7 Mar 2018

Section 80 C deductions

Finance feed by:

CA Rahul Agarwal
B.com (Hons),CA
CA in Practice    •    15 Year 6 Month  experience

The most widely used option to save income tax is section 80C of the Income Tax Act. As per this section, if an individual or Hindu Undivided Families (HUFs) invests in or spends on specified avenues then up to Rs 1.5 lakh, as per the current laws, of this investment/expenditure can be claimed as a deduction from gross total income before calculating tax payable on it in a financial year. The deduction can be claimed only from income in the financial year in which the specified investment/expendi has been incurred

Below is a long list of investments, expenditures that qualify for deduction from gross total income under Section 80C:
a) Premium paid for life insurance, ULIP, annuity plan 
b) Contribution to provident fund such as EPF, VPF or PPF or superannuation funds 
c) Investment in NSC, KVP, Senior Citizen Savings Scheme (SCSS) 2004, 5-year Post Office Term deposits, 5-year bank fixed deposits. 

By claiming this deduction, a person can reduce his/her gross taxable income and thereby the total tax payable by him/her. For example, if your gross total earnings say, for a financial year is Rs 6.5 lakh and if you invest Rs 1.5 lakh in notified schemes which allows you to claim this tax benefit, then your net taxable income will come down to Rs 5 lakh and you would have to pay tax on this amount. 

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