Section 80C of Income Tax Act

Section 80C of the Income Tax Act provides tax deductions of up to Rs. 1.5 lakh annually. By investing in qualifying schemes like Life Insurance, PPF, EPF, ELSS, and ULIPs, individuals can reduce their taxable income. These investment options not only offer tax benefits but also help in wealth accumulation and financial security.
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Deduction Under Section 80C
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3 min
24-December-2024

Section 80C of the Income Tax Act provides exemptions on specific expenditures and investments from income tax. By planning investments in various financial assets like PPF, NSC, ELSS, etc., you can claim deductions up to Rs. 1.5 lakh under Section 80C, effectively reducing your taxable income.

If you on the lookout for smart strategies to cut down on your taxable income this year? Look no further than Section 80C of the Income Tax Act.

This section offers a treasure trove of tax-saving opportunities through various investments and allowable expenses. By tapping into tax saving investments under 80C, taxpayers can significantly reduce their tax burdens.

In this article, we will explore the meaning of Section 80C, the deductions available under this section, the exemptions it offers, and the associated tax benefits. Additionally, we will cover who is eligible for an 80C deduction, how to maximize these benefits, and more.

What is Section 80C of the Income Tax Act?

Section 80C of the Income Tax Act offers a valuable opportunity to reduce your taxable income. By strategically investing in eligible financial instruments, you can claim 80C deductions of up to Rs. 1.5 lakh.

Popular options include Public Provident Fund (PPF), National Savings Certificates (NSC), and Equity Linked Savings Schemes (ELSS). Diversifying your investments across these assets not only helps mitigate risk but also ensures you make the most of Section 80C benefits.

Consider consulting with a financial advisor to create a personalised tax-saving plan that aligns with your financial goals and risk tolerance.

Budget 2024: Will the government raise the section 80C deduction limit?

From the Union Budget 2024, taxpayers hope for lower tax rates and higher exemption limits. A key expectation is increasing the Section 80C tax deduction benefits, which currently allow up to Rs. 1.5 lakh in tax-deductible investments or expenses. Let’s understand these expectations in detail:

Preferred tax-saving option

Section 80C of the Income-Tax Act, 1961, is a favoured choice among taxpayers for reducing their tax burden. It includes a wide range of savings and investment options such as Life Insurance Corporation (LIC) premiums, Public Provident Fund (PPF) contributions, and Equity-Linked Savings Schemes (ELSS).

For the fiscal year 2024-25, individuals following the old tax regime can claim up to Rs. 1.5 lakh in deductions under Section 80C. However, the new tax regime does not allow for these deductions. This makes Section 80C particularly valuable to those opting for the traditional tax system.

Current limitations and expectations

Many taxpayers believe the current Rs. 1.5 lakh limit under Section 80C restricts their ability to invest in various tax-saving instruments like fixed deposits, ELSS, and the principal repayment of housing loans. With the rising cost of living and increased salaries, taxpayers quickly exhaust this limit, leaving little room for additional tax-saving investments.

Hence, there is a growing demand for the government to increase the deduction limit to Rs. 2 lakh in the upcoming Union Budget 2024. Such an increase would align the tax benefits with current economic conditions and provide taxpayers with greater flexibility and relief.

Impact on taxable income

It is worth mentioning that revising the Section 80C deduction cap would directly affect an individual's taxable income and tax liability. With rising living costs and salaries, the current Rs. 1.5 lakh limit is often insufficient and causes many taxpayers to hit the cap quickly. By increasing this limit, the government can reduce the taxable income for a larger number of taxpayers and lower their overall tax liability.

Additionally, this change would also encourage more investments in tax-saving instruments. By addressing these expectations in the Union Budget 2024, the government could provide significant relief and promote broader participation in Section 80C schemes.

