Income Tax Deductions section 80C

Each year most of the people eagerly wait for the budget proposals to be announced for various reasons.

One of the significant reasons is to know what all instruments of investments and deductions / exemptions have been included in the Section 80C of Indian Income Tax for employees, so that they can plan their tax savings according to the same, and maximize the benefits.

As income tax is major component of the salary, the changes / additions in 80C Section has major impact on the savings and expenses of salaried employees as they have a fixed source of income. The 80C Section deductions are introduced to boost savings of employees on one side and save tax on the other side.

Actually, Section 80C replaced the earlier Section 88 which was available till 1st April 2006. The Deductions permitted in the 80 C Section of Indian Income Tax is more or less the same investment mixes that were available in Section 88. Even the section 80CCC on pension scheme contributions was merged with the above 80C. However, this new section has allowed a major change in the method of providing the tax benefit. Section 80C of the Income Tax Act allows certain investments and expenditure to be tax-exempt. One must plan investments well and spread it out across the various instruments specified under this section to avail maximum tax benefit. Unlike Section 88, there are no sub-limits and is irrespective of how much you earn and under which tax bracket you fall.

The most important aspect that needs to be kept in mind is that the total exemption limit under section 80c is revised from Rs 1,00,000 to Rs 1,50,000 in the budget presented by Finance Minister Arun Jaitley on July 10th 2014. This benefit is available to everyone, irrespective of his or her income levels. Thus, if you are in the highest tax bracket of 30%, and you invest the full Rs. 1,00,000/-, you save tax of Rs. 45,000.

We will now see in detail those deductions that are permissible under section 80C in this section. The following is section 80c deductions / exemption list.

Provident Fund (PF) deduction under section 80C

Any contributions to Provident Fund, Voluntary provident Fund (VPF) or savings made in Public Provident Fund (PPF Account) are eligible for income tax deduction under section 80C of Indian Income Tax Act. The PF limit has been increased to 1.5 Lakhs from 1.0 Lakh earlier

Life Insurance Premiums

Any Life Insurance premiums (for one or more insurance policies) paid by you for yourself, your spouse or your children is eligible under income tax deduction under section 80C of Indian Income Tax Act.

ELSS Equity Linked Saving Schemes

Any investment made in certain Mutual Funds called equity linked saving schemes qualifies for section 80C deduction. Please note that not all mutual fund investments are eligible for this deduction. Some examples of ELSS funds are – SBI Magnum Tax Gain, HDFC Tax Saver, HDFC Long term advantage, etc.

ULIP – Unit Linked Insurance Plan

Investments made in certain ULIPs of Unit Trust of India and LIC of India are eligible for 80C deduction.

Bank Fixed deposits or Term deposits of term greater than 5 years

According to a relatively new provision amount saved in fixed deposits of term at least five years is eligible for income tax deduction under section 80C of Indian Income Tax Act.

Principal part of EMI on Housing Loan deduction under section 80C

If you are paying EMI on a housing loan, you would be aware that the EMI (equated monthly installments) consists of two parts – principal part and interest part. The principal part of the EMI on your housing loan is eligible for income tax deduction under section 80C. The interest part is also eligible for tax deduction, however not under section 80C but section 24.

Tuition Fees deduction under section 80C

Amount paid as tuition fee for the education of two children of the employee / Tax Payer is eligible for deduction under section 80C of Indian Income Tax Act.

Other 80C deductions

Amount saved in National Saving Certificate (NSC), Infrastructure Bonds or Infra Bonds, amount paid as stamp duty and registration charges while buying a new home are eligible for income tax deductions under section 80C of Indian Income Tax Act.

These are the eight avenues, which qualify for deductions under Section 80 C of Indian Income Tax.

81 comments to Income Tax Section 80C Deductions

  • Joseph K Mathews

    Sir,am retired JCO from Army , retired in 01.01.2000. I am told by my Records ( Corps of Signals the commuted portion will be restored on completion of 15 yrs. Meantime OROP became effective. My bank (SBT)says comuted portion is already merged with OROP. How can I get redressal. Secondly, My wife expired after 35 days of hospitalistion.I spent around get 4 lakh for treatment. ECHS paid only 1.45 L.Shall I IT exemption for the amt I spent. I took loan of 2L from my pension . EMI of approx 5000.00 being deducted from my pension being deducted. Shall I get the IT benefit. TDS also being deducted.

  • P.P. Umer Farooq

    My income is Rs.4 Lakhs. During financial year I paid Rs.15,000/= to PTA of local school. Rs.5,ooo/= for neighbouring Charitable Medical Trust and Rs.10,000/= for an nearby registered social organisation. Shall I get tax deduction for all these – Total Rs.30,000/=

  • T.R.KRISHNA BABU

    I am paying the EMI for housing loan availed by my wife and son, which was sanctioned basing on my pension i get. Can i get exemption under 80c of I.T. act

  • Balaji

    Sir, I am paying 24% basic as VPF, but company consider only 12% for IT calculation.
    Came to know that there is no such rule. Is this correct if so can I get some data from govt site.
    I searched in web, there is no data. Please reply

  • Akram

    postal life insurance is exempted from income tax u/s 80 c. I am a Postal Assistant.

