Section 80C Deduction List - What is covered under Section 80C?
| Investment options |
Interest |
Minimum lock-in period |
Assured Return |
Associated Risk |
| ELSS |
23.14% (depending on market fluctuation) |
3 years |
No |
High |
| NPS |
8% to 10% |
Till the investor reaches 60 years of age (retirement) |
No |
High |
| SCSS |
8.20% |
5 years |
Yes |
Low |
| PPF |
7.10% |
15 years |
Yes |
Low |
| NSC |
7.7% |
5 years |
Yes |
Low |
| ULIP |
8% to 10% (depending on market fluctuation) |
5 years |
No |
Moderate |
| Fixed Deposit |
Up to 8.40% |
5 years |
Yes |
Low |
| Sukanya Samriddhi Yojana |
8.20% |
8 years |
Yes |
Low |
It’s the safest investment option under section 80C.
Eligibility: You can make investments in the name of:
| In the case of a Resident Individual: |
Self
Spouse or
Any child of such individual
|
| In the case of HUF: |
Any member of HUF |
Amount of Investment: The minimum deposit limit is Rs. 500, and the limit for maximum deposit is Rs 1,50,000 during a year.
Lock-in-Period: The PPF account matures after 15 years, but part of the money can be withdrawn after six years.
Taxability: It’s EEE-rated, which means it's tax-exempt at the time of investment, returns, and withdrawals.
Prime Minister Narendra Modi launched this scheme in line with the Beti Bachao, Beti Padhao campaign on 22 January 2015.
Eligibility: Resident Individual parents with a girl child can invest in this scheme until age 10.
Amount of Investment: The minimum deposit limit under this account is Rs 250 annually, and the maximum limit is Rs 1,50,000.
Lock-in-Period: The amount is required to be deposited for 15 years. After 21 years, this account will mature.
Taxability: It’s EEE rated.
If you like to take some risks & invest in the stock market, then ELSS can be a good option for you. For deduction under section 80C, you can invest in units of UTI or mutual funds specified u/s 10(23D) of Income Tax India, 1961.
Amount of Investment: You can start investing from Rs 500 without an upper limit.
Lock-in-Period: 3 years.
Taxability: The investment is exempt under section 80C of the Income Tax Act upto Rs 1.5 lakhs and the long-term gains on withdrawals are exempt upto Rs 1 lakh. The dividends received (if any) will be chargeable to tax under the head “Income from other sources”.
Almost everyone invests in FDR, but did you know you can claim a deduction for it, too? Yes, the income tax deduction is available on a 5-year FD done with banks or post offices.
Amount you can invest: The minimum deposit limit is Rs. 1000
Lock in Period: 5 Years. If you break the FD before the completion of the lock-in period, then the deduction taken will be added back to your income.
Taxability: The amount invested is eligible for deduction under section 80C, but the withdrawals and interest are taxable. Senior citizens can claim tax benefits of up to Rs 50,000 on the interest amount earned u/s 80TTB.
If you have a good amount of idle cash accumulated, making a Fixed Deposit will benefit you.
Investments in a National Savings Certificate (NSC) are considered very secure.
Eligibility: Only individuals can buy an NSC; HUFs are not allowed to do so.
Amount you can invest: The minimum investment amount is Rs 100, and there is no cap on the highest ceiling.
Lock in period: 5 Years
Tax benefit: The investment is tax deductible under section 80C, and the interest earned is chargeable to tax under the head “Income from other sources.”
One interesting thing about NSC is that when interest is accrued, it is deemed to be re-invested in NSC. This gives you an extra tax benefit on the reinvested interest amount.
Senior Citizen Saving Scheme:
SCSS (Senior Citizen Saving Scheme) is one of the most lucrative investment options for investing the lump sum money received at retirement by resident senior citizens in India.
Amount you can invest: There is a 1000 minimum investment limit, but on the higher side, the investment amount shall not exceed Rs 30 lakhs or the amount received on retirement (whichever is higher)
Lock in Period: 5 Years
Tax Benefit: Investment is tax-deductible u/s 80C. Interest income tax benefits up to Rs 50,000 can be taken u/s 80TTB. One of the best things about this scheme is that it can be foreclosed after one year.
This is a life insurance policy cum investment option. ULIP provides risk cover and investment options in large no. of qualified investments such as stocks, mutual funds, or bonds. In most ULIPs, the minimum life cover offered is ten times the annual premium, with an option to select a higher life cover.
Eligibility: You can make investments in the name of:
| In the case of an Individual: |
Individual,
Spouse or
Any child of such an individual
|
| In the case of HUF: |
Any member of HUF |
Amount you can invest: There is no such limit for making investments in the ULIP, but the premium should not be more than 10% of the sum assured for taking the benefit of tax under section 80C.
