CA Sandeep Kanoi

CA Sandeep KanoiSection 80C – Eligible Investments and Expenses for Individual Assessee

Deduction Under section 80C for Financial Year 2014-15 and 2015-16 / Assessment Year 2015-16 and 2016-17  in respect of Life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc. 

Section 80C, entitles an Individual Assessee to deductions for the whole of amounts paid or deposited  in  the  current  financial  year  in  the  following  schemes, subject  to  a  limit  of Rs. 1,50,000/-:

(1)  Payment of insurance premium to effect or to  keep in force  an  insurance on the life of the individual, the spouse or any child of the individual.

(2)  Any  payment made to effect or to keep in force  a  contract for a deferred annuity, not being an annuity plans is referred to in item (7) herein below on the lifeof the individual,  the  spouse or any child  of  the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment  in lieu of the  payment  of  the annuity;

(3)  Any sum deducted from the salary payable by, or, on  behalf  of  the Government to any individual, being  a  sum deducted  in accordance with the conditions of his  service for the purpose  of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum deducted does not exceed 1/5th of the salary;

(4) Any contribution made:

(a) by an individual to any Provident Fund to which the Provident Fund Act, 1925 applies;

(b) to  any  provident  fund  set  up  by  the  Central Government, and notified by it in this behalf  in the Official Gazette, where such contribution is to an  account standing in the name of an individual, or spouse or children;

[The  Central  Government  has  since  notified  Public  Provident  Fund  vide Notification S.O. No. 1559(E) dated 3.11.05]

(c) by an employee to a Recognized Provident Fund;

(d) by an employee to an approved superannuation fund;

It  may be noted that “contribution” to any Fund  shall not include any sums in repayment of loan or advance;

(5) Any subscription:-

(a) to  any such security of the Central Government or  any  such deposit scheme as the Central  Government may, by  notification  in  the  Official  Gazette, specify in this behalf;

(b) to any such saving certificates as defined  under section  2(c) of the Government Saving Certificate Act, 1959 as the Government may, by notification in the Official Gazette,  specify  in  this  behalf.

[The  Central  Government  has  since  notified  National  Saving  Certificate (VIIIth Issue) vide Notification S.O. No. 1560(E) dated 3.11.05and National Saving Certificate (IXth Issue) vide Notification . G.S.R. 848 (E), dated the 29thNovember, 2011, publishing the National Savings Certificates (IX-Issue) Rules, 2011 G.S.R.  868 (E),  dated  the  7th  December,  2011,  specifying  the National Savings Certificates IX Issue as the class of Savings Certificates F No1-13/2011-NS-II r/w amendment Notification No.GSR 319(E), dated 25-4-2012]

(6)  Any  sum  paid as contribution in the case  of  an individual, for himself, spouse or any child,

a.for  participation  in the Unit  Linked  Insurance  Plan, 1971 of the Unit Trust of India;

b. for  participation  in any  unit-linked  insurance  plan  of  the  LIC  Mutual Fund  referred  to  section  10  (23D)  and  as  notified  by  the  Central Government.

[The Central Government has since notified Unit Linked Insurance Plan (formerly known as Dhanraksha, 1989) of LIC Mutual Fund vide Notification S.O. No. 1561(E) dated
3.11.05.]

(7)  Any subscription made to effect or keep in force a contract for such annuity plan of  the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify;

[The Central Government has since notified New Jeevan Dhara, New Jeevan Dhara-I, New Jeevan Akshay, New Jeevan Akshay-I and New Jeevan Akshay-II vide Notification S.O. No. 1562(E) dated 3.11.05 and Jeevan Akshay-III vide Notification S.O. No. 847(E) dated 1.6.2006 ]

(8) Any subscription made to any units of any Mutual Fund, of section 10(23D), or from  the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002 under  any  plan formulated  in  accordance with any scheme as  the  Central Government,  may, by notification in the Official  Gazette, specify in this behalf;

[The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]

The investments made after 1.4.2006 in plans formulated in accordance with Equity Linked Saving Scheme, 1992 or Equity Linked Saving Scheme, 1998 shall also qualify for deduction under section 80C.

