Income Tax Deduction | Section 80C

Do you like paying Income tax?

If people start answering honestly, we bet 99.99% will say NO! And it’s but obvious, who likes to pay tax on their hard-earned money.
Today, we are going to share with you some uber cool ways. And by using them you can save income up to ? 1,50,000! Exciting? Let’s Begin.

Have you heard of Section 80C?

This magical section of Income tax Act will help you to save income & income tax.
If you are an individual or HUF, then using various ways suggested in Sec 80C, you can reduce “Gross Taxable Income” up to ? 1,50,000.

Tell me how can I save income & taxes?

We are presenting a list of ways using which you can save income & taxes. Simply go through them & if you face any confusion, get in touch with our eCAs.
All Set? Ready? Let’s GO!!

Life Insurance Premium Deduction

• We can never predict future.
• The best we can do is TO PLAN IT!
• Hence, taking life insurance policy is the most appropriate thing to do if you want to plan your future.
• Here, we are not going to tell what is life insurance policy? Which one is best? NO!
• Instead, we’ll tell about the deduction of the insurance premium amount that you have paid. Sec 80C allows this to you.
• You can claim this deduction for life insurance taken for yourself, your wife or children.
• There are different percentages of deductions on the premium, depending upon when you took the insurance. Refer the below table for more clarity.

Tuition Fees Deduction

• In this day & age, children’s education has become very expensive.
• Be it School fees or expenses for picnics or new books etc. all add to parent’s worry every day.
• But Sec 80C allows you a sigh of relief. You can claim the deduction of tuition fee paid for educating your children u/s 80C.
• There are certain conditions which need to be kept in mind if you are looking to claim this benefit.

1. Deduction is available for 2 children only.
2. It needs to be paid for full-time education only.
3. It should be paid to any university, college, school or other educational institution situated within India.

Deduction in Principal Repayment of House Loan

• It is everyone’s dream to own a debt-free house which they can call their Home.
• Well, Sec 80C helps & encourages you to realize that dream.
• As per this section, if you have taken a home loan, then you can claim the deduction of principal amount repaid by you.
• But the maximum amount of deduction will be ? 1,50,000 for the financial year.

PPF Deduction

• The amount deposited by you in the Public Provident Fund is eligible for deduction in sec 80C.
• It is a government backed scheme, so nothing can be safer than this. However, it is having the lock in period of 15 years.
• What’s even more interesting is, you can deposit as low as ? 500 and go up to ? 1,50,000 in one financial year.
• You have the option to make a deposit either in your name or spouse’s or children’s.

5 Year Fixed Deposit

• If you have a good amount of idle cash accumulated then making a Fixed Deposit will be beneficial for you.
• Such FD is eligible for deduction under sec 80C up to ? 1,50,000.
• But the minimum time period for such FD is 5 years. If you break FD before completion of lock-in period then deduction taken will be added back to your income.

Deduction in NSC Investments

• Investments in National Savings Certificate are considered very secure.
• You can start investing in NSC’s with a minimum amount of ? 100 and there is no maximum limit.
• One interesting thing about NSC is that when interest is accrued, it is deemed to be re-invested in NSC. This saves you from any tax impact on interest as you can further claim the deduction of it u/s 80C.
• NSC investments cannot be made by HUF.

Sukanya Samriddhi Account

• Considering the “Save The Girl Child” initiative, this scheme was introduced a couple of years ago.
• A minor girl’s natural/ legal guardian can open an account in bank/ post office in her name till the age of 10.
• After that, the amount deposited by a parent/legal guardian in this account will be eligible for deduction u/s 80C.
• The amount is required to be deposited for 15 years. After 21 years, this account will mature.
• The minimum deposit is ? 1,000 annually, which can go up to ? 1,50,000.

ELSS Deduction

• If you like to take some risks & invest in the stock market then ELSS can be a good option for you.
• Investing in ELSS is eligible for 80C deduction. All you need is a DEMAT account and you are good to go.
• You can start investing from ? 500 and there is no upper limit. But investing in this option invites a lock-in period of 3 years.

Stamp Duty & Registration Charges Deduction

• While purchasing or constructing a new house, you must have paid stamp duty & registration charges.
• These charges may look small as compared to the price of the house but they do make a dent to one’s pocket.
• Sec 80C allows you to take the deduction in respect of these charges as well.
• Apart from the above, there are some other ways through which you can claim the 80C deduction.
• But those methods are not very much in practice because of the huge technicality involved in the procedures.
• Still if you face any kind of issue while claiming above deductions, our eCAs are here to help you 24×7. Simply get in touch with them!
• It is important to note that no matter what method you use to claim a deduction, TOTAL AMOUNT OF DEDUCTION U/S 80C CANNOT EXCEED ? 1,50,000.
• In other words, you can invest in NSC, ELSS, PPF or any other manner as it suits you but the total sum allowed will not exceed ? 1.5 lacs.

Our Thoughts

• The government provides various ways, using which you can magnify your saving in income & taxes.
• But at the end of the day, it depends upon you, your knowledge & tax management capabilities.
• We hope our blog was able to maximize your savings & clear all your doubts related to 80C
• For regular updates, keep following Tax2Win. Happy Filing ????