Section 80C of the Income Tax Act and Information on Deduction under Section 80C

If you invest in specific programs, the government will exempt you from paying taxes. Section 80C is one of the most important headings under which you can declare your savings and receive the maximum deduction. In this post, we will discuss deductions under section 80C, tax savings under section 80C, and exemptions under section 80c of the Income Tax Act.

Introduction

Various expenditures and investments are exempt from the Income Tax Department under Section 80C of the Income Tax Act. It permits an investor to deduct up to INR 1.5 lakh from their total taxable income each year. Individual taxpayers and HUF (Hindu Undivided Family) are both covered by Section 80C. Partnership firms, corporate bodies, and other enterprises are not eligible for Section 80C tax exemption.

What is Section 80C?

Section 80C is one of the most important headings under which you can declare your savings and receive the maximum deduction. EPF (Employee Provident Fund), LIC premium, PPF, Equity-linked saving scheme, principal amount payment towards home loan, stamp duty and registration charges for property purchase, National saving certificate (NSC), Senior citizen savings scheme (SCSS), Sukanya Smriddhi Yojana (SSY), ULIP, tax saving FD for 5 years, Infrastructure bonds, etc. are all eligible for deduction under section 80C of the Income Tax Act. Also, Section 80C includes Subsection 80CCC, 80CCD, and 80CCD (2).

Investment options that are eligible for the income tax deduction under Section 80C

• PPF (Public Provident Fund)

Under section 80C of the Income Tax Act, any contribution to a PPF (Public Provident Fund) can be claimed as a tax deduction. The highest amount that can be saved on taxes under section 80C is INR 1.50 lakhs. Any voluntary contribution to the provident fund made by an employee is also tax-deductible under section 80C of the Income Tax Act.

• EPF (Employee Provident Fund)

Any contribution to an EPF (Employee Provident Fund) can be claimed as a tax deduction under section 80C of the Income Tax Act. The maximum amount of tax savings under section 80C is INR 1.50 lakhs. Section 80C of the Income Tax Act allows employees to deduct their voluntary contributions to the provident fund.

• Investment in Senior Citizen Saving Scheme

A contribution to the SCSS qualifies for a tax exemption under Section 80C, which is limited to INR 1.5 lakh. Individuals over the age of 60 are entitled to such a deduction under section 80c, as do those who choose to enroll in a voluntary retirement program after the age of 55, with a minimum lock-in-tenure of 5 years.

• NSC (National Saving Certificate)

NSC is one of the most popular Section 80C tax-saving schemes. National Saving Certificate interest is compounded semi-annually, with a maximum maturity length of 5 to 10 years. There are no restrictions on the overall amount of money that can be invested in NSC in a given fiscal year. However, under Section 80C, the exemption is limited to a maximum of 1.5 lakh each financial year.

Other tax exemptions besides Section 80C

Aside from Section 80C, you can get tax relief from many additional sub-sections of Section 80. Consider the following scenario

• Section 80D – You can get a tax break on the premiums you pay for health insurance policies for yourself, your spouse, your children, and your parents. This area allows you to deduct up to 25,000 for yourself and your spouse, plus an additional 25,000 for your parents. This provision allows for a maximum exemption of one lakh rupees.

• Section 80G – Donations to various charities and social purposes are included in this section. Depending on the reason for which you are donating, you may be entitled to up to a 50% or 100% exemption, with no restrictions.

• Section 80GGC – Donations to any political party are included under this section. These exemptions are only available if the payment is made in a non-cash manner.

FAQs on Section 80C of the Income Tax Act

1. Is Section 80C of the Internal Revenue Code applicable to Hindu Undivided Families?

Individuals and HUFs can take advantage of the tax incentives provided by Section 80C of the Income Tax Act.

2. which year can I claim a discount for stamp duty paid on a house purchase?

You can claim stamp duty for the purchase of a dwelling in the year in which the stamp duty payment is done under Section 80C.

3. What is the 80CCD section under the Income Tax Act?

80CCD is a part of the tax code that allows you to deduct contributions to national pension schemes that have been approved by the government. Contributions made by an employer, an employee, or a voluntary self-contribution are all eligible for the deduction.

4. Can deductions under Section 80C be claimed even if a proof has not been supplied to the employer when submitting income tax returns?

Before the conclusion of the fiscal year, you must produce proof of your investments. This permits your employer to account for them when calculating tax deductions and taxable income. Even if you neglect to produce the proof, you can claim these investments before completing your income tax returns if they were made before the relevant financial year.

Conclusion 

As a result of these and other deductions, taxpayers’ tax payments can be significantly reduced. So, before you file your income tax returns, double-check all of the rules under Section 80C and other sub-sections of Section 80 to be sure you are getting the most out of your tax deductions.