Deduction 80C A.Y. 2023-24 & A.Y.2024-25: There are a number of deductions under Chapter VI-A, namely Sections 80C to 80U, that can be deducted from gross income in order to arrive at net income/taxable income. In this article, we will discuss only section 80C deduction. Investments in certain instruments, such as Life Insurance Premiums, Employee Provident Funds (EPFs), Public Provident Funds (PPFs), National Savings Certificates (NSCs), tax-saving fixed savings, five-year post office time deposits, etc., are eligible for deductions under this section. There is a maximum reduction of Rs. 1.5 lakh you can avail under section 80C.
In this article, the deduction under section 80C is included in all amendments of the Finance Act 2023.
Deduction 80C Quick Summary
|Amount Eligibile For Deduction||Rs.1.5 Lakh Per Year|
|Allowed To||Individual and HUF|
|Popular Payment Eligibile||LIC, LIP, PF, Tution Fee, FD 5 Years, Some Mutual Funds, Senior Citizens Schems, NABARD Bonds, 5 Years Post Office Time Deposit, Sukanya Samriddhi Scheme etc.|
Investments Eligible for Deduction 80C
You can avail the benefit of deduction u/s 80C by investing in the following schemes.
|1||Life Insurance Premium (LIP/LIC)||Life Insurance Premium for self, children, spouse in case of individual
Life Insurance Premium for any member of HUF - in case of HUF
|2||Public Provident Fund (PPF)||Amount Deposited in Public Provident Fund (PPF) for Self, Spouse, Children - In case of Individual
Amount Deposited in Public Provident Fund (PPF) for any member of HUF - In case of HUF
|3||Employee's contribution to Statutory Provident Fund||Employee's contribution to Statutory Provident Fund (SPF) or any Approved superannuation fund (ASF) or any Recognised Provident Fund (RPF)|
|4||National Saving Certificate||Interest accrued on NSC as well as the amount invested in NSC.|
|5||House Loan Repayment||Bank or financial institution loan repayment for the purchase or construction of a residential House|
|6||Fixed Deposit (5 Years)||Five-year or longer fixed deposit in a scheduled bank or post office|
|7||Children Education Fee||Tuition fee paid for children's education (Max 2 children for full-time education in India)|
|8||NABARD||Deposit in Notified bonds of NABARD (National Bank for Agriculture and Rural Development)|
|9||Senior Citizen Saving Scheme||Deposit in Senior Citizen Saving Scheme|
|10||ULIP||Contribution towards Unit Linked Insurance Plan (ULIP)|
|11||Mutual Funds||Notified units of Mutual Funds or UTI|
|12||Pension Scheme||Notified Pension scheme of UTI or MF|
|13||Sukanya Samridhi Scheme||Deposit in Sukanya Samridhi Scheme Account (for any girl child of an individual or girl child for whom such individual is a legal guardian)|
|14||Stamp Duty||Stamp duty, the registration fee for the acquisition of house property|
|15||Pension Scheme in 80CCD||Contribution to the pension scheme described in section 80CCD by an employee of CG for a fixed period of three years or more (NPS tier 2).|
If any previous year, an assessee
- has not paid his premiums for two years or terminated his LIP,
- hasn’t paid ULIP premiums for more than five years or has terminated the policy
- transfers house before 5 years from the end of the financial year in which possession is obtained
- the amount is withdrawn from a FD or Senior Citizen Savings Scheme before 5 years,
then all deductions allowed earlier will be considered income in the year of violation or withdrawal.
Deduction 80C Important Point
Maximum Deduction: A maximum deduction of Rs. 1.5 lakh can be claimed under Section 80C. Therefore, the total amount of investments that can be claimed under this section cannot exceed this amount.
Eligible Investments and Expenses: Investments and expenses can be deducted under Section 80C, including contributions to Employee Provident Funds (EPF), Public Provident Funds (PPF), National Savings Certificates (NSC), tax-saving fixed deposits, home loan repayment, tuition fees, life insurance premiums, National Pension System (NPS) contributions, and more. For a complete list of eligible investments and costs, please refer to the Income Tax Act. Visit the official website of income tax India
Lock-in time: ELSS (Equity-Linked Savings Scheme) investments have a three-year lock-in period while tax-saving fixed accounts have a five-year lock-in period.
Joint Investments: Section 80C allows people to deduct their own investments as well as investments they make for their children or contributions they make to certain plans, such as SSY (Sukanya Samriddhi Yojana), PPF, LIP.
Taxpayer Types: Individuals and Hindu Undivided Families (HUFs) can get exemptions from their taxable income under Section 80C.
Proof of Investment: Maintaining the correct paperwork and providing proof of investments and costs under Section 80C is of utmost importance. Tax officials may want to examine receipts, certificates, and statements as proof of the claim.
Restriction on Deduction under New Tax Regime: Under the new tax regime, assessees shall not be allowed any deduction under section 80C except
- Deduction in respect of employer’s contribution to the National Pension Scheme
- Deduction in respect of central govt contribution under Agniveer Corpus Fund
Max Amount of Deduction 80C
It is important to note that Rs. 1.5 lakh limit is an aggregate limit, meaning that the total amount of deductions under Section 80C cannot exceed Rs. 1.5 lakh. This limit applies to all deductions under Section 80C, including investments in PPF, ELSS, NPS, and insurance premiums. Any amount invested in excess of Rs. 1.5 lakh will not be eligible for a deduction. The aggregate amount of deduction u/s 80C, 80CCC, 80CCD and new section 80CCE is restricted to Rs.1,50,000.