29 Nov 2018
#FinancialBytes: Income tax deductions taxpayers can claim under Section 80C
Income tax accounts for a major part of the government's revenue and salaried individuals form a significant chunk of the overall taxpayers.
While paying taxes could be a little hard on taxpayers' bank balance, they can lower their tax liability and save on taxes by claiming tax deductions while filing Income Tax Returns (ITR).
Here are the deductions taxpayers can avail under Section 80C.
The Section 80C of Income Tax Act
Section 80C of the Income Tax Act provides for several deductions for which both individuals and Hindu Undivided Families (HUFs) are eligible.
Under it, taxpayers can avail deductions of upto Rs. 1.5 lakh per year.
As Section 80C provides wide-ranging tax deductions, it is further divided into sub-sections for clarity: Sections 80 CCC and 80 CCD [80CCD (1), 80CCD (1B), and 80CCD (2)].
Here are some investments/payments eligible for deduction under Section 80C
One can claim deductions under Section 80C on payments towards life insurance policies, provident fund (PPF, EPF, VPF), fixed deposits (minimum five-year tenure), and tuition fees (for two children).
Payment towards purchase/construction of residential properties (housing loans), ELSS mutual fund investments, NABARD bonds, and certain post-office schemes like Sukanya Samriddhi Yojana, National Savings Certificates, Senior Citizens Savings Scheme are some among other eligible expenses.
About the tax deductions under Section 80CCD
Section 80CCD provides for deductions on investments in pension schemes notified by the government.
Under this, contributions by taxpayers and their employers are eligible for deduction.
Section 80CCD(1) deals with an employee's contribution to pension account, while 80CCD(1B) is for self-contribution to National Pension Scheme (NPS) and Atal Pension Yojana.
Section 80CCD(2) provides for deductions on the contribution made by taxpayer's employer to NPS.
Scope for income tax deductions under Section 80 CCC
The Section 80 CCC has provisions for deduction on investments in annuity plans. The maximum deduction a taxpayer can claim under this section is Rs. 1.5 lakh. Only individual taxpayers are eligible to avail tax deduction under this section.
Maximum deduction under Sections 80C, 80CCC, and 80CCD (1)
Total deduction amount under Sections 80C, 80CCC, and 80CCD (1) cannot exceed Rs. 1.5 lakh (according to FY17-18 rules). However, taxpayers can avail an additional Rs. 50,000 if they invest in National Pension Scheme. In this case, the maximum deduction amount is Rs. 2 lakh.
- Financial Bytes
- Financial Services
- Income Tax
- Income Tax Deductions
- Income Tax Department
- IT Returns
- Section 80C
- Atal Pension Yojana
- Hindu Undivided Families
- Income Tax Act
- Income Tax Returns
- National Pension Scheme
- National Savings Certificates
- Section 80 CCC
- Section 80CCD
- Sections 80 CCC
- Sections 80C
- Senior Citizens Savings Scheme
- Sukanya Samriddhi Yojana