Section 80C – Eligible Investments and Expenses for Individual Assessee
Deduction Under section 80C for Financial Year 2017-18 and 2018-19 / Assessment Year 2018-19 and 2019-20 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/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 3.11.05 and 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),dated 11.01.2007, 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.
21. Amount can be deposited by an individual or in the name of girl child of an individual or in the name of the girl child for whom such an individual is the legal guardian.
(Article republished with amendments )
Updated on 23.06.2018
Author Bio
I want to know which company shares i can show in case of ”
Investment in debentures of, and equity shares in, a public limited company engaged in infrastructure activities”
Direct Investment in AFPP Fund is Eligible for Deduction under Section 80C
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
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
I want to know If I invest in Equity Shares in Indian Public Companies then deduction is available in 80(c)
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?
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.
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
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.
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.
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.
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
@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]
Is the Deduction U/S 80C(xviii) applicable for loan taken for self occupied house property construction.
I am paying 12500 premium(LIC) every year. Am i eligible to claim deduction in 80C.
@keith
Yes you may avail benefit of 80C. Because 80C gives benefit to Individual [whether resident or non resident]
Any further querry
Whatsapp 8963013175
I am a non resident indian. Can I claim deductions inder Section 80C?
@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]
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.
@sunil jain
Please clarify your querry, what u want 2 ask
@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]
(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
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.
Let me know Kisan Vikas Patra Bond Investment eligible for 80 C
Please elaborate eligibility for deductions on education loan taken.
Let me know the max amt eligible for tution fee under 80c
Can you elaborate the Senior Citizens Savings Scheme 2004. thanks a lot. the article is very informative and useful.
@ 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.
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.
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