What All Comes Under Section 80C Deductions?

“A fool and his money are soon parted. The rest of us wait for tax time.”

Yes, escaping income tax is a herculean task. Fortunately, you have the Section 80C deductions, given so generously by the government. You get a tax deduction up to INR 1.5 lakhs a year, under Section 80C of the income tax act. You get this benefit, only if you invest in certain tax saving financial instruments. Let’s take a look at the financial instruments, which give you tax benefits, under Section 80C.

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Financial Instruments which give Section 80C Benefits

Tax benefits on investing in the PPF

Public Provident Fund also known as PPF, is a very popular investment in India. You get tax deductions under Section 80C of the income tax act, up to INR 1.5 Lakhs a year, on your investment in the PPF.

Tax benefits on life insurance

You pay a premium and avail a life insurance plan. You get a tax deduction, up to INR 1.5 Lakhs a year, under Section 80C of the income tax act, on the premium you pay for the life insurance plan. You get this deduction, if you avail a term life insurance plan, endowment life insurance plan, money back plan, ULIP or even a whole life insurance plan.

Tax benefits on investment in ELSS

You get tax deductions under Section 80C, up to INR 1.5 Lakhs a year, on your investment in the equity linked savings scheme, called ELSS. The ELSS has a lock in of 3 years. You cannot touch your investment in the ELSS, for 3 years.

Tax benefits on repayment of a home loan

You avail a home loan to purchase your dream house. You get tax deductions on the EMI (Principal component) of your home loan, under Section 80C of the income tax act, up to INR 1.5 Lakhs a year.

Tax benefits on senior citizen savings scheme

You have completed 60 years. You are now a senior citizen. You are eligible for a tax deduction, under Section 80C of the income tax act, up to INR 1.5 Lakhs a year, on your investment in senior citizen savings scheme (SCSS). The senior citizen savings scheme has a maturity period of 5 years.

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Tax benefits on children’s education expenses

You get a tax deduction under Section 80C, up to INR 1.5 Lakhs a year, on the tuition fees, paid for your children’s education. You can avail the Section 80C deduction, only for two children. You get this deduction, only if the educational institution, is in India.

Tax benefits on contribution to the Employee Provident Fund

Your (employee’s) contribution, towards the employee provident fund (EPF), is available for a tax deduction under Section 80C, up to INR 1.5 Lakhs a year. A minimum of 12% of your basic salary, is deducted as a contribution towards the EPF.

Tax benefits on investment in the National Saving Certificate

You get a tax deduction under Section 80C, up to INR 1.5 Lakhs a year, on your investment in the National Saving Certificate (NSC). The National Saving Certificate has a maturity of 5 years. The interest you earn from the NSC, is reinvested at the same interest rate. The interest which is reinvested, is also eligible for a tax deduction, under Section 80C.

Tax benefits on investment in a tax saving fixed deposit

You invest your money in a tax saving fixed deposit. The tax saving fixed deposit, has a maturity of 5 years. You get a tax deduction, under Section 80C of the income tax act, up to INR 1.5 Lakhs a year, on your investment in tax saving fixed deposit. You get Section 80C tax benefits, only on tax saving fixed deposits. Your investment in an ordinary fixed deposit, even if it is held for 5 years, is not eligible for Section 80C benefits.

Tax deduction on property registration expenses and stamp duty

You pay stamp duty and registration charges, when you buy your home/property. These charges are around 5-7% of the cost of the property (market value), depending on the State in which you buy the property.

Investment in post office time deposits get tax benefits

You get a tax deduction under Section 80C, up to INR 1.5 Lakhs a year, on your investment in a post office time deposit. You get this tax deduction, only if you invest in post office time deposits, of 5 year maturity.

Tax benefits of sukanya samriddhi account yojana

The Government wants to pass on the message, that the girl child, is not a financial burden to a family.You have a minor girl child (10 years old or less). Simply open a Sukanya Samriddhi Account and avail tax deductions under Section 80C, up to INR 1.5 Lakhs a year, on the invested amount.

Time to end this article on a humorous note. “People who complain about taxes can be divided into two classes: men and women.” Why waste precious time complaining about taxes? Simply avail Section 80C deductions and enjoy life.

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