(9)Any  contribution made by an individual to  any  pension  fund  set  up by any Mutual Fund  referred to in  section 10(23D), or, by the Administrator or the specified company defined in  Unit  Trust  of  India  (Transfer  of  Undertaking  &  Repeal)  Act,  2002,  as  the  Central Government  may,  by notification in  the Official Gazette, specify in this behalf;

[The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]

(10)  Any subscription made to any such deposit  scheme of, or,  any contribution made to any such pension fund set  up by, the National Housing Bank, as the Central Government may,  by notification in the Official Gazette, specify  in this behalf;

(11) Any subscription made to any such deposit  scheme, as the Central Government  may,  by notification in the Official  Gazette, specify  for  the  purpose of being floated by  (a)  public sector companies  engaged  in  providing  long-term finance  for  construction  or  purchase  of houses in India for residential purposes,  or, (b) any authority constituted in India  by,or, under any  law,  enacted  either for  the  purpose  of  dealing with and  satisfying the  need  for housing  accommodation or for the purpose of planning,development or improvement of cities, towns and villages, or for both.

[The Central Government has since notified the Public Deposit Scheme of HUDCO vide Notification S.O.No.37(E),dated11.01.2007,for the purposes of Section 80C(2)(xvi)(a)].

(12)  Any sums paid by an assessee for the purpose of purchase or construction of a residential house property, the income from which is chargeable to tax under thehead “Income from house property” (or which would, if it has not been used  for  assessee’s own residence,  have been chargeable to tax under that head) where such payments are made towards or by way of any instalment or part payment of the amount due under any self- financing or other scheme of any Development Authority,  Housing Board  etc.

The deduction will also be allowable in respect of re-payment of loans borrowed by an assessee from the Government,  or any bank or Life Insurance Corporation, or National Housing Bank,  or certain other categories of institutions  engaged in the business  of  providing long term  finance  for construction or purchase of houses in India.  Any repayment of loan borrowed from the employer will also be covered, if the employer happens to be a public company, or a public sector company,  or  a university established by law, or  a  college affiliated  to  such university, or a local authority, or a  cooperative society, or an authority, or a board, or a corporation, or any other body established under a Central or State Act.

The stamp duty, registration fee and other expenses incurred for the purpose of transfer  shall also  be  covered.Payment  towards  the  cost  of  house property,  however, will not include, admission fee or cost of share  or initial deposit or the cost of any addition or alteration  to,  or, renovation  or repair  of  the  house property  which  is  carried  out after the  issue  of  the completion certificate by competent authority, or after the occupation of the house by the assessee or after  it  has been  let out.  Payments towards any expenditure in respect of which the deduction is allowable under the provisions of  section  24 of the Act will also not be included in payments towards the cost of purchase or construction of a house property.

Where the house property in respect of which deduction has been allowed under these provisions is transferred  by the tax-payer at any time before the expiry of five  years from the end of the financial year in  which possession  of  such  property  is obtained by  him  or  he receives back,  by  way of refund or  otherwise,  any  sum specified in section 80C(2)(xviii), no deduction  under  these  provisions  shall  be  allowed  in  respect  of  such  sums  paid  in  such previous  year in which the transfer is made and  the aggregate amount of deductions of income so allowed in the earlier years shall be added to the total income of the assessee of such previous year and shall be liable to tax accordingly.

(13) Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee.

Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, pre- nursery and nursery classes.

It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature.

(14)  Subscription  to  equity shares  or  debentures forming  part of any eligible issue of capital made by a public company, which is approved by the Board or by any public finance institution.

(15)  Subscription  to  any units of  any  mutual  fund referred  to in clause (23D) of Section 10 and approved  by the Board, if the amount of subscription to such units is subscribed only in eligible issue of capital of any company.

(16) Investment as a term deposit for a fixed period of not less than five years with a scheduled bank, which is in accordance with a scheme framed and notified by the Central Government, in the Official Gazette for these purposes.