Lock in Period: Minimum 5 years
Tax Benefit: On investment: Upto Rs 1.5 lakh
On Maturity: As per The Finance Act, 2021, certain ULIP plans will no longer have exemptions in case:
- The policies are issued on or after February 1, 2021, and
- If you have paid an insurance premium of Rs 2.5 lakh or more for any of the previous years, then the amount received (including the bonus) at the time of maturity will be taxable.
- In case an individual has purchased multiple ULIP plans and the aggregate amount paid is more than Rs 2.5 lakh, then it comes under the ambit of taxation.
The investment in NPS has manifold tax benefits. Section 80C and 80CCD(1) cumulatively provide a tax benefit of Rs 1.5 lakh for the NPS contributions.
Eligibility: Individuals aged 18-60 years
Amount you can invest: There is no limit on the amount that can be invested, but a minimum deposit of Rs 6000/- cumulatively is required in a year.
Lock in Period: Till retirement
Tax Benefit: On investment Upto Rs 1.5 lakh
On Returns: Exempt Partially
Under section 80C, the deduction is allowed in respect of life insurance premiums. The premium must be for the Life insurance policy taken in the name of:
| In case of an Individual: |
Individual,
Spouse or
Any child of such individual
|
| In case of HUF: |
Any member of HUF |
There are different percentages of deductions on the premium, depending on when you took the insurance. Refer to the table below for more clarity.
Children's Tuition Fees:
You can claim a deduction for the payment of tuition fees of your children to any university, college, school, or any other educational institution in India for education. However, the deduction would not be allowed for payment toward development fees, donations, or payments of a similar nature. Certain conditions must be kept in mind if you want to claim this benefit.
- The deduction is available for two children only.
- It needs to be paid for full-time education only.
- It should be paid to any university, college, school, or other educational institution in India.
Principal Repayment of Housing Loan:
You can claim a deduction of principal repayment of your housing loan taken to purchase or construct residential house property.
This deduction is available for both individuals and HUF.
But keep in mind that if you sell/transfer such house property before the expiry of 5 years from the end of the financial year in which possession was taken, then the deduction availed in the earlier years will become taxable.
Deferred Annuity Plan
You can claim a deduction for your payment under the Deferred Annuity Plan. This annuity may be in your name, your spouse's name, or the name of any of your children. But to claim a deduction under this annuity plan, there should be no provision for receiving cash in lieu of an annuity. And, if you're a government employee and any sum is deducted from your salary under a deferred annuity plan, then the deduction is restricted to only 1/5th of your salary.
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 compared to the price of the house, but they do make a dent in one’s pocket. Sec 80C allows you to take the deduction regarding these charges as well.
How to Calculate Section 80C Deduction?
Calculating the Section 80C deduction involves summing up the eligible investments and expenses made during the financial year.
Let's consider a scenario where an individual's gross taxable income is Rs 9,00,000 per annum. The individual benefits from the standard deduction of Rs 50,000 per year and invests Rs 1.5 lakh in an ELSS fund under Section 80C.
Without Section 80C Deduction:
Gross Taxable Income = Rs 9,00,000
Standard Deduction = Rs 50,000
Taxable Income = Rs 9,00,000 - Rs 50,000 = Rs 8,50,000
Tax Liability Calculation without Section 80C Deduction:
As per Income Tax Slab for individuals below 60 years:
- Up to Rs 2,50,000: No tax
- Rs 2,50,001 to Rs 5,00,000: 5% on income exceeding Rs 2,50,000
- Rs 5,00,001 to Rs 8,50,000: 20% on income exceeding Rs 5,00,000
Taxable Income falls in the 20% tax slab.
Tax = 12500 + 20% of (8,50,000-5,00,000) = 12500+ 70000 = 82500
Total Tax Liability without Section 80C Deduction = Rs 82500
With Section 80C Deduction:
Gross Taxable Income = Rs 9,00,000
Standard Deduction = Rs 50,000
Section 80C Deduction = Rs 1,50,000
Taxable Income = Rs 9,00,000 - Rs 50,000 - Rs 1,50,000 = Rs 7,00,000
Tax Liability Calculation with Section 80C Deduction:
As per Income Tax Slab for individuals below 60 years:
- Up to Rs 2,50,000: No tax
- Rs 2,50,001 to Rs 5,00,000: 5% on income exceeding Rs 2,50,000
- Rs 5,00,001 to Rs 7,00,000 : 20% on income exceeding Rs 5,00,000
Taxable Income falls in the 20% tax slab.
Tax = 12,500 + 20% of (7,00,000 - 5,00,000) = 52,500
Total Tax Liability with Section 80C Deduction = Rs52,500
Savings due to Section 80C Deduction = Rs 82,500 - 52,500 =30,000 -
In this scenario, by utilizing the Section 80C deduction of Rs 1.5 lakh, the individual reduces their tax liability from Rs 82,500 to Rs 52,500, resulting in tax savings of Rs 30,000
You can also easily calculate the tax savings under Section 80C with the Tax2win calculator. Click here to calculate.
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