Deductions list on investments under Section 80C

The following table provides an overview of various investment options available under Section 80C of the Income Tax Act, along with their key features:

Investment Option

Minimum Lock-in Period

Rate of Interest

Associated Risk

National Pension Scheme (NPS)

Till the age of 60

8% to 10%

High

Equity Linked Savings Scheme (ELSS)

3 years

Ranging between 12% and 15%

High

Public Provident Fund (PPF)

15 years

7.1%

Low

Senior Citizen Savings Scheme (SCSS)

5 years

8.2%

Low

National Savings Certificate (NSC)

5 years

7.7%

Low

Unit Linked Insurance Plan (ULIP)

5 years

Ranging between 8% and 10%

Moderate

Fixed Deposit

5 years

Up to 8.40%

Low

Sukanya Samriddhi Yojana

21 years

8.00%

Low


What are the exemptions under 80C?

Section 80C and Section 80CCC of the Income-Tax Act offers several tax benefits to lower the overall income tax liability. Section 80C allows a deduction of up to Rs. 1.5 lakh per year for investments in specified financial instruments such as Life Insurance premiums, Public Provident Fund (PPF), National Savings Certificates (NSC), and Equity-Linked Savings Schemes (ELSS).

On the other hand, Section 80CCC provides a similar deduction of up to Rs. 1.5 lakh for contributions made to specified pension funds designed to provide retirement benefits.

Eligibility criteria for Section 80C deductions

To claim deductions under Section 80C of the Income Tax Act, 1961, you must meet the following eligibility criteria:

  • Eligible taxpayers

    • You are either an individual taxpayer or a Hindu Undivided Family (HUF).

  • Maximum deduction

    • The maximum deduction you can claim is up to Rs. 1.5 lakh per financial year.

  • Eligible investments

    • Life insurance premiums

    • Unit Linked Insurance Plans (ULIPs)

    • Provident Fund contributions

    • National Savings Certificates (NSCs)

    • Equity-Linked Savings Schemes (ELSS)

    • Sukanya Samriddhi Yojana (SSY)

    • Tax-saving Fixed Deposits (FDs)

  • Other eligible expenses

    • Tuition fees for your children's education.

    • Repayment of the principal amount on a home loan.

  • Lock-in period

    • Certain investments have a mandatory lock-in period, such as:

      • ELSS (3 years)

      • Public Provident Fund (PPF) (15 years), and

      • ULIPs (5 years).

  • Premature withdrawal

    • If you withdraw from these investments before the lock-in period ends, you will lose the tax deduction benefits under Section 80C.

    • The amount previously exempt would become taxable in the year of premature withdrawal.

  • Financial year applicability

    • Deductions apply to the financial year in which you make the investment.

Features of income tax deduction u/s 80

Section 80C allows you to claim a tax deduction of up to Rs. 1.5 lakh for investments in certain financial instruments. These deductions reduce your taxable income and, ultimately, your income tax liability. Below is a list of all the eligible deductions (investments/ expenses) you can claim under Section 80C:

Investments

  • Life insurance premiums: You can deduct premiums paid on life insurance policies for yourself, your spouse, or your children (both minor and major). For Hindu Undivided Families (HUFs), premiums for any member can be deducted. However, premiums paid for parents are not eligible.

    • Sukanya Samriddhi Scheme: Investments in this scheme for your daughter or any girl child under your guardianship are deductible.

    • Fixed Deposits (FDs): Investments in five-year FDs of Scheduled Banks or Post Offices are eligible.

  • Contributions to various funds:

    • Public Provident Fund (PPF)

    • Approved superannuation fund

    • Unit-linked Insurance Plan (ULIP), 1971

    •  Unit-linked Insurance Plan of LIC Mutual Fund

    • Approved annuity plan of LIC

    • Pension funds set up by mutual funds or administrators

    • National Housing Bank Term Deposit Scheme, 2008

    • Additional accounts under the National Pension System (NPS)

    • Senior Citizens Savings Scheme

  • Subscriptions:

    • National Savings Certificates (NSC) (VIII issue)

    • Units of any mutual fund or administrator-specified company

    • Notified deposit schemes of public sector companies providing long-term finance for housing

    •  Specified equity shares, debentures, or units of mutual funds

    • Notified bonds issued by the National Bank for Agriculture and Rural Development (NABARD)

  • Payments towards the principal amount of a housing loan, including stamp duty, registration fees, and other related expenses, can be deducted.