  • santak pandey

    dear sir is tuition fees is deducted under section 80c along with ppf lic housing loan principal

  • Mini

    Iam a private company employee. Total salary is 172000/- and FD interst is Rs.30000/-. Do I need to file income tax return?

    • Financial Advisor

      You need not file the return if you are out of the tax bracket. You can reduce you taxable income by claiming house rent exemption, investing in section 80C instruments like insurance, PPF, ELSS etc

  • deepak bisht

    I have premium paid for Rs.7000/-annum (wife)in Life Insurance Company Limited.
    Can I get IT exemption under80c? Kindly guide me.

    • Financial Advisor

      Any Life Insurance premiums (for one or more insurance policies) paid by you for yourself, your spouse or your children is eligible under income tax deduction under section 80C of Indian Income Tax Act.

  • Asok

    What is the max age limit of Children for availing Tuition fee under 80 C

  • G.Ravikumar

    Sir,

    I am a senior citizen with annull income of about 5 lakh.
    I spent monthly about Rs 5000/for medicienes for me&my wife.
    How can I clain excemption under 80c?

  • sunil

    hello Sir, i have taken a lic in the month of feb14 and was not able to submit the proof in my organization as the last date to submit was 20-jan. So I paid the tax, can i know put the premium amount in 80c adding it to the pf amount. so that it will get refund. please help

  • sunil

    whether postal life insurance investment is allowed for tax rebate U/s 80 C

  • Lavanya

    Hi,

    while e-filing , how can i submit my 80C(LIC) and 80G(Green peace contribution) exemptions , if they are not available in form 16(As, i haven’t submitted them to my employer).

    Please reply…

  • Ruchi

    Under 80C deduction the exemption limit is 1 lakh.I have declare PPF of 1 lakh and LIC of 1 lakh. The exemption will be calculate on 2 lakh or just the 1 lakh.

  • B Prabu Srinivas

    Sir

    I missed to pay my 80 C premium amount before March 31st 2014. But I had paid it subsquently on April 4th. The policy is in force. Can I avail 80 C benefit for previous yr 2013-14 ?

  • Venkatesh

    Hi Sir,

    I just want to know, if the interest income of Fixed deposit exceeds the exemption limit of 200000, say for example if I get 2.5 lacs as interest from FD. Can I get tax exemption under 80C, if I invest the rest 50000 in any tax saving mutual fund.

    Regards
    Venkatesh

  • Jaya

    Sir, we have taken home loan with my name as primary and my husband as secondary responsible. Can we show tax exemption to my husband, if we pay some of the principal amount.

  • mahesh

    sir i am paying my wife lic premium, can i get the Exemption u/s 80c

  • Rakesh

    Dear Sir,
    I have a FD on my wife’s name. She is not working. Can I use her FD for tax exemption. Also her FD is in ICICI Bank, will that affect .

  • B N RAO

    Sir,
    Can you name some infrastructure bonds, or any central govt, railway bonds that are
    eligible under 80C.

  • Santhosh b

    Sir

    i have taken a LIC policy and paying 12500 per qtr, payment is from my wife’s bank account my doubt is can my wife avail the tax exemption for this payment

  • sekar

    is the rent paid by a pensioner is deductible from income for the purpose of calculation of income tax

  • AAP

    Sir/Mam,
    I AM A CENTRAL GOV. CONTRACT FACULT OF ANNUAL INCOM IS ABOUT 2.5 LAKHS PER ANNUM.CAN I COME UNDER SECTION 80C IF I HAVE SAVINGS OF ABOUT 60000 AND ABOVE?

  • vaibhav

    can i get fully allow deducation for lic primium {money back policy} rs 30000 under 80c

  • S.K SETH

    i have been retired from the govt service on july,2013. I have paid Rs.39000/- towards life time medical facility to delhi govt. Please tel me any income tax rebate u/s 80 c will be given to me for payment of 39000/- to delhi govt for getting life time medical facility.

  • pradeep

    dear sir,

    i paid LIC 50000, Bonds 15000, school Fees 40000, Mediclaim 5000.

    how many benefit i can take as income tax relief?

  • Punit Gupta

    What is meant by MEP in contribution to MEP under
    Sec 80C?

  • Kiran Kumar

    My mother had availed housing loan, she was a house-wife. Now she is deceased. I am paying loan EMI. Can I claim exemption under Income Tax Act., for loan repayment?

