate of interest is 9.20% per annum payable quarterly. Please note that the interest is payable quarterly instead of compounded quarterly. Thus, unclaimed interest on these deposits won’t earn any further interest. Interest income is chargeable to tax.

5-Yr post office time deposit (POTD) scheme: POTDs are similar to bank fixed deposits. Deposits in 5 year time deposit qualify for deduction under section 80-C of Income Tax Act on the deposits made in new accounts opened on or after 8th December 2007. The Interest is entirely taxable.

NABARD rural bonds:  The Finance Act, 2007 inserted clause (xxii) in sub-section (2) of section 80C of the Income-tax Act to provide that deposits made in  bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by notification in the Official Gazette, specify in this behalf, shall be eligible for deduction under the said section. There are two types of Bonds issued by NABARD (National Bank for Agriculture and Rural Development): NABARD Rural Bonds and Bhavishya Nirman Bonds (BNB). Out of these two, only NABARD Rural Bonds qualify under section 80C.

Unit linked Insurance Plan: ULIP stands for Unit linked Saving Schemes. ULIPs cover Life insurance with benefits of equity investments. They have attracted the attention of investors and tax-savers not only because they help us save tax but they also perform well to give decent returns in the long-term.

  • Contribution for participating in the unit-linked insurance plan (ULIP) of LIC Mutual Fund (i.e. Dhanraksha plan of LIC Mutual Fund)
  • Payment for notified annuity plan of LIC (i.e. Jeevan Dhara, Jeevan Akshay New Jeevan Dhara ,etc ) or any other insurer.
  • Contribution for participating in the Unit-Linked Insurance Plan (ULIP) of Unit Trust of India.

Tuition Fees :- Any sum paid as tuition fees to any university/college/educational institution in India for full time education. Nowadays most of  income tax payee have to incur quite high payments  towards the education fees of their  children .  The expenditure incurred on education fees is  eligible for a deduction under Income Tax Act,   So, if you are incurring expenditure towards education fee of your children, please check whether these are eligible for deduction under the IT Act.

(Republished with amendments)

Read our Earlier post for detailed Analysis of Section 80C

All about deduction under section 80C and tax planning


77 Responses to “Investments which qualifies for deduction u/s. 80C”

  1. Ajay Malhotra says:

    Lic has launched varistha pension policy for sr citizens. Is it will be under section 80 c

  2. Mehul Damania says:

    I have purchase NSC in the name of my son who is minor, just wanted to know whether i can claim deduction under section 80 c

  3. Vadivel says:

    Loan taken in joint name can be claimed for deduction in the hands of first holder of the loan and not the joint holder.

  4. manimegalai says:

    whether housing loan taken in joint names of self & spouse are eligible for sec 24 & 80 C in the hands of both(property in the name of self)

  5. subhadip ghosh says:

    sir,
    i want to know that if i purchased n.s.c along with my mothers name as first applicant and second name to me then if i able to tax deductions benefit under 80 c or not?
    from
    Subhadip Ghosh

  6. sarath valsalan says:

    Sir,
    I would like to know if i can claim benefits for the amount put in PPF in this Financial year if i have closed the PPF.

  7. sanjay says:

    Can I claim Postal Life Insurance premium for tax saving under Sec. 80c

  8. vimal says:

    Dear Sir,

    i want to know if i have taken lic policy in my name and my husband paid the premium amount then who can claim the tax benefit also want to know who cab pay premium for other if the policy in his/her name

  9. svvarma says:

    Tuition fees paid by the Grandparents for their grandchildren whether can be claimed as deduction under Section 80C

  10. jai says:

    Sir
    I want to know that national saving institue govt of india covere in section 80 c or not

  11. RAMESH L BHANUSHALI says:

    A person is getting full time education and taking home tuitions at spare time in addition to that he is having interest income, total income become taxable,He can claim the amount paid to college for himself , can he claim that amount u/s 80C?

  12. Kulbir Verma says:

    I have booked a flat which is under construction and I have taken a home loan on that flat. Can I avail tax benefit on that loan? What is actual law to avail tax benefit on home loan? Please clarify.

  13. Amar says:

    Hi ,

    I would like to know 5 year of RD A/C from HDFC bank can have 80C deduction. Please let me know

  14. Romesh says:

    My wife has a savings A/C in SBI and I wanted to do a FD for my son. Will I benefit from the tax exemptions as the A/C is not in my name?