[The Central Government has since notified the Bank Term Deposit Scheme, 2006 for this purpose vide Notification S.O. No. 1220(E) dated 28.7.2006]

(17)  Subscription  to  such  bonds  issued  by  the  National  Bank  for Agriculture and Rural Development, as the Central Government may, by such notification in the Official Gazette, specify in this behalf.

(18) Any investment in an account under the Senior Citizens Savings Scheme Rules, 2004.

(19) Any investment as five year time deposit in an account under the Post Office Time Deposit Rules, 1981.

B.  Section 80C(3) & 80C(3A) states that in case of Insurance Policy other than contract for a deferred annuity the amount of any premium or other payment made is restricted to:

Policy issued before 1st April 2012 20% of the actual capital sum assured
Policy issued on or after 1st April 2012 10% of the actual capital sum assured
Policy issued on or after 1st April 2013 * – In cases of
persons with disability or person with severe disability as per Sec 80 U or suffering from disease or ailment as specified in Sec 80DDB
15% of the actual capital sum assured

*Introduced by Finance Act 2013

Actual capital sum assured in relation to a life insurance policy means the minimum  amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account –

i.  the value of any premium agreed to be returned, or

ii.  any benefit by way of bonus or otherwise over and above the sum actually assured which may be received under the policy by any person.

20. Sukanya Samriddhi Account- Sukanya Samriddhi Account Scheme is been notified by Ministry of Finance vide Notification No. G.S.R.863(E) Dated 02.12.2014. Shceme become operational by notification of rules namely Sukanya Samriddhi Account Rules, 2014’. Sukanya Samriddhi Account Scheme is a small deposit scheme for girl child, as part of ‘Beti Bachao Beti Padhao’ campaign, which would fetch yearly interest rate of 9.1 per cent and provide income tax deduction Under section 80C of the Income Tax Act,1961.

(Article  republished with amendments )

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30 responses to “Section 80C – Eligible Investments & Expenses”

  1. Lalit N Sharda says:

    Direct Investment in AFPP Fund is Eligible for Deduction under Section 80C

  2. Sanjeev says:

    Sir I am a army person I want to know that AFPP fund comes in which section of income tax and A GIFT comes in which

  3. Sumeet says:

    Sir,
    Please confirm Point 14 — Approved Equity Shares for tax saving under 80C .Which company shares are those by which we can save tax.
    Regards
    Sumeet

  4. Hiranmoy Ganguly says:

    I want to know If I invest in Equity Shares in Indian Public Companies then deduction is available in 80(c)

  5. Indranil Roy says:

    Any individual wants to take a policy in the name of his wife in the table 189 jeevan akshay 6 whether the husband can get the relaxation u/s80C upto rs150000?

    2)the annuity which his wife will earn from LICI, that amount will add with the total yearly taxable income of her husband or not?

  6. NANDKISHOR G BALPANDE says:

    Dear Sir,
    Plz Suggest me that, Can I Deduction of Investment in Mutual Fund U/S 80C for 3 Year which Investment Locked for 3 year.

  7. bharat says:

    Dear Mukesh Dhakkar Ji

    Any investment made in NPS tier 2 Account would not qualify for exemption under section 80c .

    Total investment which qualify for investment under section 80c is 200000/- if you invest additional 50000/- in NPS tier 1 Account only.

    150000/- any instrument like ELSS,PF,PPF and any other which qualify for 80c + 50000/- in NPS tier 1 Account.

