Section 80C deduction is available for taxpayers who have made certain payments like life insurance premiums, bank fixed deposits, payment of tuition fee, deposit under Sukanya Samriddhi Yojna, National Savings Certificate, ELSS, pension funds and more. Section 80C deduction is one of the most popular income tax deduction, as it covers a range of payments from tuition to bank deposits. Taxpayers can claim a maximum deduction of upto Rs.1.5 lakhs under Section 80C, 80CC and 80CCD.
Various types of deposits are eligible for deduction under Section 80C subject to certain conditions. Deposits under the following schemes are ideal for risk averse investors who would like to earn interest on their investment while also saving on taxes.
Some types of investments in mutual funds and equity shares are eligible for deduction under Section 80C. Investments in following mutual funds and equity shares are ideal for investors who would like to earn above-average rate of return on their investment while also saving on taxes.
Various types of insurance premiums are eligible for deduction under Section 80C. Taxpayers who wish to mitigate risk while saving taxes can opt for certain types of insurance plans to reduce risk and save taxes.
Purchasing or constructing a house is a great way to save taxes. Payments like repayment of home loan, home loan interest and registration charges are tax deductible under Section 80C. For the deduction to be available the taxpayer must hold ownership of the residential property for a minimum of fiver years. If the taxpayer transfers the house property before the expiry of five years from the end of the financial year, then the deduction availed in the previous years would be held as income in the current year.
Amount paid towards tuition fee for the purpose of full time education of any two children of the individual shall be admissible as deduction under section 80C( 2)( xvii). Deduction would be admissible of the amount paid to any university, college, school or other educational institution situated within India. However, payment towards any development fees or donation or payment of similar nature would not be admissible as deduction.
Amount contributed by a taxpayer as an employee to any Provident Fund or any Recognised Provident Fund or any approved Superannuation Fund is admissible as deduction under Section 80C from gross total income.
Annuity is a powerful financial planning tool that which can be used by taxpayers to create a steady stream of income after certain years, while also saving on taxes.
Deposit in an account under the Senior Citizens Savings Scheme Rules, 2004 and deposit as five year time deposit in an account under the Post Office Time Deposit Rules is allowed as deduction from gross total income under Section 80C.
If any amount, including interest accrued is withdrawn by the taxpayer from deposit accounts before the expiry of the period of five years from the date of its deposit, the amount withdrawn will be deemed to be the income of the assessee in the previous year in which the amount is withdrawn except amount of interest which was included in the total income of the assessee in any earlier previous year. In case of death of the assessee only interest accrued, if any, which was not included in the total income of the taxpayer for any earlier previous year will be taxable. Any amount received by the nominee or legal heir of the assessee towards refund of deposit will not be taxable.
Contribution to any of the pension funds are deductible under Section 80C
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