Tax Exemption in 80C

Section 80C of the Income Tax Act came into effect on 1 April 2006. . It basically allows certain expenditures and investments to be exempt from tax. The section offers various investment options to the taxpayer which not only generate returns for him but can also be claimed as deduction while calculating total taxable income.

Section 80C allows individuals and HUFs to claim tax deduction of up to Rs. 1,50,000 from their gross total income for certain investments and payments.  However these deductions are not available to companies, partnerships and other corporate.

SUB SECTIONS UNDER SECTION 80C

This section is further divided into following sub sections :-

TAX SAVING SECTIONS TAX DEDUCTIONS  INVESTMENTS ELIGIBLE
Section 80CCC Rs. 1,50,000 Payments made toward pension plans or annuity plans of insurance companies.
Section 80CCD Rs. 1,50,000 Contributions made to the Pension Scheme of Central Government. (This deduction is available only to individuals and not HUFs).
Section 80CCF Rs. 20,000 Investments made toward long-term government-approved infrastructure bonds.
Section 80CCG Rs. 25,000 Investments made under a government-approved equity savings scheme.

ELIGIBLE DEDUCTIONS UNDER SECTION 80C

The following investments and payments are eligible for deduction under Section 80C of the Income Tax Act, 1961:

LIFE INSURANCE – The following investments and payments are eligible for deduction under Section 80C of the Income Tax Act, 1961:

PUBLIC PROVIDENT FUND –  : Public Provident Fund (PPF) contributions are eligible for tax deductions under Section 80C. PPF accounts have a maximum deposit limit of Rs. 1,50,000 per year, therefore, all deposits made to PPF account can be claimed as deductions under Section 80C.

SUKANYA SAMRIDDHI YOJANA –  Investments made in Sukanya Samriddhi Yojana, which is a saving scheme for the girl child, are eligible for tax deduction under Section 80C of the Income Tax Act, 1961

FIXED INCOME SCHEMES –    Senior citizen Saving scheme (SCSS), National Saving Certificate (NSC), Home loan repayment, tution fees payment etc are also eligible for tax deduction under section 80C.

UNIT LINKED INSURANCE PLAN –  It is a insurance cum investment plan which offers tax benefit under Section 80C on the premium paid towards the policy. The return earned towards ULIP plans is also eligible for tax exemption under 10(10D) of the act.

Registration charges and stamp duty for home/property, investment in infrastructure bonds, NABARD Rural bonds, Five year Post Office Time Deposit Scheme are also eligible for tax deductions under section 80C of the Income tax act.

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