80C Deduction List

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80C Deduction List

Every taxpayer person must know about Section 80C Deduction under Chapter VI of the Income Tax Act. Section 80C is one of the most popular and favorite sections amongst taxpayers as it allows for the reduction of taxable income by making tax-saving investments or incurring eligible expenses. It allows a maximum deduction of Rs 1.5 lakh every year from the taxpayer’s total income.

Who Can Claim 80C Section:- The benefit of this deduction can be availed by Individuals and HUFs. Companies, partnership firms, and LLPs cannot avail of the benefit of this deduction. Section 80C includes subsections, 80CCC, 80CCD (1), 80CCD (1b), and 80CCD (2). It is important to note that the overall limit including the subsections for claiming the deduction is Rs 1.5 lakh except an additional deduction of Rs 50,000 allowed u/s 80CCD(1b)

80C Deduction List – Complete Guide

Types Eligible investments for tax deductions
80C Deduction
  • Life Insurance Premium: – If you buy any life insurance policy for yourself, your spouse or your children, you can claim an 80C deduction on the premium paid towards the plan. However, if you pay premium for your parents or parents-in-law, then you will not be eligible to receive such a benefit. If you hold more than one policy, then you can claim tax benefits on all of them up to the limit of Rs. 1.5 lakh as per Section 80C of Income Tax Act.
  • Public Provident Fund (PPF):- is a government scheme that allows you to invest as low as Rs. 500 to Rs. 1.5 lakh in a given financial year. Under the provisions of Section 80C of the Income Tax Act, your taxable income will be reduced by the amount you invest in the fund.
  • Employees’ Provident Fund (EPF):- Under Section 80C of Income Tax Act, Employees’ contribution to the EPF account is also eligible for 80C deductions. Whereas, the employer’s contribution remains free from tax but not available as 80C deduction.
  • Equity Linked Savings Scheme (ELSS):- is another type of investment scheme covered under Section 80C, in which you enjoy income tax saving benefits on the amount you put into the fund. Such a scheme offers you higher returns as your money gets invested in equity funds, but the point to note is that equity investment is prone to higher market-related risks.
  • Unit Linked Insurance Plan (ULIP):- It offers the twin benefit of life cover and investment benefit. Under Section 80C, it also provides income tax saving benefit, up to Rs. 1.5 lakh, on the amount invested. You can avail of tax-deduction benefits up to either 10% of the sum assured or annual premiums, whichever is lower. Investing in ULIPs will help you enjoy flexibility of maximising your savings through a variety of market-linked fund options. 
  • Tax Saver Fixed Deposits:- Any deposit that you make with a bank for a period of 5 years is eligible for tax deductions, up to the specified limit stated under Section 80C of Income Tax Act, 1961.
  • National Pension Scheme (NPS):- You contribute an additional Rs. 50,000 under NPS (over and above the Section 80C limit of Rs. 1.5 lakh), the total amount can be claimed as deduction under Section 80CCD (1B).
  • Home Loan Principal Repayment:-If you have availed home loan from any bank or financial institution, you can avail 80C deduction up to Rs.1.5 lakh on the home loan principal repayment amount.
  • Sukanya Samriddhi Yojana:- It is a saving scheme for girl child and is eligible for 80C deduction of Income Tax Act. This account is for the girl child under 10 years of age. This account can be opened for a maximum of 2 girl childs and claim income tax deductions under Section 80C of Income Tax Act.
  • Senior Citizens Savings Scheme:-Senior Citizens Saving Scheme is for senior citizens with at least 60 years of age. Senior Citizens who have opted for Voluntary Retirement Scheme (VRS) can opt for it after 55 years of age. Any investments made under this scheme is eligible for 80C deductions with the maximum 80C limit remains Rs.1.5 lakh only.
  • National Savings Certificate:- Any investments made under the National Savings Certificate can also be claimed under Section 80C deductions. Not only the investment amount, but also the interest accrued for the first 4 years are eligible for deduction under Section 80C of Income Tax Act. You can reduce the taxable income up to Rs.1.5 lakh (Section 80C limit).
80CCC Deduction for life insurance annuity plan. 80CCC allows a deduction for payment towards annuity pension plans Pension received from the annuity or amount received upon surrender of the annuity, including interest or bonus accrued on the annuity, is taxable in the year of receipt.
80CCD (1) Deduction for NPS Employee’s contribution under section 80CCD (1) Maximum deduction allowed is least of the following
  • 10% of salary (in case taxpayer is employee)
  • 20& of gross total income (in case of self-employed)
  • Rs 1.5 Lakh ( limit allowed u/s 80C)
80CCD (1b) Deduction for NPS An additional deduction of Rs 50,000 is allowed for the amount deposited to the NPS account

Contributions to Atal Pension Yojana are also eligible for deduction.

80CCD (2) Deduction for NPS Employers’ contribution is allowed for deduction up to 10% of basic salary plus dearness allowance under this section. The benefit in this section is allowed only to salaried individuals and not self-employed.

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