    NPS tier 2 account is just like a saving account you can take withdrawal any time from tier 2 account.

    now PFDRA Allowed to withdraw partially from NPS tier one account also subjected to qualify few condition

    1-you can withdraw up to 25% of your contribution made on completion of 10 year of service.
    2-The withdrawal can be done 3 times during the lifetime provided there is a minimum gap of 5 years between each withdrawal.
    3- The withdrawal can be for the following reasons:
    a. Marriage
    b. Children’s Education
    c. Building / Purchase of House
    d. Medical emergency – for himself or family – for 13 critical illnesses – Only in case of medical emergency – the 5 year vesting before 2 withdrawals is not applicable.
    4. The subscriber can keep the funds in the NPS system till age 70 and need not withdraw at Superannuation age.
    5. The annuity purchase date can be deferred 3 years from the date of exit.
    6. If the accumulated corpus comes to less than or equal to 1 lakh before age 60, including for Corporate NPS, then the subscriber is entitled to take the full amount as lump sum and need not annuitise.
    7. If the accumulated corpus comes to less than or equal to 2 lakhs after age 60, including for Corporate NPS then the subscriber is entitled to take the full amount as lump sum and need not annuitise.

    The changes to the NPS have made the product more liquid and flexible. This will allow employees / subscribers to look at the product not only as a retirement but also a savings product. The lack of withdrawal facility was an issue faced by subscribers when deciding whether to invest in NPS but with these changes, the product would be more appealing to investors.

    Thanks & Regards
    Bharat Singhal AFP
    Mob :- 8467847063

  8. bharat says:

    Dear Mukesh Dhakkar Ji

    Any investment made in NPS tier 2 Account would not qualify for exemption under section 80c .

    Total investment which qualify for investment under section 80c is 200000/- if you invest additional 50000/- in NPS tier 1 Account only.

    150000/- any instrument like ELSS,PF,PPF and any other which qualify for 80c + 50000/- in NPS tier 1 Account.

    NPS tier 2 account is just like a saving account you can take withdrawal any time from tier 2 account.

    now PFDRA Allowed to withdraw partially from NPS tier one account also subjected to qualify few condition

    1-you can withdraw up to 25% of your contribution made on completion of 10 year of service.
    2-The withdrawal can be done 3 times during the lifetime provided there is a minimum gap of 5 years between each withdrawal.
    3- The withdrawal can be for the following reasons:
    a. Marriage
    b. Children’s Education
    c. Building / Purchase of House
    d. Medical emergency – for himself or family – for 13 critical illnesses – Only in case of medical emergency – the 5 year vesting before 2 withdrawals is not applicable.
    4. The subscriber can keep the funds in the NPS system till age 70 and need not withdraw at Superannuation age.
    5. The annuity purchase date can be deferred 3 years from the date of exit.
    6. If the accumulated corpus comes to less than or equal to 1 lakh before age 60, including for Corporate NPS, then the subscriber is entitled to take the full amount as lump sum and need not annuitise.
    7. If the accumulated corpus comes to less than or equal to 2 lakhs after age 60, including for Corporate NPS then the subscriber is entitled to take the full amount as lump sum and need not annuitise.

    The changes to the NPS have made the product more liquid and flexible. This will allow employees / subscribers to look at the product not only as a retirement but also a savings product. The lack of withdrawal facility was an issue faced by subscribers when deciding whether to invest in NPS but with these changes, the product would be more appealing to investors.

  9. Mukesh Kumar Dhaker says:

    Is contribution made in NPS tier II Account is exempted from income tax . If yes than in which section .

    Can i show the NPS Tier II contribution in my saving for Tax benefit.

  10. A MANIKANDAN says:

    Kindly provide the exemptions available under the investments and other sections.

    Pls forward for the same in section wise details.

    Thank you for your reply.

  11. jayaprakash.A says:

    the article about 80 c was nice, i want your guidance. My son just finished his engineering in computer science and want to study MS is US,being salaried it is a difficult task but wanted to fulfill sons ambition of doing MS in US as many of his friends are doing. I have 25 years of service in government department as engineer, but had no assets which can be called as mine own. had a saving of around 18 laksh and borrowed around 6 lakhs from friends,closed some deposits in other banks to sum up 30 lakhs (all fruits of my 25 year service) for taking education loan in SBI i made a Fixed deposit of 30 lakhs on which bank had promised to give education loan. my question is as i had made fixed deposit of 30 lakhs is there any problem from incometax department ? I have sacrificed all my years of savings, and expecting good future for my son. all left to gods grace. is there any rebate in tax for education loan interest which can be claimed in my government salary ? please guide me,
    thanking you,

    with regards
    jayaprakash.A

  12. Rawal Singh Bhati says:

    @Devraj Bhandari

    Yes eligible under 80C

    @SUBHA D.

