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[Notification No. 49/2022/F.No.370142/6/2022-TPL] [Notification No. 85/2022/F. No. 300196/17/2022-ITA-I]

DEDUCTION UNDER SECTION 80C

Section 80C of the Income Tax Act of India is a clause that points to various expenditures and investments that are exempted from income tax. It allows for a maximum deduction of up to Rs.1.5 lakh every year from an investor’s total taxable income.

Section 80C is applicable only for individual taxpayers and Hindu Undivided Families. Corporate bodies, partnership firms, and other businesses are not qualified to avail tax exemptions under Section 80C.

Subsections of Section 80C

Under the Income Tax Act of India, deductions under Section 80Care dividedinto certain sub-sections. These are –

Tax saving sections Eligible investments for tax exemptions
Section 80C80C allows deduction for investment made in PPF, EPF, LIC premium, Equity linked saving scheme, principal amount payment towards home loan, stamp duty and registration charges for purchase of property, Sukanya samriddhi yojana (SSY) , National saving certificate (NSC) , Senior citizen savings scheme (SCSS), ULIP, tax saving FD for 5 years, Infrastructure bonds etc
Section 80CCCPayment made towards pension plans, as well as mutual funds.
Section 80CCD (1)Employee’s contribution under section 80CCD (1) Maximum deduction allowed is least of the following -10% of salary (in case taxpayer is employee) -20& of gross total income (in case of self-employed) -Rs 1.5 Lakh (limit allowed u/s 80C)
Section 80CCD(1B)Investments of up to Rs.50,000 in NPS is considered for exemption under this section.
Section 80CCD (2)Employer’s contribution towards NPS (up to 10%, comprising basic salary and dearness allowance, if any) is exempted under this category.

Investments eligible for deduction under Section 80C of The Income Tax Act

Investment optionsInterestMinimum lock-in period
ELSS12% to 15% (depending on market fluctuation)3 years
NPS8% to 10%Till the investor reaches 60 years of age (retirement)
Senior citizen savings scheme8.60%5 years
PPF7.10%15 years
NSC6.8%5 years
ULIP8% to 10% (depending on market fluctuation)5 years
Fixed deposit7% to 8%5 years
Sukanya Samriddhi Yojana8.40%8 years

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