  • Tuition fees paid to any school, college, university, or any other educational institution within India for the full-time education of up to two children can be claimed as a deduction.

Sub-sections under Section 80C of the Income Tax Act

Below is a table summarising the sections and subsections under Section 80C of the Income Tax Act, detailing the various investment options and expenditures eligible for tax deductions:

Section

Investments eligible for deductions under section 80C

Maximum deduction

80C

ULIP, ELSS, Provident Fund contributions, SCSS, Life Insurance premiums, SSY, Principal of home loan, and NSC

Rs. 1,50,000

80CCC

Contributions made to specified pension funds

Rs. 1,50,000

80CCD(1)

Contributions to Atal Pension Yojana (APY) or other government-sponsored pension schemes

  • Employed: 10% of Basic Salary + DA

  • Self-Employed: 20% of Total Income

80CCE

Overall deduction limit for Section 80C, 80CCC, and 80CCD(1)

Rs. 1,50,000

80CCD(1B)

Additional contributions to NPS (over and above the deductions under Section 80CCE)

Rs. 50,000

80CCD(2)

Employer’s contribution to NPS (outside the Rs. 1.5 lakhs limit under Section 80CCE)

  • Central Government Employer: 14% of Basic Salary + DA

  • Other Employers: 10% of Basic Salary + DA

 

How to calculate the Section 80C deduction?

To calculate the total amount eligible for deduction under Section 80C you must add all your investments and expenses made during the financial year and subtract them from your gross total income. To understand better, let’s study a hypothetical example:

Consider an individual taxpayer with gross taxable income for FY 2023-24 as Rs. 7,50,000. During the relevant financial year, the assessee made an investment of Rs. 1,20,000 in an ELSS fund. Also, they benefit from the standard deduction of Rs. 50,000 per year under Section 16 (iia) (available under the salary head).

Now, let’s consider two different scenarios: one in which Section 80C deductions are claimed and one in which they are not claimed.

Scenario I: Without Section 80C deduction

Particulars

Amount

Gross Taxable Income

Rs 7,50,000

Less: Standard deduction

Rs 50,000

Taxable income

Rs. 7,00,000


Based on taxable income of Rs. 7,00,000, we can calculate the tax liability after applying the latest income tax slabs as follows:

Tax on First Rs 2,50,000: No tax

Tax on Rs 2,50,001 to Rs 5,00,000: 5% of (Rs. 5,00,000 - Rs 2,50,000) = 5% of Rs 2,50,000 = Rs 12,500

Tax on Rs 5,00,001 to Rs 7,00,000: 20% of (Rs. 7,00,000 - Rs 5,00,000) = 20% of Rs 2,00,000 = Rs 40,000

Hence, total tax liability without Section 80C Deduction (ignoring rebate available under section 87A) is Rs. 52,500 (Rs. 12,500 + Rs. 40,000)

Scenario II: With Section 80C deduction:

Particulars

Amount

Gross Taxable Income

Rs. 7,50,000

Less: Standard deduction

Rs. 50,000

Less: Section 80C deduction (contribution to ELSS fund)

Rs. 1,20,000

Taxable income

Rs. 5,80,000


Based on taxable income of Rs. 5,80,000, we can calculate the tax liability after applying the latest income tax slabs as follows:

Tax on first Rs. 2,50,000: No tax

Tax on Rs. 2,50,001 to Rs. 5,00,000: 5% of (Rs. 5,00,000 - Rs 2,50,000) = 5% of Rs. 2,50,000 = Rs. 12,500

Tax on Rs. 5,00,001 to Rs. 5,80,000: 20% of (Rs. 5,80,000 – Rs. 5,00,000) = 20% of Rs. 80,000 = Rs. 16,000

Hence, total tax liability without Section 80C Deduction (ignoring rebate available under section 87A) is Rs. 28,500 (Rs. 12,500 + Rs. 16,000)

From the above example, we can clearly observe that additional tax savings due to Section 80C deductions are Rs. 24,000 (Rs. 52,500 – Rs. 28,500 = Rs. 24,000).