    80C(2)(xviii) is available for Residential House Property irrespective of whether Self occupied or let out. [main condition is that it should be a RESIDENTIAL house property]

  13. Subha.D says:

    Is the Deduction U/S 80C(xviii) applicable for loan taken for self occupied house property construction.

  14. Devraj Bhandari says:

    I am paying 12500 premium(LIC) every year. Am i eligible to claim deduction in 80C.

  15. Rawal Singh Bhati [Hamira, Jaisalmer] says:

    @keith

    Yes you may avail benefit of 80C. Because 80C gives benefit to Individual [whether resident or non resident]

    Any further querry
    Whatsapp 8963013175

  16. keith says:

    I am a non resident indian. Can I claim deductions inder Section 80C?

  17. Rawal Singh Bhati says:

    @DEEPAK DANG

    80C maximum limit 150000

    You have to invest in specfied items only. [example, PPF, LIP, TUTION FEE, repay homeloan excluding interest allows in 24, etc]

  18. DEEPAK DANG says:

    Please inform the limit of exemption u/s 80 (C) for F.Y. 2015-16. Is it required to invest in particular investments for full rebate.

  19. Rawal Singh Bhati says:

    @sunil jain

    Please clarify your querry, what u want 2 ask

  20. Rawal Singh Bhati says:

    @Mahaveer

    Yes it is neccesary , as per sec 80C(2)(xviii) read with sec 22, two condition must be sataisfy

    1st is ownership
    2nd payment by such owner

    No case law required since main section itself clear.

    For Querry in detail
    Whatsapp no. 8963013175 [plz do not call, only whatsapp]

  21. sunil jain says:

    (15) Subscription to equity shares or debentures forming part of any eligible issue of capital made by a public company, which is approved by the Board or by any public finance institution.

    Weather it shall be eligible to an individual assessee who invest in any new public issue of shares by a public limited company

  22. MAHAVEER says:

    sir i want to known that for claming a 80c deduction regarding housing loan re-payment by husband and wife who has take a joint loan there must be a joint ownership is necessary or not if not the please refer any case . yhank you.

  23. Bhuvaneshwari says:

    Let me know Kisan Vikas Patra Bond Investment eligible for 80 C

  24. Avinash Singh says:

    Please elaborate eligibility for deductions on education loan taken.

  25. h.k.panda says:

    Let me know the max amt eligible for tution fee under 80c

  26. manjunath shanbhogue says:

    Can you elaborate the Senior Citizens Savings Scheme 2004. thanks a lot. the article is very informative and useful.

  27. Paras Bafna says:

    @ Saumya,

    As regards the NSC interest, the last year’s interest will not be deductible.
    Those who are not including accrued interest on every completed year (1st to 5th year) can not get deduction U/s 80C. I think, what you are thinking is correct.

  28. Ami says:

    I want to know whether the investment made in the Senior Citizens Savings Scheme Rules, 2004 has a lock in period of five years to be eligible for exemption?
    Please reply.

  29. Saumya says:

    Sir

    Thanks for such a descriptive article on 80C deduction.

    I want to know the following

    Para 5 refers to subscription to NSC. The amount subscribed to NSC is eligible for 80C deduction. The interest that accrued yearly (ending 1st to 5th year) though taxable, is eligible for deduction in the year accrued, being reinvested for 5 consecutive years and 6 year interest is taxable and no deduction whatsoever is available. Am I right. Someone told me that the maturity amount available after 6 years will be included in gross income and is taxable like ETT or EET. Is this true. Please clarify. I am very much confused as I am not getting correct reply.

    Para 8 refers to MFs of ELSS types only, from the secondary market as well.

    Para 15 refers to MFs from primary market only or from secondary market as well.

    Saumya

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