  15. N.V.B.RAO says:

    Sir

    I have made deposit in monthly recurring deposit with Post office. I would like to know, deposit may allow for deduction U/s 80C or not?

  16. R K Mundhra says:

    I want to deposit Rs 100000/ each to my two minor daughter’s P P F a/c. Please let me know if I am entitled to deduction u/s 80C and also am I entitled to interest on the said deposits.

  17. Venkatesh says:

    Hi Sir,

    I just want to know, if the interest income of Fixed deposit exceeds the exemption limit of 200000, say for example if I get 2.5 lacs as interest from FD. Can I get tax exemption under 80C, if I invest the rest 50000 in any tax saving mutual fund. That is till 2Lacs tax is nill, and if I invest the rest 50thousand in mutual fund, I can get tax exception under 80C on full interest amount?. Please help

    Regards
    Venkatesh

  18. Anant Dhavale says:

    The Contribution to National Pension Scheme by Individual is tax exempted but under which section exactly?

  19. mitul shah says:

    hi sir,

    if i invest in 80 c through my son minor account in mutual fund elss scheme, i can claim in my 80c tax exemption limit

  20. SACHIN TYAGI says:

    SIR
    I PURCHASED A PLOT FOR MAKING HOUSE AND PAID RS.43500/- FOR STAMP DUTY AND 10100/- FOR REGISTRATION ON 28TH FEB,2014. CAN I CLAIM THIS FOR THE INCOME TAX EXEMPTION UNDER SEC 80C. AS I HAVE ALREADY COMPLETED MY INVESTMENT FOR THIS YEAR SO CAN I CLAIM THIS AMOUNT FOR THE NEXT FINANCIAL YEAR.

  21. rajneesh says:

    sir ,i whould like to know,that can a person take deduction of 80c when he paid lic premium by mode of cash payment.

  22. Ganesh says:

    I am a salaried person and couldn’t make timely submission of about 40k proofs to claim 1lakh 80C benefits from office.
    Now, I have all proofs to claim complete 1lakh 80C benefits, but its too late for office submissions but instead it is time for IT returns.
    Can I account this during IT returns now and claim a refund ?

  23. Nagendra says:

    Interest paid on delayed payment of Insurance premium is not allowable U/S 80 C as deduction

  24. Rajendra says:

    Whether Interest paid on delayed payment of Insurance premium is allowable U/S 80 C

  25. Praveen says:

    Hi,
    can you please let me know if i can invest in Tax saver FD in my spouse’s name and claim exemption for it ?? i remember reading it somewhere in the internet.

    Thanks

  26. praveen says:

    R/sir/madam

    i would like to know that 5 year post office recurring deposit is covered under tax rebate or no and if it covered then it comes under which section.

    this is in name of my wife

    can i take rebate of that or not.

  27. naresh says:

    sir,
    i would like to know, the post office recurring deposit account can comes under tax deduction.

  28. hem raj says:

    repayment of ppf instalment is taxable or not

  29. karteek says:

    sir,
    An assessee is having a deposit with him, but is in the name of his sister, the amount was invested by him only in that deposit.
    Whether that assessee can claim exemption under section 80 c for the amount he deposited in that fixed deposit.

  30. sujata james says:

    I have a to know whether the amount invested in post office recurring deposit eligible for tax deduction under section 80

  31. Mahesh Kumar says:

    Sir,

    I had already submitted my investement proof in my company which i had declared in the beginning of the fin year 2012-13.

    But I have taken 2 different insurence policies in the last week of Feb 2013.

    Can i declare the 2 policies in next financial year 2013-14?

  32. ANAND says:

    Sir,

    I have investment in One of ELSS mf . & paid the amount last yr and it is in locking period for 3yrs so can i claim deduction u/s 80c, every year (3yrs)
    or it should be for 1 year in which i have paid. Pls advice.

    Thx

  33. A K Bhat says:

    i am pensioner annual gross pension 3.10lac also sen citzn ins prem yearly 25000 am i taxable home consum loan instalment rs 5200 commutition ded 2300 rs

  34. VENKATESH says:

    WHETHER WIFE’S SSS PREMIUM DEDUCTIONS CAN BE CLAIMED AS DEDUCTION UNDER SECTION
    80 C BY HUSBAND?

