Section 80C Certain deductions

This is the most popular and most important deduction

This deduction is for

Individuals (whether in job or business)

or

HUF (in certain cases only)

(NOT FOR COMPANIES AND PARTNERSHIP) 

Assessee makes certain investments on which deduction available under this section.

Max deduction available is 150000 for Section 80C 

Note:-

Max amount of deduction under this section is 150000

and

Section 80C+ 80CCC+ 80CCD combined is also Rs 150000

Following investments are covered

• LIC
• Employee Contribution to RPF/SPF/Super Annuation fund/
• PPF
• NSC
• ULIP
• FD/Deposits >5years
• Senior Citizen Saving Scheme
• Mutual funds
• Notified Pension scheme
• Non commutable deferred annuity plan

• Sukanya Samriddhi Account scheme

Certain expenses are also covered like

• Stamp duty on Purchase of Property
•  Repayment of housing loan (principal amount only).
• Tuition fees paid for children
• Amount deducted from Salary for Deferred Annuity

Some of these are available to Individual only while some are for both Individual and HUF

Lets study these in detail

Deduction under 80C for Individuals

1. Life insurance Scheme (LIC etc.)

    Only insurance premium of self/spouse and children covered (not parents)

2. Employee contribution to Recognized Provident Fund / Statutory Provident Fund/ Approved Super Annuation Fund

(Only employees contribution covered here, and not employers, this is normally automatically deducted from salary)

3. Contribution to mutual fund / ELSS (equity link saving scheme)

4. Contribution to Notified Pension Fund of UTI

5. Non commutable deferred annuity plan for self/spouse / child
6. Tuition fees paid for children

      Following conditions must be satisfied.

      (a) It should be for full time education

      (b) It should be paid to Universities, Colleges, schools etc. situated within India

      (c) It is allowed for 2 children maximum

Note:-

• Development charges/Bus charges of school not covered, only tuition fees component covered.
• Even play schools tuition fees covered
• Education of self/spouse not covered, only children covered

7 Amount deducted from salary regarding deferred annuity

  The amount deducted should not exceed 1/5 of salary

8. Sukanya Samriddhi Account scheme:

Deduction is allowed with respect to sums paid or deposited in the previous year as a subscription to any such

security of the Central Government or any deposit scheme notified by the Central Government.

Notified Scheme is S ukanya Samriddhi Account scheme:

Eligible Amount of Deduction

Any sum paid or deposited during the previous year in the said Scheme, by an individual in the name of -

(a) the individual himself or herself;

(b) any girl child of the individual; or

(c) any girl child for whom such individual is the legal guardian,

would be eligible for deduction under section 80C.

Interest on deposits is exempt from tax (Section 10 (11A)

Withdrawal from the said scheme in accordance with the rules of the said scheme will be exempt from tax.

Features of  Sukanya Samriddhi Account scheme:

• Rate of interest 9.2% Per Annum(w.e.f 1-4-2015),calculated on yearly basis ,Yearly compounded. 
  Minimum INR. 1000/-and Maximum INR. 1,50,000/- in a financial year. Subsequent deposit in multiple of INR 100/- Deposits can be made in lump-sum
• No limit on number of deposits either in a month or in a Financial year 
• A legal Guardian/Natural Guardian can open account in the name of Girl Child.
• A guardian can open only one account in the name of one girl child and maximum two accounts in the name of two different Girl children. 

Deduction allowed to both Individual and HUF.

1.Contribution to PPF

This may be for Individual / spouse / child etc.

NSC

Amount paid to NSC (national saving certificate)

ULIP

Contribution to ULIP (unit linked insurance plan)

This may be for Individual / spouse / child etc.

Contribution to pension fund of national housing fund

FD/Deposits >5years

FD for period more than 5 years in scheduled bank

Deposit for period more than 5 years in post office

Senior Citizen Saving Scheme

Amount paid under senior citizen saving scheme.

Stamp duty on Purchase of Property

Stamp duty / registration fees / other expenses paid on transfer (purchase) of house property, deduction cannot be claimed for following expenses:

       (a) Any initial deposit paid to become member of co-operative society

       (b) Any alteration or repair made

       (c) Any expense allowed for income from house property under Section 24.

 Bonds purchased of NABARD

(national bank for agriculture and rural development).

Repayment of housing loan (principal amount only).

 Such loan maybe borrowed from –

a) Bank

(b) Co- operative bank / society.

(c) National housing bank

(d) Public company registered for giving long term loan

(e) Employer

(Only if employer is public company / university / local authority / co- operative society / government company or co-operation)

(f) Housing development authority.

Note :-

(1) Deduction under Section 80C cannot be claimed against [LTCG / STCG/ income from

 lottery etc.] 

(2) Deduction available only if the amount is actually paid during the year.