Deduction u/s 80C is allowed under Chapter VIA of the Income Tax Act 1961 wherein any individual or HUF who makes a specific payment for items mentioned therein the Section then such Individual or HUF can claim deductions from his total income to the extent of such payments. However there is a ceiling limit of Rupees 1.5 Lakh in the said clause.
Generally a notion that only payment for life insurance premium are a part of 80C is prevalent among people. However this is not the case as the section has innumerable options for which an individual or HUF can make investments and claim deductions.
Following deductions can be claimed by an assessee under Sec 80C to reduce his taxable income:
- LIC premium of self, spouse or child for the individual and any member for HUF (Premium value should not exceed 20% of the sum assured).
- Contribution to Public Provident Fund (PPF).
- Employees share of contribution to recognised provident fund as deducted by his employer.
- Subscription to National Saving Certificates (interest on NSC upto 5th year.
- Notified pension fund set up by the Mutual Funds or UTI.
- Notified units of Mutual Funds or UTI.
- Subscription to notified bonds of National Bank for Agriculture & Rural Development (NABARD).
- Tution Fees of self, spouses or children.
- Payment towards cost of purchases or construction of residential house property or repayment of installments for the above purpose.
- Repair of house property.
- Fixed deposit with scheduled bank.
- Equity linked saving schemes.
Other deduction which are included along with Section 80C are:
- Deduction u/s 80CCC: It is also available to an individual, irrespective of his status, for any premium paid to LIC or other insurer for receiving pension in future.
- Deduction u/s 80CCD: It is also available to an employee or an individual on account of amount paid or deposited under a pension scheme notified by Central Government. Maximum amount of deduction allowed under this section is 10% of the salary of the employee or 10% of the gross total income of an individual.
NOTE: The aggregate of deduction available under Section 80C, 80CCC & 80CCD cannot exceed Rs.150,000.
The above are the various deductions that a person can claim to save tax. He can invest in different alternatives of his preference to take maximum advantage of his deduction. Many a people make payments for their principal amount of Housing loan and they claim interest only in House Property head. But they do not claim the amount of principal paid under Section 80C. Not only this even the expenses of the stamp duty and registration expenses for the purpose of transfer of house property are allowable. Many a time, many people make a lot of payment which are eligible for deductions under Section 80C but they don’t even realize that they can claim the same as deduction to reduce their total income. Hence it is really necessary that people understand the scope of the section and make maximum use of the benefits available under these sections.
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