  35. KMURTHY says:

    dear sir,

    i have salry 28000 pm and monthly deduction pf can take exmpt tax or not and my wife is dependent on me so i paid monthly lic amont rs 2080 so i can take for exmpt tax…?

  36. sumana says:

    do we get deduction of contribution made into VPF even if we have left service in that particular year.

  37. Abhay says:

    can i claim deduction u/s 80C for principal Repayment for my housing loan for which construction is going on/property is purchased however not registered or possession not taken?

  38. Sunil Kumar says:

    I have 5 year RD with HDFC bank. Could I claim 80C exemption on that or not?

  39. shiva says:

    money deposited in father’s account who is senior citizen, will this deposit get exempt?

  40. SC BANAWAL says:

    Dear sir
    I want to know section 80 TTA is applicable in yr 2012-13 assessment yr 2013-14 or not

  41. ELAMARAN says:

    Dear Sir,

    i paid every month EMI Rs.3499/- for 2wheeler loan totaly 23month, incurred interest also, so can i get Tax exemptions. that has come under 80c? because am getting salary Rs.17600/-(Take home) per month.

    So please clarify and reply me

    Thanks&Regards
    Elamaran

  42. chitrak says:

    dear sir / madam,

    U/s. 80 c FD in nationalized bank for fix for 5 years or more then 5 year allowed as deduction ?

    i have 1 FDR 50000/- for 108 month can i take benefit for deduction in f. y. 2011-12 ?

  43. CA Sunil Behl says:

    An error above. Infrastructure Bonds are not covered u/s 80C but the invested amount in these bonds is deductible u/s 80CCF upto Rs. 20000, over and above the deduction u/s 80C. Nevertheless, the benefit u/s 80CCF is not available from AY 2013-14, unless the benefit is extended by Budget 2013.

  44. HIMANSHU SHEKHAR says:

    Dear Sir,
    I have given money to my wife to invest in ELSS tax saver plan through Demat a/c
    in her name as she was working but remained on leave during the current FY.
    So she is not going to claim Tax exemption on the same investment from her employer.
    Can I claim Tax exemption on the same investment as the money has been given by me for
    investing in ELSS.

    Regards,
    Himanshu Shekhar
    9419161058

  45. Sudhir Harsule says:

    I have a taken education loan of Rs. 25 lacs for my son for his higher studies at University of California, Santa Barbara, California, USA from Credla Financial Institute for MS (Master of Science). Will the interest accrued is expempted from the income tax? if yes, under which provision?

  46. vinod kumar says:

    please make me detail about equity linked savings scheme

  47. Subrahmanian says:

    Can i get tax exception for post office five year depoite payed for my mother by me

  48. devendra kumar says:

    Is the tax rebate under 80DD, to the tax payee having a disabled dependent,  is given in lump-sum or the proof of expenses (80DDa) incurred on the medical treatment, rehabilitation, training  of the disabled etc.  or policy(s) for the benefits of dependent (80DDb) are required.

  49. Shibashis says:

    Hello Sir,
    My employer deducts an amount from my monthly salary as EPF contribution. When I inquired about VPF contribution, my employer said our EPF trust does not have that feature, hence I can not make VPF deduction directly from my salary.
    Please tell me in my case how can I enroll for VPF contributions.
    Is it possible to directly do the contributions via RPFO (regional provident fund office)?

  50. K K Nanda says:

    Under LIC premium, it is not mentioned whether premium amount paid for FY 2012-13 should be 10% of sum assured can be taken under 80C deductions. I was having opinion it is 20% earlier but from 01 04 12 it has become 10%. Will u please clarfy?

  51. Chandrahash Chaudhary says:

    Crisp note on 80C on investments.

  52. Adithya says:

    Doubt on this:”Any amount that you pay towards life insurance premium for yourself, your spouse or your children can also be included in Section 80C deduction.”

    I heard to get the tax exemption for the wife’s life insurance it has to be paid by the husband through his cheque. Is it correct? What should be the mode of payment to get wife’s investment tax exemption.

