All this brings us to the discussion about Section 80C, the most common deduction available under the Income Tax Act. Here is how it works and helps individuals save tax in a financial year.
Every financial year, taxpayers invest a significant amount of time and effort in strategizing and devising ways to invest to save taxes. Fro, visiting banks or other financial institutions, contacting agents to getting baffled with the list of numerous tax-saving products available online, the process is quite overwhelming. Add to it the fact that being someone from a non-financial background, you struggle to understand and make use of the different financial jargon.
To successfully use and make the most of your hard-earned income, you must comprehend the minute details of tax planning. With varying incomes, and income owner falls under different tax slabs. However, to help them save their money, certain tax-saving schemes and plans help people with several tax benefits. Certain sections govern the savings of tax-paying individuals, and one of the deductions that taxpayers can avail are offered under section 80 C of the Income Tax Act.
But, before knowing what this section has as deductions, it is better to have a fair idea about the dealings under Section 80C Income Tax.
Section 80C: Taxpayers’ Most Favoured Provision
80C is a section under the Income Tax Act, 1961 that includes the various provisions that allow taxpayers to avail deductions up to a maximum of ₹1,50,000 per annum. In addition, the individuals seeking deductions under this section can further opt for investments in various market schemes and claim deductions on the parts of their income that stand taxable under the act.
The benefits under Section 80C relates to the provisions for tax deductions on several payments, with both individuals and Hindu Undivided Families that are eligible for these deductions. The eligible earners and taxpayers can claim deductions to the tune of ₹1.5 lakh per year, with this amount being a combination of some of the deductions available under Sections 80C, 80CCC, and 80CCD.
Some popular investments eligible for this tax on savings are mentioned below:
- Payments that are made towards towards life insurance policies for self, spouse, or children
- Payments that are made towards a superannuation or any provident fund
- Payments regarding the tuition fees paid to educate a maximum of two children
- Payments that are made towards construction or purchase of a residential property
- Payments that are issued towards a fixed deposit with a minimum tenure of 5 years
Section 80C of the Income Tax Act, 1961 offers additional deductions like investment in some prominent instruments like mutual funds, senior citizens saving schemes, purchase of NABARD bonds, etc.
Sub-sections under Section 80C
80C income tax section has an exhaustive list of deductions an individual is eligible for, which fall under different subsections that empower taxpayers to choose the suitable means and make prudent financial decisions.
- Section 80CCC
Section 80CCC provides scope for tax deductions on investment in pension funds. These pension funds can come from an insurer, and a maximum deduction of ₹1.5 lakh can be claimed under it. However, this deduction can be claimed only by the individual taxpayers.
- Section 80CCD
Section 80CCD under the Income Tax 80C aims to encourage the habit of savings among individuals, providing them with an incentive for investing in pension schemes that the Central Government is notifying. The contributions made by an individual and their employer are eligible for a tax deduction only if the deduction is less than 10% of the employee’s salary. Only individual taxpayers can opt for this provision.
- Section 80CCF
Open to both Hindu Undivided Families and individuals, Section 80CCF contains provisions for tax deductions and provides benefits under Section 80C on the subscription of long-term infrastructure bonds, which the government has notified. One can claim a maximum deduction of ₹20,000.
- Section 80CCG
Section 80CCG of the act permits a maximum deduction of ₹25,000 per year, with specified individual residents eligible for this one. The government notified investments in equity savings schemes and are permitted for deductions, but the limit stands at 50% of the amount invested.
Regardless of your income, you may save a significant amount of money by effectively organizing your investments. You can explore unlimited options with tax-saving investments and deductions under Section 80C, and your payments can be greatly reduced. Double-check the requirements before filing income tax returns online to get the most out of your 80C deductions.
