Tax Deduction Under Section 80c – income tax deductions using section 80C of Indian income tax act.
The government of India levies taxes on individuals, Hindu Undivided families, private limited companies, public limited companies firms, co-operative societies and trusts. This tax is levied on the income of the concerned individual or organization. The law of Income tax is strictly governed by the Income tax act, 1961. The Income tax department of India is governed by the Central Board for Direct Taxes. It is also a part of Department of Revenue under the Ministry of Finance, Government of India.
There are many exemptions available under the Income tax act and a person can get certain deductions accordingly. The deduction under section 80C provides the tax payer certain investments and expenditure which can be deducted from the total income. The maximum amount is up to Rs. 1 lakh. In short the total limit under section 80C is Rs. 1 lakh. This limit of Rs. 1 lakh can be utilized in any arrangement as feasible by the tax payer. The allowable Income tax deductions using section 80C of Indian Income Tax act is as follows:
Provident Fund contributions: The contribution to the Public Provident Fund, Voluntary Provident Fund and the Provident Fund is considered for the deduction under section 80C.
Life Insurance premiums: The tax payer can get the deduction for one or more insurance policy premiums. The insurance premium paid could be for the tax payer himself / herself; spouse and children.
ELSS (Equity Linked Savings Scheme: The investments made in specific Mutual funds are considered in the Equity Linked Savings Scheme under deduction in section 80C.
ULIP (Unit Linked Insurance Plan): The investments made by the tax payer in the ULIP of unit Trust of India and Life Insurance Corporation of India are schemes qualified for deduction under the section.
Fixed deposits and term deposits: This is relatively a new provision in the Income tax deductions using section 80C of Indian Income Tax act. The amount invested in the fixed deposits or term deposits are considered for deduction under section 80C.
Principal part of EMI on housing loan: The principal amount of the EMI on the housing loan is liable for deduction under section 80C. The interest is also allowed for deduction but under section 24.
Tuition fees: The amount paid as Tuition fees for the education of children. The tuition fees are exempt up to two children.
Stamp duty registration charges: The amount paid as stamp duty and the charges paid for the registration while purchasing a house is considered for deduction under section 80C.
National Savings Certificate: The National Savings Certificate (NSC) is a small savings instrument which can be claimed for deduction.
Infrastructure bonds: The infra bonds are issued by the infrastructure companies. The investment made in infra bonds is considered for deduction under section 80C.
Pension funds: The investment done by the tax payer in the pension funds is actually exempt under section 80CCC. The section is clubbed with section 80C.
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