  53. MAYUR says:

    Hi

    I have a Recurring deposit of Rs 10000 per month upto 5 years at 9.5% interest rate.
    Overall my investement will become Rs 6lkhs and Maturity amount is Rs 7,68,753
    Iam getting the additional amount of Rs 1,68,753 after 5th year.

    Since Recurring deposit amount is taxable ,My question is , should i pay tax once after 5th year Rs 16,875.3(Assume 10% tax bracket).
    Or should i pay tax every year 5 times by calculating the additional amount for evey year.

  54. sagar datta says:

    i want tax planning for my cousin to save tax from housing loan and investments in life insurance scheme and to get maximum benifit by saving TDS from his salary.

  55. Harshit says:

    Is it necesary for me to become Proposed Policy Holder (PPH) in policy to be taken on Son’s name to save tax u/s 80.C for me?

  56. K.S Krishna Bhatta says:

    Is Peerless MF Child Plan eligible for deduction u/s 80c. And for HRA computation Purpose is D.A is also to be considered as part of the salary.

  57. Amit Surpuriya says:

    For Investing in All Infrastructure Bonds – Contact – Amit Surpuriya – 9850873688 – Pune
    KSHITIJ FINANCIAL SERVICESMutual Fund | Tax Planning | Infrastructure Bond | 54EC Capital Gain Bond | Medi-Claim | Company Fixed Deposit

  58. komal says:

    Can a daughter get IT deduction under 80c to the premium paid for ULIP policy taken in the name of mother for 2011-12 year?

  59. Neha says:

    If an employee retires from the services of the corporation and wants to maintain his/her PF account with the employer self managed trust.Is employer can retain the PF amount of the Employee on superannuation and if yes for how long??????

  60. Nimit says:

    Thank you very much it is very usefull
    once again thankyou
    Nimit

  61. sandeepa says:

    i would like to know that 5 year post office recurring deposit is covered under tax rebate or no and if it covered then it comes under which section please let me know at the earliest

  62. sandeepa says:

    i would like to know that 5 year post office recurring deposit is covered under tax rebate or no and if it covered then it comes under which section

  63. admin says:

    No. Only in the year of investment the same can be claimed u/s. 80C.

  64. Dinesh says:

    Hi,

    I Have Opened FD with UBI (Tax Saving) for 5 years but i do not want to claim it under section 80C in the current FY 2010-2011.

    Can i claim this FD in the next financial year (2011-2012)

    Dinesh

  65. Sachin Bhagat says:

    Hi, I am having two questions:
    1) I have signed an agreement for new flat in the month of Feb’11 can I claim this in the next financial year undet 80 C.
    2) I have availed a Home Loan in which I have my wife as co-applicant. What type of statement do I request from the Bank where I want to claim tax benefit for both of us. Is it only one statement provided by the bank and we can claim whatever proportion we are fine amongst us.

  66. Sachin says:

    I booked a flat which is under construction & paid a stamp duty & registration charges also. so can i take a benefit of that deduction for my income tax calculations

  67. Girish says:

    I have one query.
    My wife is dependent on me.
    So whether I get tax benefit on the PPF investment done on her name?

  68. neeraj kumar sharma says:

    it’s neccessary to open a/c in post office. than i got nsc. please tell me.

    thanks & regards
    Neeraj Kumar Sharma

  69. Anil says:

    pl update ur home page and specif the VPF max %

  70. kapoor says:

    Is the investment in PF made from income of previous year eligible under 80C

  71. CA Sandeep Kanoi says:

    Yes . He can

  72. DILEEP DUBEY says:

    sir ,i whould like to know,that can a person take deduction of 80c when he paid lic premium by mode of cash payment.

  73. Gurusubramanian says:

    whether service tax paid on the life insurance premium is eligible for 80C and rebly the same for 80D also?

  74. Kalyanaraman says:

    Whether late payment fee paid to LIC also qualifies for 80C deduction, since the terms used are “any sum paid to ..keep in force” ?

  75. Sreekanth says:

    Dear Sir,

    whenever resign my job after i will drawn the PF from the previous employer, it is taxable income or not.

  76. CA Sandeep Kanoi says:

    Yes he can.

  77. susheel says:

    Sir,

    I would like to know, can a person claim deduction u/s. 80C, of the Stamp duty & regn. chgs. paid even he has not taken a loan but self financed it

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