Section 80C of the Income Tax Act, 1961 is one of the most popular sections for tax planning in India. It allows taxpayers to claim a deduction of up to ₹1.5 lakh on certain specified investments and expenses. This deduction can help to reduce your taxable income and save you money on taxes.
The most popular investments and expenses that qualify for deduction under Section 80C mentioned below:
- Life insurance premiums:You can claim a deduction for the premiums paid on life insurance policies taken for yourself, your spouse, or your children. The deduction is available for both term and permanent life insurance policies.
- Pension contributions:You can claim a deduction for the contributions made to pension schemes, such as the National Pension System (NPS) and the Employees’ Provident Fund (EPF). The deduction is available for both employer-sponsored and self-funded pension schemes.
- Equity-linked savings schemes (ELSS):ELSS are mutual funds that invest in a mix of equity and debt instruments. You can claim a deduction for the amount invested in ELSS, up to a maximum of ₹1.5 lakh in a financial year.
- Public provident fund (PPF):PPF is a government-backed savings scheme that offers a fixed rate of interest. You can invest in PPF for a period of 15 years, and you can withdraw your money after maturity or at any time after five years, subject to certain conditions. You can claim a deduction for the amount invested in PPF, up to a maximum of ₹1.5 lakh in a financial year.
- National savings certificate (NSC):NSC is a government-backed savings certificate that offers a fixed rate of interest. You can invest in NSC for a period of three, five, or ten years. You can claim a deduction for the amount invested in NSC, up to a maximum of ₹1.5 lakh in a financial year.
- Senior citizen savings scheme (SCSS):SCSS is a government-backed savings scheme that is specifically designed for senior citizens. You can invest in SCSS for a period of three years, and you can renew it for another three years. You can claim a deduction for the amount invested in SCSS, up to a maximum of ₹1.5 lakh in a financial year.
- Home loan repayment:You can claim a deduction for the principal amount repaid on your home loan, up to a maximum of ₹2 lakh in a financial year.
- Tuition fees for children:You can claim a deduction for the tuition fees paid for your children’s education, up to a maximum of ₹1 lakh in a financial year.
It is important to note that not all investments and expenses qualify for a deduction under Section 80C. For example, investments in gold or real estate do not qualify for deduction.
If you are considering making any investments or incurring any expenses for the purpose of tax planning, it is important to consult with a tax advisor to ensure that your investments qualify for deduction under Section 80C.
Here are some points for tax planning under Section 80C:
- Make sure that your investments qualify for deduction under Section 80C.
- Spread your investments across different instruments to reduce your risk.
- Start investing early to take advantage of the power of compounding.
- Review your investments regularly to make sure that they are still meeting your needs.
Tax planning can be a complex process, but it is important to take the time to understand your options and make the most of the deductions available to you. By following above mentioned point, you can save money on taxes and reach your financial goals sooner.
In addition to the above, here are some additional information about tax planning under Section 80C:
- The deduction under Section 80C is available to both individuals and HUFs.
- The deduction is available for investments made in the financial year.
- The deduction is available for a maximum of ₹1.5 lakh in a financial year.
- The deduction is claimed while filing your income tax return.
If you have any questions about tax planning under Section 80C, you should consult with our team (TAXMAAZRA).
