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Income Tax Section 80C: As March 31 is approaching, investment efforts to save tax have also intensified. These days, especially salaried professionals start looking for tax saving options. Section 80C of the Income Tax Act 1961 is most discussed in tax saving. This is one of the most commonly used deductions. Usually investors use this option to save tax. Whether you can avail tax benefits under Section 80C or not depends on the tax system you choose. Tax benefits under Section 80C are available only to those who opt for the old tax system. Those who opt for the new system cannot avail tax benefits under Section 80C.
What is Section 80C of IT Act?
Section 80C works as a tax deduction aimed at reducing taxable income and subsequently tax liabilities. This provision includes specific investment and payment options, which can reduce taxable income up to Rs 1.5 lakh. You can also invest more than Rs 1.5 lakh in investment options under 80C. But as per tax saving, tax benefit will be available only up to Rs 1.5 lakh. Most of the tax saving investment options covered under 80C have lock-in. For example 5 year FD, ELSS.
These are the investment options
If you want to take advantage of Section 80C of the Income Tax Act 1961, there are many investment options available. Like EPF, Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), National Saving Certificate (NSC), Equity Linked Saving Scheme or Tax Saving Mutual Fund (ELSS), Tax Saving FD (Fixed Deposit), National Pension. System (NPS) and Senior Citizens Savings Scheme (SCSS), premium payment of life insurance, Unit Linked Insurance Plan (ULIP). Apart from this, you can also claim income tax exemption under Section 80C only on tuition fees for the education of two children, part of the principal amount included in the home loan installment, stamp duty and registration fees on the purchase of a house, etc. In these investment options, you can avail tax exemption on deposits up to Rs 1.50 in a financial year.
What comes under Income Tax Section 80CCC?
Section 80CCC of the Income Tax Act allows deduction in income tax that can be claimed for purchasing certain annuity plans or pension funds offered by public insurance companies. It is necessary that the person is eligible for such funds as per section 10 (23AAB).
There are no exemptions under these types of policies, where income such as bonuses and interest earned are always taxable. These deductions can be claimed by both resident and non-resident Indians, whereas an undivided Hindu family cannot claim deduction under this section.