Income Tax Deduction | Section 80C
(Last Updated On: April 2, 2019)
- A brief about Section 80C
- How can I save income & taxes?
- Life Insurance Premium Deduction
- Tuition Fees Deduction
- Deduction in Principal Repayment of House Loan
- PPF Deduction
- 5 Year Fixed Deposit
- Deduction in NSC Investments
- Sukanya Samriddhi Account
- ELSS Deduction
- Stamp Duty & Registration Charges Deduction
Lot of hopes were there that an increase in the limit of Deduction under section 80C will be seen by the Budget 2019. Contrary to the expectation no change in the limit of Income Tax Deduction u/s 80C has been bought by the Budget 2019. And the old limit of Rs 1,50,000 continues for Financial Year 2019-20 too.
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.
|♦ Deduction is available for 2 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 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.
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.
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.
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
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