Income Tax Return: Before filing income tax return, there is often mention of section 80C coming under the Income Tax Act among the taxpayers. Section 80C is the most commonly used provision under the Income Tax Act.
Now only a few hours are left for July 31, the last date for filing income tax returns. In such a situation, if you have not filed your income tax return yet, then deal with this work immediately because no announcement has been made by the government to extend its last date. If you do not file your IT return before 12 midnight of July 31, then you may have to pay a fine before filing the return from August 1.
Section 80C under the Income Tax Act is often mentioned among taxpayers before filing income tax returns. This is the provision under which the claim of exemption from income tax is presented. Let us know today about the different types of deductions available in income tax under 80C.
What is section 80C and how is it exempted in income tax?
Section 80C is the most commonly used provision under the Income Tax Act. Most of the taxpayers of our country take the facility of exemption from income tax using this provision. They get these benefits on their investment activities. That is why it is very important to know about 80C. Section 80C of Income Tax allows us to keep certain expenses and the amount spent on investments out of the purview of tax. Experts say that if you spend wisely and claim tax deduction while filing income tax return under 80C, then you can be free from tax burden of up to Rs 2 lakh.
Benefit is also available under many subsections falling under 80C
Section 80C has been included in the income tax laws with an aim to encourage taxpayers to save and invest. Under this section, not only does an individual get the benefit of tax exemption, but it also helps the economy of the country in a small way. There are also several subsections under section 80C which include 80CCC, 80CCD(1), 80CCD(1b) and 80CCD(2). The maximum limit of income tax exemption under all these sections is two lakh rupees (1.5 lakh + 50 thousand).
Exemption up to a maximum of Rs 1.5 lakh can be claimed in a year as deduction under section 80C and its sub-sections. Apart from this, a deduction of Rs 50,000 can also be claimed for investing in NPS under section 80CCD(1b). It is also important to know here that the benefit of deduction under 80C can be availed only by those taxpayers who are individual Indian citizens and come from Hindu Undivided Families (HUF).
Which investments get the benefit of income tax exemption under 80C?
Children’s education fees: You can claim income tax deduction under 80C on the amount spent on your children’s education in schools, colleges and universities in the country. You can avail tax exemption on the amount spent on education of two children in a financial year.
Fixed Deposit (FD): Tax exemption under 80C can also be claimed on fixed deposits made for at least five years.
Life Insurance or ULIP: You can also claim income tax exemption under section 80C on premium payments made to pay for life insurance policies of your self, husband, wife and children.
EPF and PPF : A certain amount from your income is deposited in your EPF account as a pension fund. Even on this amount, you can get the benefit of tax exemption under section 80C. On the other hand, up to a maximum of Rs 50 lakh can be invested in a PPF account every year. The lock-in period on PPF accounts is 15 years. You can also get income tax exemption on the return received after the maturity of the PPF amount. Your PPF account can also be in your own name or in the name of husband, wife or children.
Home loan repayment : Home loan repayments can also claim a deduction of up to Rs 50 lakh per annum. 80C deduction is not applicable on the amount to be paid as interest in home loan. It is important to note here that the lock-in period for availing this benefit is five years. If you sell the property within five years from the date of possession, the amount of all previously claimed deductions will be added back to his income in the sale year.
Sukanya Samriddhi Yojana: If parents pay premiums for the future of their child under Sukanya Samriddhi Yojana, they can also claim tax exemption in income tax under 80C. This facility can be availed for two daughters, in case of twins, the third child can be availed under 80C.
ELSS (Equity Linked Savings Scheme): ELSS is an equity mutual fund with a lock-in period of three years. The asset allocation of ELSS mutual funds is mostly (about 65%) invested in the stock market. Investments made in this item can also be availed under 80C.
Senior Citizen Savings Scheme: Senior citizens above 60 years of age can also avail income tax exemption under 80C on investments made under the Senior Citizen Savings Scheme or NCSS. In case of voluntary retirement, those above 55 years of age can also avail tax exemption under 80C.
NABARD Bonds: Tax exemption under section 80C can also be claimed on the amount spent to buy bonds of National Bank for Agriculture and Rural Development (NABARD).
Other investments on which income tax exemption is available under 80C
Amount spent by way of National Savings Certificate (NSC), National Pension Scheme (NPS), Stamp Duty and Registration Fee on property other than those mentioned above, amount deposited with National Housing Bank or LIC or any other insurer Income tax exemption under 80C can also be claimed on the amount spent as subscription to the notified annuity plans of the U.S.
