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Deductions Under Section 80 C in India
The Income Tax Section 80C investments that are considered as eligible for tax deduction include payment made towards life insurance policies for yourself, your spouse or children, payment made towards a superannuation or provident fund, tuition fees paid to educate a maximum of two children, payments made towards construction or purchase of a residential property, payments made towards a tax saver fixed deposit with a minimum tenure of 5 years and also a number of additional deductions like investment in mutual funds, senior citizens saving schemes, purchase of NABARD bonds, etc.
There are also various subsections under Section 80C such as section 80 CCC that provides scope for tax deductions on investment in pension funds. Such pension funds can be availed from any insurer and a maximum deduction limit of Rs 1.5 lakh can be claimed here too. However, only individual taxpayers are eligible for this deduction. The return on investment from such pension schemes is usually exempt from tax as per the tax structure in India.
Under Section 80 CCD, incentives for investing in pension schemes initiated by the Central Government are available. These are primarily meant to encourage savings and contributions made by an individual and his/her employer are both are eligible for tax deduction, provided that this deduction is less than 10% of the salary of the person. Again, only individual taxpayers are eligible for this deduction in taxable income.
Both Hindu Undivided Families and Individuals can utilize Section 80 CCF, which contains provisions for tax deductions on subscription of long-term infrastructure bonds which have been notified by the government. The maximum deduction under this Section is capped at Rs 20,000.
Finally, Section 80 CCG of the Income Tax Act permits a maximum deduction of Rs 25,000 per year, with specified individual residents eligible for this deduction. Investments in equity savings schemes notified by the government are permitted for deductions such as Rajiv Gandhi Equity Savings Scheme or RGESS, subject to the limit being 50% of the amount invested.
Thus, the section 80C of the Income Tax act, various avenues for saving tax as well as making long term investments for retirement saving are provided that individuals can use to pay as less income tax as possible depending on the income bracket and corresponding income tax rate that fall under.Using insurance plans, equity linked savings schemes and more, one can not only save on tax but also get high returns depending on their appetite for risk.
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- Section 80 - Best Tax Saving Investment option and its Impact on Income Tax
To learn more about the income tax slabs AY 18-19, click here.
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Francis Rodrigues
Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.
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HDFC Life
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