Section 80C of the Income Tax Act, 1961, provides various avenues for taxpayers to claim deductions on their taxable income by investing in specified instruments. As of my last update in January 2022, here are some of the popular deductions available under Section 80C:
- Investments in Public Provident Fund (PPF): Contributions made to PPF accounts are eligible for deduction under Section 80C. The interest earned and the maturity amount are tax-free.
- Employee Provident Fund (EPF): Contributions made by both the employee and the employer towards EPF are eligible for deduction under Section 80C.
- Life Insurance Premiums: Premiums paid towards life insurance policies for self, spouse, and children are eligible for deduction under Section 80C.
- Equity Linked Savings Schemes (ELSS): Investments made in ELSS mutual funds are eligible for deduction under Section 80C. ELSS funds have a lock-in period of three years.
- National Savings Certificate (NSC): Investments made in NSC are eligible for deduction under Section 80C. The interest accrued annually is deemed to be reinvested and qualifies for deduction.
- 5-year Fixed Deposits: Tax-saving fixed deposits with a lock-in period of five years offered by banks are eligible for deduction under Section 80C.
- Tuition Fees: Tuition fees paid for the education of up to two children are eligible for deduction under Section 80C.
- Principal Repayment of Home Loan: Repayment of the principal amount of a home loan qualifies for deduction under Section 80C. However, this deduction is available only after the construction of the property is complete.
- Sukanya Samriddhi Account: Contributions made to Sukanya Samriddhi Account for the girl child are eligible for deduction under Section 80C.
- Senior Citizens Savings Scheme (SCSS): Investments made in SCSS are eligible for deduction under Section 80C.
The maximum deduction allowed under Section 80C is Rs. 1,50,000 per financial year, aggregated across all eligible investments and expenses. It’s important to review the terms and conditions of each investment option and consult with a tax advisor to optimize tax savings under Section 80C. Additionally, tax laws and provisions are subject to change, so it’s advisable to refer to the latest tax regulations.
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