1. What is section 80C?
Section 80C of the income tax act is an opportunity for Individuals and Hindu undivided families. They can have tax deductions up to the 1.5 lakhs under section 80C. However, other corporate firms, companies, and partnerships can not avail of the tax benefits under section 80C. Section 80C is divided into the following sections. An individual can avail of the tax benefits under section 80C for the investments and on gross earned income in a financial year.
An individual needs to make investments and deductions between April 2019 to March-2020 to claim the tax deduction in the financial year 2019-20. All the subsections and applicable deductions are in detail mentioned below-
2. Subsections of section 80C
According to the regulations of the income tax act of India, deductions under section 80C are divided into different categories.
|Tax-saving sections||Eligible investments for tax deductions|
|Section 80-C||80C permits a deduction for the investment made in PPF, EPF, LIC premium, Equity-linked saving scheme, principal amount towards the home loan, stamp duty, and registration charges for the purchase of property, Sukanya siddhi Yojana, National saving certificate, Senior citizen savings scheme, ULIP, etc.|
|Section 80-CCC||80CCC permits a deduction for payment towards annuity pension plans Pension received from the annuity or Payments made towards pension plans and mutual funds.|
|Section 80CCD (1)||Employee’s contribution towards the NPS (National Pension Yojana), Atal Pension Yojana (APY) under section 80CCD (1).|
|80CCD (1b)||Additional deduction of Rs 50,000 is qualified for the NPS account.|
|80CCD (2)||Employers' contribution is qualified towards the National Pension Yojana up to 10%.|
3. Deductions under section 80C
|Investment options||Interest||Minimum lock-in period||Assured return||Associated risk|
|ELSS||12% to 15% (relies on the fluctuation of the market)||3 years||No||High|
|NPS(National Pension Scheme)||9% to 11%||Until investor get of the 60 years of age (retirement)||No||High|
|ULIP||8% to 10% (relies on market fluctuation)||5 years||No||Moderate|
|Fixed deposit||Up to 8.40%||5 years||Yes||Low|
|Sukanya Samriddhi Yojana Scheme||7.50%||8 years||Yes||Low|
4. List of Tax saving
PPF(Public Provident Fund) -
- A contribution made towards the PPF account by an individual is eligible to tax exemption under section 80C. A public provident fund (PPF) is one of the saving schemes provided by the post office. National Savings Institute launched this scheme in 1968. The interest rate of the public-private fund is 7.1% for the current quarter and interest is calculated on the minimum balance of the public-private fund. EPF (Employees’ Provident Fund) -
- EPF is applicable only to those employees who have been in the service at least for 5 years. The earned returns from an employee provident fund along with the interest rate rely on section 80C for deductions. NSC (National Saving Certificate) -
- Earned Interest on the national saving certificate or NSC is compounded twice a year. NSC comes under section 80C and its maturity period is ranged from 5 to 10 years. Like other investments, the national saving certificate allows deductions of up to Rs.1,50,000 lakh under section 80C. ELSS (Equity Linked Saving Scheme) -
- Under this investment scheme is also known as a tax saving mutual fund, This tax-saving scheme has a lock period of 3 years. The returns from ELSS are tax-exempted up to a limit of ₹1 Lakh. For returns exceeding the limit, you will be subject to long-term capital gains tax at a 10% rate. SSY(Sukanya Samriddhi Yojana) -
- The central government has announced a scheme for Sukanya Samridhi Yojana to develop the future of women. There are multiple schemes out there for girl children. This scheme is entirely aimed at strengthening the situation of women in society. Sukanya Samridhi yojana comes under the scheme of “Beti Bachao Beti Padhao” and can be opened by the parents or legal guardians of a girl child. Sukanya Samridhi yojana benefits to ensure a good financial future of the girl child and expenses of marriage. The interest earned in this scheme is eligible for tax exemption under section 80C SCSS (Senior Citizen Saving Scheme) -
- Senior Citizen Saving Scheme (SCSS) strives at furnishing a recurring income for senior residents aged beyond 60 years unrestricted at a certified bank and all the post offices across India. The lock-in period of SCSS is five years. Section 80C income tax deductions cover the prevalent amount, and the interest is tax exempted. NPS (National Pension Scheme) -
- National Pension Scheme (NPS) is one of the finest investment programs that is governed by the Regulatory and Development Authority for the Pension Fund (PFRDA). Regulatory and Development Authority for the Pension Fund launched the National Pension System Trust (NPST) which is the registered owner of all assets under this investment plan. NPS full form is National Pension System. Only the Central Government employees were wrapped by the National Pension Scheme. Now NPS is open to all Indian citizens. NPS scheme maintains huge value for anyone working in the private sector and needs a regular post-retirement pension. Stamp duty or registration charges -
- Registration charges or stamp duty can be taken as the widest expense made for having the ownership of property. The Indian Government permits deductions of tax liability until the charges are paid for stamp duty and registration towards the housing procurement. The exemption will only be claimed in the year of paid duties, otherwise, it will not be eligible for contemplation under section 80C. SCSS (Senior Citizen Saving Scheme) -
- SCSS or senior citizen saving scheme encircles the senior citizen above 60 years to provide them a regular income at a certified bank and post offices. The SCSS has a lock-in period of five years. NABARD Rular Bonds -
- NABARD means National Bank for Agriculture and Rural Development. The highest amount under section 80C is entitled up to 1.5 lakh. NABARD offers the rural bonds that are eligible for tax exemption as per the income tax act of India.
Frequently Asked Questions
What is Covered under 80C?
80C covers deductions on investments made for the PPF, EPF, NSC, NPS, ELSS, Equity Linked Saving Scheme, SSY, life insurance premium and ULIP, etc.
What is 80C and 80D?
80C permits deductions for the investments made for NSC, NPS, ELSS, ULIP, PPF, SSY, equity-linked saving schemes, etc. But section 80D deduction is entitled to avail the tax benefits on the expenses occurred on health check-ups and health insurance premiums paid for self, parents, and family.
Who is eligible to claim the tax under section 80C?
Section 80C allows Hindu undivided families(HUF) and individuals to avail the tax exemption.
Does SIP come under 80C?
Yes. Section 80C enfolds the SIP for mutual fund ELSS (equity-linked saving schemes). Individuals can avail of the deductions up to 1.5 lakhs under section 80C.
Is HRA part of 80C?
No. Taxpayers can claim HRA (House Rental Allowance) exemptions under section 10(13A) or section 80GG.
Are donations eligible for tax exemptions under section 80C?
Yes. Donations made for the specific institutions and funds are eligible for exemption under section 80C.
Is proof required for 80D?
No. There is no proof required for the deduction under section 80D.