  • Rajeev

    To get an income tax exception under section 24 (for interest paid on housing loan) where to show it on ITR form)

  • Rajaraman

    My total pension comes to around Rs.300000/-; To what extentI have to invest under NSCs/Fixed Deposit with a nationalised Bank to avoid paying tax. Please reply me.Rajaraman

    • Financial Advisor

      You can claim rebate up-to Rs 1,00,000 in this section. As there is no tax up-to Rs 2.5 L for senior citizens. You need to save only Rs 50000 to avoid paying tax

  • Om Prakash Shrimali

    Dear Sir
    Plz. Clerify We have Paid PPF 65000 LIC Premium 7000 & Childeran Tution Fees 46000 My Children
    My Childern also Start Filling Return

    Can We use 80 C Deduction for Excess Tution Fees in Childern ITR

  • Anand

    Is RD of more than 5 years exempted from tax?

  • ajay

    Sir,
    My mother receive interest on fd Rs.300000/- p.a. whether she can receive any deduction in income tax act. No other income is there.Her age is about 55 yrs
    Ajay

  • CHANDANMALM JAIN

    can i get deduction u/s 80c for registration fees paid for purchase of land on which house will be constructed

  • G.S. Pawar

    How Much Profit Limit of Child Fees claim in income tax in India?

  • Gayyur Ahemed

    Sir,
    whether the Postal life insurance is covers the benefits of 80 c of Income Tax. I have come to know that some department are not allowing rebated of 80 c towards premium deposited in Postal life insurance.Please intimate.

  • S.NALINI

    Sir,

    I have deposited premium of Rs.49,900/- in Tata AIA Life Insurance Company Limited.
    I am a Govt. employee.Can I get IT exemption under80c?

  • Rajiv Kumar

    Dear Sir,
    we have open a saving RD account with post office.
    is eligible for income tax deduction under U/S 80C

  • Narsih

    how much amount of principal amount of H.B.A. is eligible for income tax deduction under U/S 80C

  • saloni

    is term investment elligible for 80 c deduction ?

  • sanjay kwatra

    Hi
    Can anyone tell me what is the minimum age of children for getting the tax relief

  • Jyalatha

    Sir
    My husband is in abroad,Can I elgible for tax exemption by considering his LIC policies?

  • monohar

    as i worked ina company for 12 yr and i got VRS amount 900000 other benefits 115000 now i need to pay 125000 tax i invested 100000 in 80c wheather there is any exemption for VRS amount

  • K.SRINIVASAN

    I have a doubt which requires clarification. I hv purchased wealth plus and market plus policies from LIC in 2008 for a premium of Rs.60000/- and Rs.80000/- as a single premium for a term of 5 or 10 years. From 2008 till 2012 fy, I hv not claimed tax exemption for that amount under sec 80C of IT Act. Shall I claim these premia towards tax exemption in this year or shall I claim a portion of those premia in this current year and for forthcoming years for a uniform amount. can anyone enlighten me in this issue

  • K.Nageswara Rao

    what is the limit of tutions fee exempted from Income tax

  • Janhavi

    can my husband claim tax rebate on the premium of my lic policy

    • Tax Consultant

      Definitely, he is eligible to claim under 80C. However, if you are also an assessee (i.e. you also pay tax), then ideally, you should be availing the exemption under 80C and NOT your husband.

  • Balraj Bagul

    Can I get 80C IT benifit on Paid amount as “Course Fee” ?
    Kindly guide me.

    Regards
    B T Bagul

  • Hemant kr

    can any one plz guide me i want to know about the procedure how to fill for form 16 ( salary) what type of deduction is required .

  • Rohit A Chauhan

    Whether employee is eligible for contribution toward provident fund for employer contribution in his/her return of income

  • k.kanna

    Hi

    under 80c deduction , can we take the interest from national service certificate (NSC) or not could you revert me.

  • Kishore Deokar

    I have invested 5 Years Fix deposit with Co-operative credit Society to get tax benefit u/s 80C, but my employer not considered this investment for benefit u/s80C. As per my employer FD should be deposit only Schedule bank. Investment in society is allowed for 80C exemption. please guide me.

  • N.Rao Yammada

    Dear Sir,

    Your columns are very helpful in understanding the complex Tax laws.But I require a brief advise on my Tax liability. I am a pensioner having an annual income of nearly Rs.4 lakhs. I am paying an annual premium of Rs.120,000/- on the life of my daughter under a ULIP policy .She is my only child. She is married already but there was no insurance coverage for her life so far.She is not dependent on me.

    I have to continue the payment of premium for 5 years to get the full benefit.Please advise me weather I can avail the deduction u/s 80c on the premium I am paying.

    Thank you Sir.
    N.Rao Yammada

  • radhika

    Hi,
    Can anyone tell me if there is way to pay postoffice PPF premium through online?
    i know that ppf opened in bank can be payed online. Im looking for a way to pay preminum online for a ppf opened in postoffice.
    thnx in advance.

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