What is Income Tax Section 80C?
Section 80C is a big advantage to salaried persons. Salaried employees can claim upto Rs.1.5 lakh rupees under Section 80C, 80CCC, and 80CCD(1) combined. Section 80C along with 80CCC, 80CCD gives mixture of activities. The Section 80C came into effect 1st April 2006. If an employee plans to invest well and spread them wisely across the different investments, can claim maximum deductions up to Rs.1.5 lakh, there by employee can lower tax liability.If an employee wants to utilise this section in some of investments during the previous year, employee can claim the utilised amount as deduction from total taxable income for previous year.
Example : If an employee earns a gross total income Rs:9,00,000/- as taxable income in FY:2022-23. If he/she invest Rs.1,00,000/- of this income in any or multiple activities which are listed under Section 80C, then employee taxable income will be reduced to 8,00,000/- .
Read Also : Income Tax Deductions Under Chapter VIA Section 80C to 80U
Amendment of section 80C
In section 80C of the Income-tax Act, in sub-section (1), for the words “one lakh rupees”, the Amendment of words one hundred and fifty thousand rupees shall be substituted with effect from the 1st day of section 80C in April, 2015. The amendment of Section 80C take effect from 1st April, 2015 .
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No Change in Section 80C in Union Budget 2022
As per the Union Budget 2022, there was no any changes to the exiting rules regarding the Section 80C. Those who are following old tax regime, can avail deduction up to Rs.1.5 lakh from gross income which is great relief to the tax payers. These Section 80C rules do not apply if individual/HUF opted for new tax regime option.
How to avail tax benefit Under Section 80C?
We can divide into two parts based on the activities under income tax section 80C. The division of two parts is as Investment Activities, Spending Activities. Now we know about these two in detail.
Read More : 80C Tax Saving Options Click Here
Investment Activates: Putting money in an investment for a period of time and then get it back.
Spending Activities : Spending money on the activities which are mentioned under section 80C.
80C Tax Saving Investment Activities
The following are the tax saving activities under investment. Tax payer has to consider following investment options which comes under section 80C to avail tax benefit.
- Provident Fund (EPF/VPF)
- Public Provident Fund (PPF)
- National Saving Certificate (NSC)
- Tax Saving 5 years FD from Banks
- 5 years Post Office Time Deposit (POTD)
- Senior Citizen Saving Scheme (SCSS)
- NHB deposit scheme
Market-Linked Products
- Life Insurance Premium (Participating Endowment Plans)
- New Pension Scheme (NPS) (under Section 80CCD) Atal Pension Yojana
- Equity Linked Savings Scheme (ELSS)
- Pension Plans from Insurance Companies (under Section 80CCC)
- Unit Linked Insurance Plan (ULIP)
80C Spending Activities
- Tuition fee for 2 children
- Stamp duty and registration cost of the House
- Home Loan Principal Payment
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Deductions under Section 80C of IT Act on Investments
Here we are proving the list of eligible various investments by which one can save tax under Section 80C of Income Tax Act. The list specified is as follows.
| Investment options Under Section 80C | Minimum lock-in period of Investment |
|---|---|
| National Pension System (NPS) | Till the age of 60 years |
| Equity Linked Savings Scheme (ELSS) | 3 years |
| Public Provident Fund (PPF) | 15 years |
| Senior Citizen Savings Scheme (SCSS) | 5 years |
| National Savings Certificate (NSC) | 5 years |
| Unit Linked Insurance Plan | 5 years |
| Fixed Deposit | 5 years |
| Sukanya Samriddhi Yojana | 21 years |
FAQ on Section 80C Income Tax Act
Is proof needed to claim deduction under Section 80C ?
Basically Yes. You need submit proof to the employer to claim them in your income tax return. If you were not able to submit proof timely, you can claim them during the return filling, even though they don’t appear on your Form 16.
Is Fixed Deposit allowed under Section 80C?
Yes, Fixed deposits which have certain lock-in periods as specified are allowed for tax saving under Section 80C. One can get tax benefit up to Rs.1.5 lakh under Section 80C of Income Tax Act of 1961 on investment in a fixed deposit.
What is the maximum deduction to get tax benefit under section 80C ?
Rs.1.5 lakh is the maximum deduction is allowed from your total income to avail the tax benefit under Section 80C of Income Tax Act 1961.
Can I get tax deduction benefit for more than Rs.1.5 lakh under section 80C?
The maximum tax benefit under is allowed under Section 80C is Rs.1.5 lakh from their total income every year.
Suggest investments to get maximum tax exemption?
Taxpayer can avail tax benefit by investing Senior Citizen Savings Scheme (SCSS), Sukanya Samriddhi Yojana (SSY), National Pension Scheme (NPS), Public Provident Fund (PPF), National Pension Scheme (NPS) and other specified investments as sated in IT Act.
Can a company avail the benefit of Section 80C?
No, Company cannot get benefit, Section 80C applies only to individuals or Hindu Undivided Families (HUFs).
Is repayment of house loan premium comes under 80C?
Yes, repayment of house loan premium comes under section 80C of Income Tax Act.