What is Section 80(c) of the Income Tax Act?


What is Section 80(c) of the Income Tax Act?

Section 80c comprises of various investments and expenses that are eligible for tax deductions. Under section 80C, a deduction of Rs 1,50,000 can be claimed from once total income. One can reduce up to Rs 1, 50,000 from his total taxable income through section 80C. This deduction is given to an Individual or a Hindu Undivided Family. A maximum of Rs 1, 50,000 can be claimed for the FY 2018-19, 2017-18 and FY 2016-17 each.

This section says a deduction to an individual for any amount paid or deposited in any annuity plan of LIC or any other insurer. The plan must be for getting a pension from a fund referred to in Section 10(23AAB). 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.

The mentioned investments are eligible for deductions u/s 80C. An investor can choose to either invest in all the available tax-saving instruments or in part of them:

Employee Provident Fund (EPF) & Voluntary Provident Fund (VPF)

  • Public Provident Fund (PPF)
  • Equity Linked Savings Scheme (ELSS)
  • National Savings Certificate (NSC)
  • Sukanya Samriddhi Scheme
  • Senior Citizens Savings Scheme (SCSS)
  • 5 Year Post Office Time Deposit
  • 5-year Tax Saving Bank Fixed Deposits (FD)
  • Unit Linked Insurance Plan (ULIP)
  • Infrastructure Bonds
  • NABARD Rural Bonds

Subsections under Section 80C:
Section 80C has an exhaustive list of deductions an individual is eligible for, which have led to the creation of suitable sub-sections to provide crystal clear knowledge to taxpayers.

  • Section 80 CCC: Section 80 CCC of the Income Tax Act says scope for tax deductions on investment in pension funds. These pension funds could be from any insurer and a maximum deduction of Rs 1.5 lakh can be claimed under it. This deduction can be claimed only by particular taxpayers.
  • Section 80 CCD: Section 80 CCD focus to encourage the habit of savings among individuals, providing them with an incentive for investing in pension schemes which are notified by the Central Government. Contributions made by an individual and his/her employer, both are eligible for tax deduction, subject to the deduction being less than 10% of the salary of the person. Only individual taxpayers are eligible for this deduction.
  • Section 80 CCF: Open to both HUF and Individuals, Section 80 CCF contains rules for tax deductions on the subscription of long-term infrastructure bonds which have been notified by the government. Under this scheme, one can claim a maximum deduction of Rs 20,000 under this Section.
  • Section 80 CCG: Section 80 CCG of the Income Tax Act permits a maximum deduction of Rs 25,000 per year, with specified individual residents eligible for this deduction. Investments in equity savings schemes notified by the government are permitted for deductions, subject to the limit being 50% of the amount invested.
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