Deductions under 80C are one of the most popular among taxpayers. 80C allows you to reduce your taxable income by making tax-saving investments or paying toward some eligible expenses. Maximum deduction under section 80C is capped at 1.50 Lakh in a financial year.
Today we will look at some of the most common eligible deductions available under section 80C to help you save tax:
1. Public Provident Fund: or “PPF” is a long-term investment scheme with a minimum tenure of 15 years and offers an interest rate of 7.1%. The interest earned on PPF is also exempt from Income Tax. One can invest in PPF through any scheduled commercial bank or a post office.
2. Equity Linked Saving Scheme or ELSS is a type of equity mutual fund with a lock-in period of 3 years. Because it has a lower lock-in period and better odds of earning a better return, ELSS is one of the most preferred investments for tax deduction under 80C.
3. Life Insurance Premium: Any life insurance or ULIP premium paid during the year can be claimed ****for tax deduction under 80C.
4. Employee Provident Fund: Employee contributions to the EPF are deductible under Section 80C, whereas employer contributions to the EPF are tax-free but not deductible under Section 80C.
5. Sukanya Smriddhi Yojana is a government-sponsored program developed to benefit girl children under the initiative “Beti Bachao – Beti Padhao”. Parents of girls younger than ten years old can invest in it. The account matures after 21 years or in the event of the marriage of the girl child after she gains the age of 18. Sukanya Samriddhi Scheme returns are exempt from tax.
6. Senior Citizen Saving Scheme: The senior-citizen savings scheme is a government-guaranteed savings programme with a 5-year term that can be extended for an additional three years.
7. Fixed Deposit for 5 years: Fixed deposits at banks and post offices with a tenure of five years are tax deductible.
8. National Pension Scheme. Both employee and employer’s contribution to NPS is deductible under section 80C, provided that the employer’s payments cannot be greater than 10% of your base wage plus the dearness allowance. Self-employed individuals can also benefit from this benefit by contributing up to 20% of their gross income. In addition, above and beyond the ₹ 1.5 lakhs under Section 80C, voluntary donations to the NPS up to ₹ 50,000 are exempt. These free-will donations are exempt from taxation under Section 80CCD (1B).
9. Expenses Available for Deduction: Principal Amount Paid Towards Home Loan, Stamp Duty, Registration Charges for purchase of property, and Tuition fees paid for up to two children at any school, college or institution are some expenses that are also available for deduction under section 80C.
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