Most common Deduction Section 80C of Finance Act

Finance Act provides certain benefits to tax assesses in the form of Deductions. One of the major, widey applicable and effective is deduction under Section 80C of Finance Act

Talking about the deductions what comes to mind first is :

Person who  can claim deduction under section 80C??

So any person who is assessed as a  Individual both Resident or Non Resident and HUF’s (Hindu Undivded Family) filing their return of Income can claim an deduction of upto One Lakh fifty Thousand  on their declared Income in their return.

Limit :

So the available amount is Lower of following two :

  1. Amount contributed/ paid/ deposited out of the Taxable (declared) Income in the exhaustive list specified.
  1. One Lakh fifty Thousand.

So any Individual or HUF as a smart Tax planner can reduce their taxable income declared upto  Rs. 1,50,000 and save from paying Tax.

Eligibility Criteria for availing the benefit of Section 80C Finance Act:

Amount contributed in followings ways are eligible to fall under the limit of One Lakh Fifty Thousand calculation.

  1. Individual can take a Life Insurance policy and claim premium payment as a deduction on life of  Individual, spouse or children whether they are defendant or not on the person claiming deduction.
  2. An employee contributing from his salary towards Statutory or Recognized Provident Fund.
  3. Depositing in Public provident fund (PPF)
  4. Payment of tuition fees to university, college, school or educational institution in India but to a maximum of Two Children.
  5. Investment in NABARD, NSC, certain approved mutual funds units, NHB, ULIP, Sukanya Samriddhi Account Scheme, ELSS.
  6. Housing loan principal installment repayment taken through approved financial institution.

This is not the exhaustive list, there are many investments on which deduction benefit can be taken under this section 80c. Any individual  before making an investment shall evaluate any benefits of tax could be derived from such schemes or investment.