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What expenses qualify for tax deductions under Section 80C?

  • Highlights

  • Claim deductions up to Rs.1.5 lakh under Section 80C

  • Make annual expenditure to claim 80C deduction

  • Claim tuition fees for up to 2 children as 80C expenses

  • Keep the updated list of approved expenses handy

The Indian Government allows you to claim tax deductions for expenses ranging from your child’s tuition fees to the stamp duty and registration charges for the purchase or construction of your home. These expenses allow you to claim tax deductions in case you fall short of investments for any given financial year. So, it is vital to know what expenses qualify under this Section alongside the long list of investments such as your PPF, recurring deposit, bonds, life insurances, etc.
Here are the expenses you can claim under Section 80C.

Difference between the investments and expenses

Investments account for the amount you put aside as a lump sum or through recurring deposits towards schemes and instruments of your choice. Here, your contributions towards Public Provident Fund, monthly recurring deposits, fixed deposits, Senior Citizen Savings Scheme, etc., are considered as your yearly investments. On the other hand, the funds you pay to meet several expenditures for you and your family’s welfare are separately tabulated as expenses under the IT Act. These can range across a variety of payments such as the amount you pay towards the repayment of your home loan principal or the expenditures you incur as your child’s tuition fee.

Expenses you can claim under Section 80C

You can claim a maximum of Rs.1.5 lakh in deduction for your investments and expenses under Section 80C. Owing to changes in the cost of lifestyle goods and activities, the government, after every Union Budget, revises the list of inclusions for expenses. Thus, it is important to stay updated with the latest changes so that you can claim the maximum deduction on your taxable income in a given year.
Here is the approved list of what you can claim as expenses under Section 80C while filing your taxes.

1. Amount you pay under a contract for a deferred annuity in the name of self, spouse or any child. In case of HUF, any member of HUF can claim this expense.
2. Expenses deducted from salary payable to government servant for securing deferred annuity or making provision for your wife/children (the qualifying amount is limited to 20% of your salary).
3. Your yearly payment towards the tuition fees (excluding development fees, donations to educational institutes, etc.) to any university, college, school or other educational institution situated in India, for full-time education for any 2 of your children.
4. Expenses you bear for overhead cost, stamp duty and registration due to the purchase or construction of your property.
5. Your principal repayment towards your home loan taken under the following schemes or separately qualifies for deduction. The schemes are:
a)Notified schemes or home loan from a public-sector company engaged in providing long-term finance for purchase/construction of houses in India for residential purposes
b) Authority constituted under any law for satisfying need for housing accommodation or for planning, development or improvement of cities, towns and villages, or for both.

So, be aware of these expenses that can help you save tax under Section 80C, and plan your finances accordingly. These expenses will help you benefit from tax exemptions in case you are not able to invest or when your invested amount falls short of the tax benefit amount.

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