Taxpayers in India can avail of various deductions and exemptions under the tax laws. One method of reducing your tax liability is by claiming a deduction under 80C of the IT Act. Notably, under 80C, one can claim deductions up to INR 1.5 Lakhs/year from their gross total taxable income.
In this article, let's understand Section 80C deductions and how they benefit taxpayers.
The Income tax act categorises the deduction under Section 80C into various subsections. These are:
Having identified the various subsections under 80C, let's explore the important instruments under 80C.
PPF is a government savings scheme intended for the long-term financial benefit of the taxpayer. While it matures 15 years after the account opening, contributors can withdraw money from the seventh financial year.
This is a Government aided savings scheme for parents with a girl child. It is an investment instrument that matures once the girl reaches age 21.
ULIP is a one-in-all instrument that provides life insurance plans, investment opportunities, and a life cover with a lock-in period of 5 years.
Rural bonds offered by the National Bank of Agriculture and Rural Development are eligible for tax deductions up to INR 1.5Lakhs.
If you are a risk-averse individual, NSC can be your much-desired tax-saving instrument with a maturity period of 5 to 10 years.
Your LIPs can make you eligible for tax benefits under Section 80C. Presently, the exemption is applicable only on annual premiums of up to 10% of the total sum assured.
So, if you are a taxpayer investing in any of these instruments, you may be eligible for a deduction under section 80C.
To start with, corporate bodies and companies cannot claim deduction under 80C. Individuals and Hindu United Families are eligible.
Moreover, the investments that are eligible for deductions are:
Besides these, there also exists deduction under section 80c to 80u to get the best possible financial benefits.
Having sound financial knowledge is key to claiming the right deductions. Claiming a deduction under 80C is a great way to ensure you obtain the greatest benefits from your investments. But personal finance can often be complicated.
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80C tax benefit is an exemption measure provided to individuals and Hindu United Families who subscribe to certain investment instruments. You can claim deductions up to INR 1.5 lakhs by mentioning your investment expenses in the relevant section of the IT form
Yes, claiming a deduction under 80C is possible while filing Income Tax returns. It is essential to ensure that your investments in a financial year are eligible for benefits under Section 80C.