Section 80C is one of the most popular and favorite sections amongst the taxpayers as it allow reducing 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.
The benefit of this deduction can be availed by Individuals and HUFs. Companies, partnership firms, LLPs cannot avail the benefit of this deduction.
Section 80C includes subsections, 80CCC, 80CCD (1), 80CCD (1b) and 80CCD (2).
It is important to note that overall limit including the subsections for claiming deduction is Rs 1.5 lakh except an additional deduction of Rs 50,000 allowed u/s 80CCD(1b)
Section 80CCC – Insurance Premium /Section 80CCD – Pension Contribution
|Eligible investments for tax deductions|
|80 C||80C allows deduction for investment made in PPF , EPF, LIC premium , Equity linked saving scheme, principal amount payment towards home loan, stamp duty and registration charges for purchase of property, Sukanya smriddhi yojana (SSY) , National saving certificate (NSC) , Senior citizen savings scheme (SCSS), ULIP, tax saving FD for 5 years, Infrastructure bonds etc.|
|80CCC Deduction for life insurance annuity plan.||80CCC allows 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||Additional deduction of Rs 50,000 is allowed for amount deposited to NPS account|
Contributions to Atal Pension Yojana is also eligible for deduction.
|80CCD (2) Deduction for NPS||Employer’s contribution is allowed for deduction upto 10% of basic salary plus dearness allowance under this section. Benefit in this section is allowed only to salaried individuals and not self-employed.|
Here are some investment options that are allowed as deduction u/s 80C. They not only help you with saving taxes but also help you grow your money. A quick comparison for the options is tabulated below:
|Investment options||Average Interest||Lock in period for||Risk factor|
|ELSS funds||12% – 15%||3 years||High|
|NPS Scheme||8% – 10%||Till 60 years of age||High|
|ULIP||8% – 10%||5 years||Medium|
|Tax saving FD||7% – 8%||5 years||Low|
|Senior citizen savings scheme||7.4%||5years (can be extended for other 3 years)||Low|
|Sukanya Samriddhi Yojana||8.4%||Till girl child reaches 21 years of age|
(partial withdrawal allowed when she reached 18 years)