Under section 80C, you can invest a maximum of Rs 1.50 lakh (1 Lakh upto AY 2014-15) and if you are in the highest tax bracket of 30%, you save a tax of Rs 45000. The various investment options under section 80C 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 1,50,000. 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.
Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net
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 1,50,000 in an ELSS fund and deduct the investment from their taxable income under section 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 the Income Tax Act.
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 means that the total deduction available for 80CCC and 80C is Rs. 1.50 Lakh.This also means that your investment in pension funds upto Rs. 1.50 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. 1.50 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.
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.
Read our Earlier post for detailed Analysis of Section 80C
All about deduction under section 80C and tax planning
(Updated on 22.06.2018)
Author Bio
is post office recurring deposit eligible for 80c ?
Good Afternoon!
when investment is made in rpf and also ppf can deduction be claimed in both cases??
good afternoon sir!
when both
150000/-Fdr made for five years is qualify for 80 C or restricted to 100000/- as such.
Thanks
9165445000
The Fundamentals of the Indian Economy demand that since the cost of living has gone up considerably the present limits under Section 80 C are obsolete and need revision
Hi ,
I would like to know 10 year of RD A/C from BANK OF MAHARASHTRA bank can have 80C deduction. Please let me know
Sir,
I want to know that May i Claim tax deduction under 80C against Investment done in Reccuring deposit at State Bank of India.
Dear Sir,
Whether service tax paid on PLI premium included in savings under section 80C
Sir,
I would like to know, can a person claim deduction u/s. 80C, for the deposit under sukanya sambridhi account for his grand daughter. pls advice
Wheather PLI SERVICE TAX can be included as savings under 80C?
what about recurring deposit that also come under 80C.
sir i invested Rs. 300000 in chawl. is it liable for 80C deduction
Sir,
Not clear with Infra bonds. Those deduction of Rs 20,000/- was under 80CCF over and above the 80C limit.
Also, the tax deduction (80CCF) is not available now.
Dear Sir,
I would like to know that there is any Tax Exemption on Tractor loan for Agriculture purpose?
Thanks and Regards,
Shobhnath Singh
I would like to know expenditure incurred on renovation of home , is entitled for Income tax rebate or not.
Sir, I have investment in One of aatharv4u infra & agro ltd. paid the amount every months 1000 in the name of wife 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
I am a government employee. I am in new pension scheme. Shal I show the cps deduction in 80c or it is different.
Sir,
Thank you so much for the valuable information, I would like to know whehter RD (Recurring Deposite) is eligible under 80C
Can HUF take the benefit of tuition fee of any member of HUF
thank you very much for your so high knowledgable things.
I WANT TO WITHRAWL MY EPF WHICH WAS DEDUCTED BY COMPANY IN LAST TWO YEARS & NOW I HAVE RESIGN FROM MY JOB IS IT TAXABLE INCOME IF I WITHRAWL
Thank you
This information is very useful.
i want to know whether person claimed tution fees if he paid for his own higher education fees. under section 80C
Is it a must that FD in bank must be under tax saving scheme
Or is it enough if the deposit for is for
5 years . some banks do not give additional
Benefit for senior citizens under tax
Savings scheme.
I would like to know, if the person close the housing loan before the time period is it applicable for claim deduction under 80C.
Hi ,
What would you suggest , what is the best option to invest for qualifying for 80C , so that our money is also saved and we don’t have to keep our money stuck for too long ?
Lic has launched varistha pension policy for sr citizens. Is it will be under section 80 c
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
Loan taken in joint name can be claimed for deduction in the hands of first holder of the loan and not the joint holder.
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)
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
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.
Can I claim Postal Life Insurance premium for tax saving under Sec. 80c
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
Tuition fees paid by the Grandparents for their grandchildren whether can be claimed as deduction under Section 80C
Sir
I want to know that national saving institue govt of india covere in section 80 c or not
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?
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.
Hi ,
I would like to know 5 year of RD A/C from HDFC bank can have 80C deduction. Please let me know
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?
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?
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.
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
The Contribution to National Pension Scheme by Individual is tax exempted but under which section exactly?
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
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.
sir ,i whould like to know,that can a person take deduction of 80c when he paid lic premium by mode of cash payment.
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 ?
Interest paid on delayed payment of Insurance premium is not allowable U/S 80 C as deduction
Whether Interest paid on delayed payment of Insurance premium is allowable U/S 80 C