Deduction under chapter VIA covers all the allowable deduction to be made while computing the total income. When we talk about the permissible deduction under chapter VIA, the first and the most popular section that comes to the mind is deduction under section 80C, which is taken up and explained thoroughly in the current article.

Categories of person to whom a deduction under section 80C is allowed –

Deduction under section 80C is permitted to the following categories of persons –

  • An individual; or
  • A Hindu Undivided Family (HUF).

List of allowable deduction –

Allowable deduction Important points to be noted
Life Insurance Premium The deduction is allowed provided –

  • In case of Individual – Life Insurance Policy is in the name of Individual or spouse or any child of such individual.
  • In case of HUF – Life Insurance Policy can be in the name of any member of HUF.
Unit Linked Insurance Plan (ULIP) The deduction is allowed provided –

  • In case of Individual – Contribution is in the name of Individual or spouse or any child of such individual.
  • In case of HUF – Contribution is in the name of any member of HUF.
Investment in Equity Linked Saving Scheme (ELSS) _
National Savings Certificate (NSC) _
Public Provident Fund (PPF) The deduction is allowed provided –

  • In case of Individual – Contribution is in the name of Individual or spouse or any child of such individual.
  • In case of HUF – Contribution is in the name of any member of HUF.
Employees’ Provident Fund (EPF) Contribution to recognized provident fund is allowed.
Fixed deposit with the bank Conditions –

1. A term deposit is for a fixed period of 5 years or more.

2. A term deposit is with the scheduled bank.

Deposit with the post office Allowable deduction – 5 year time deposit under the Post Office Time Deposit Rules.
Sukanya Samriddhi Yojna Scheme _
Tuition Fees Any tuition fees paid to any university or college or school or other educational institution situated in India is allowed.

Such tuition fees don’t include any development fees or donation.

In the case of an individual, tuition fees deduction is allowed for any two children.

Deferred Annuity Plan The deduction is allowed provided –

  • In case of Individual – Annuity is in the name of Individual or spouse or any child of such individual.
  • In case of HUF – Annuity is in the name of any member of HUF.

The deduction is allowed only if the annuity plan doesn’t contain an option for the insurer to receive a cash payment in lieu of the payment of the annuity.

The deduction is restricted to 1/5th of the salary, in case the sum is deducted from the salary of Government employee for securing the deferred annuity.

Principal repayment of Housing loan
  • Deduction towards principal repayment of housing loan taken for purchase / construction of a residential house is allowed.
  • Also, deduction of stamp duty, registration fee and other expense for the purpose of transfer of property to the assessee is allowed.
Miscellaneous –

  • Subscription to any notified securities or notified deposit scheme.
  • Subscription to any deposit scheme of the National Housing Bank.
  • Subscription to any deposit scheme of a public sector company engaged in providing long term finance for construction / purchase of houses in India for residential purpose.
  • Senior Citizens Savings Scheme.
  • Subscription to Home Loan Account Scheme
  • Contribution towards approved Superannuation Fund.
  • Subscription to notified bonds issued by the National Bank for Agriculture and Rural Development (NABARD)
  • Contribution towards notified annuity plan of LIC or units of UTI or units of notified Mutual Funds.
  • Subscription to equity shares or debentures forming part of any eligible issue of capital approved by the Board.
  • Contribution by an individual to any pension fund set up by any Mutual Fund.

Maximum allowable deduction –

The collective maximum allowable deduction under section 80C, section 80CCC and section 80CCD(1) cannot exceed INR 1.50 Lakhs.

Frequently Asked Questions (FAQ) –

1. What are the deductions under section 80c?

Deduction under section 80C is available to an individual and a HUF up to a maximum of INR 1.50 Lakhs. Various deductions like Life insurance premium, PF, fixed deposit, NSC etc. are deductions covered under section 80c.

2. Does PF deduction come under 80c?

Yes, PF deduction comes under section 80C.

3. Is HRA included of 80c?

No HRA is not included in deduction under section 80C. HRA is an exemption available as per provisions of section 10 (13A).

Can resident Indian and NRI both can claim deduction under section 80C?

Yes, both resident Indian as well as NRI is eligible to claim deduction under section 80C.

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5 Comments

  1. SANKARASUBRAMANIAN says:

    The maximum limit of Rs.1.50 Lakh was fixed several years back. If it is increased the assessees will be much pleased. Here senior citizens may be given some more exemption u/s.80C.

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