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 i get tax deduction while i deposit in post office reccorring deposit
MOST RELEVANT INFORMATION
PLEASE ADVICE BEST SUITABLE INVESTMENT PLAN FOR SENIOR CITIZENS 65 YEAR OLD
MONTHLY INTEREREST
Missing of 80TTA Savings bank Interest sir
Dear Sir
I have sent one request earlier regarding impact of GST on existing Road contracts prior to implementation of GST from 01.04.2017 since GST was not loaded in the Contract price for earlier road contracts. The Employer is insisting for submission of GST invoice along with every Running Account bill but not releasing the GST part and only releasing the net bill amount and orally intimating that payment of GST part on old contracts is still not decided and waiting fior clarification from GST authorities. Please advice.
Regards
Kishore Kumar S
Very Well written. In short, useful list of Investment. but you must sit before your financial Planner and CA before going for any Investment option. It requires Need based Analysis.
Can i get my Mother’s name FDR benefit under 80C, please suggest.
SIR,
I AM A RETIRED PERSON OF AGED 66 YEARS. I HAVE MADE THE FOLLOWING INVESTMENTS DURING THE FINANCIAL YEAR OF 2017-18.
1. SENIOR CITIZEN SAVINGS SCHEME
2. DSP BLACKROCK TAX SAVER FUND-REG-
GROWTH.
3. PMVV YOJANA WITH LIC.
KINDLY LET ME KNOW WHICH INVESTMENTS FROM ABOVE ARE ELIGIBLE FOR ME TO TAKE TAX BENEFIT AS PER INCOME TAX ACT. ALSO, PL TELL THE MAXIMUM AMOUNT CAN BE CONSIDERED FOR TAX BENEFIT UNDER THIS HEAD PLEASE.
THANKS AND REGARDS,
LAKHVINDER SINGH
I have invest a sbi mutual fund plan name sbi magnum global fund (regular g) and this is not an else can I show under 80 c and take tax benefit.
Hi,
If i invest “X” amount on my father’s name (who is dependent on me) in SCSS scheme (in post office). Its nothing but senior citizen saving scheme.
Do i will get benefit under section 80C.
I purchased an apartment in 2015 taking a loan of 29 lakhs and rented it out.
Can I show EMI principal portion in section 80C
I made 13lakh investment into senior citizen saving scheme under section 80c and got deduction of 1.5 lakh could i carry forwarded balance amount 11.5 lakh for deduction under section 80c
I made a 13 lakh investment into senior citizen saving scheme under sec 80 c during AY 2015-16 where 1.5 lakh was available for deduction,can i carry forward balance amount of 11.5 lakh for deduction under sec 80 c in the AY 2016-17 also
May I ask if a salaried class under NRI definition has invested his earnings in KVP, NSC etc.. is also treated as black money.
what are the exemptions one can claim if his income is from professional charges /or if his income is under contract wages.
I am retired bank Employee. As per Agreement between Bank & Insurance Co a fixed amount is being debited by bank for Onward Remittance to Ins co where Bank is the Master policy holder & the as & when contingent benefit is being received through TPA . My question as my a/c being retired employee is debited should i get the benefit of SEC 80(D) of i.tax act excluding paid Service Tax during the year.
Sir,
Please clearify if I invested Rs. 5000 in Tax Saving FD under 80C. Then the interest which is reinvested will also come under 80C or not.
post office investments and its income tax benefit
Situations:
1) I monthly deposit Rs.3000 to post office account
2) I invest Rs.36000 to Post Office Time Deposit in FY 2015-16
Question :
Shall we claim both of these contributions as deduction?
If yes,
how we can show this as a deduction from Total Income?
How many year we can claim this,both monthly and Time deposit?
I deposited Rs300000/ (Rupees three lakhs) in my PF account upto Sept.,2015. I retired in Sept.,2015. On retirement all the available balace in my PF a/c as my contribution as well as Govt contribution was paid to me.
Is my above contribution in PF A/c eligible for rebate under Section 80C for year 2015-16 ?
I have a query regarding SCSS 2004. In SCSS 2004 if a bulk amount of 15L is deposited for FY 2016-2017. can the tax deduction be claimed for SCSS 2004 for the year 2017-2018 also ?
Can my wife pay my future lic premiums and claim it benifit under 80c. So that i invest in other tax saving schemes we both are tax payers
No it is not considered.
Equity mutual funds are tax free after a year from the investment date.
It depends from whose bank account the money is being deducted. If its a joint account, the first holder can claim tax benefits provided the funds qualify under ELSS funds.
If you complete 15 years, then the total amount is with drawable.
My father comes under senior citizen. If he invest in senior citizen saving scheme then would i eligible for tax benefit?
Whether Post office Monthly income scheme deposits are eligible under 880c
My father has deposited money in my PPF account from his account, can I take benefit under 80C for myself?
Does 5 year recurring deposit in post office qualify under section 80C.
I will be obliged for your clarification for my following query.
>
> In this financial year 2015-16,I have invested Rs1.5lakhs with LIC under
> “Varishtha Pension Yojana” earning interest of 9 percent per annum.Maturity
> will be 15years
>
> Can above investment be considered under Section 80 C ??
> Pl clarify.
> Regards
> Deepak Desai
>
whether 6 year time deposit with post office qualify 80c ????
I opened PPF account in March 2001. It will be completing 15 years in March 2016. Can I withdraw the whole amount as i do not want to extend for another three years.
Or can I withdraw only 50% of last preceding financial year?
Kya 80c ke1ke1.5 lakh keep a lava Aur Koi diducti.milta hai
Sir,
i want to know that, can we pay more than Rs.20000/- in cash to a general insurance company? can we claim this amount as deduction u/s 80C ?
tell me how a private limited company have registered in NPS Scheme.. and how company contribute NPS for employees… pls explain
father invest in mutual funds on the behalf of daughter so who will have claimed a deduction of mutual fund u/s 80C… father or daughter
Are Mutual fund investment tax free
yes subject to a maximum of Rs.1,50,000
only what is paid to you
On my retirement , I have withdrawn all my PF and VPF within the FY (i.e. by Nov’14)
Now I want to know that whether I’m eligible for tax benefit for my PF and VPF deducted during the FY (April to Oct) while filling my ITR ?
sir i m a retired defence personal and want to invest my hard earned money to post office scheme scss. pls guide me how much i shud invest so that i can avail the tax benefits.
i dont want that interest earned is taxed.
I have a Senior citizen savings scheme deposit which will be maturing in the month of Aug 2015. There is a provision to extend the deposit for a further period of 3 years. In that case, please clarify whether I would be eligible for deduction u/s 80C for this financial year for that amount.
Dear sir,
I want to know if investment in listed companies (equities) qualify for exemption under section 80C.
Sir I want to know whether my CTC is the taxable amount or the salary which gets credited every month?
sir
i would like to know reinvested interest deducted under 80C
sir , kya aditional pf bhi insvstment me include ho ga ?
Dear Sir, Whether service tax paid on PLI premium included in savings under section 80C
Sir,
I want to know whether investment in “PACL LTD.,” known as pearls exempted from section 80C of Income tax Act.1961
hii,
i m a central govt. employee…
is the employees contribution and employer contribution amt under NPS …is saving under rs 100000 …AY 2013..14?
Respected sir
Please enlighten me regarding investing in ELSS INVESTMENT in minor & also in my name weather i can clain both under 80c section with in the limit of 1.5 lakh
regards
[email protected]
Respected sir
Please enlighten me regarding investing in ELSS in my minor daughter’s name & also in my name can i claim both the investment under 80 c ?