Income tax deduction limits under Section 80C, 80CCC, 80CCD(1), and 80CCD(2)

Under Chapter VI-A of the Income Tax Act, you can claim income tax deduction under different sections, such as 80C, 80CCC, 80CCD, and more. For an easier understanding, let’s check out the various available deductions below:

Section

Explanation

Maximum deduction limit

80C

Various investments like Public Provident Fund (PPF), Equity Linked Savings Schemes (ELSS), National Savings Certificate (NSC), etc.

Rs. 1,50,000 per year

80CCC

Contributions to specific pension funds (e.g., LIC pension funds)

Within the Rs. 1,50,000 limit of Section 80C

80CCCD(1)

Employee contributions to National Pension Scheme (NPS) or Atal Pension Yojana (APY)

Up to Rs. 1,50,000 or 10% of salary + Dearness Allowance (DA), whichever is lower

80CCD(2)

Employer contributions to NPS or APY

Up to 10% of basic salary + DA (not part of Rs. 1,50,000 limit under Section 80C)

80CCD(1B)

Additional self-contributions to NPS or APY beyond the Rs. 1,50,000 limit of Section 80CCD(1)

Up to Rs. 50,000, which is over and above the limits of Sections 80C, 80CCC, and 80CCD(1)

 

Tax saving investment options under section 80C

Tax-saving investment options under Section 80C of the Income Tax Act offer a variety of avenues through which individuals can reduce their taxable income by investing in approved financial instruments.

Investment options under Section 80C include Public Provident Fund (PPF), Employee Provident Fund (EPF), Equity Linked Saving Schemes (ELSS), Tax Saving Fixed Deposits, National Pension System (NPS), and Unit Linked Insurance Plans (ULIPs), among others.

1. Equity linked saving scheme (ELSS)

ELSS funds are mutual funds that invest in equities and are eligible for tax deductions under Section 80C. This 80C investment has a lock-in period of three years and offers the potential for higher returns compared to other 80C investments.

2.. Investments in tax saving FDs

Investments in Tax Saving Fixed Deposits (FDs) are a type of fixed-income 80C investment offered by banks in India that help individuals save on taxes.

Lock-in period: 5 years
Interest rate: Varies, generally higher than regular savings
Tax benefit: Deduction under Section 80C
Safety: High, as FDs are less risky than market-linked investments

3. Investments in PPF (Public Provident Fund)

Investments in the Public Provident Fund (PPF) are a government-backed savings vehicle in India. These investments under 80c offer tax-free interest and returns.

Duration: 15 years, extendable in 5-year blocks
Interest rate: Compounded annually, set by the government
Tax benefit: Contributions, interest, and maturity are all tax-free under Section 80C
Eligibility: All Indian citizens

4. Investments in EPF (Employee Provident Fund)

Investments in the Employee Provident Fund (EPF) are mandatory retirement savings for salaried employees in India, where both employer and employee contributions are tax-deductible under Section 80C.

Contributions: This 80C investment is mandatory for salaried employees
Rate of interest: Annually decided by the government
Tax benefits: Contributions are tax-deductible; interest earned is tax-free
Withdrawal: Partial withdrawals are allowed for specific expenses

5. Investments in NPS (National Pension System)

Investments in the National Pension System (NPS) are voluntary retirement savings plans that provide flexible investment options in equities and fixed income. This 80C investment allows partial withdrawals upon reaching retirement age.

Structure: Tier-1 (mandatory, pension account) and Tier-2 (voluntary, savings account)
Tax benefits: Deduction under Section 80C; additional deduction for investment up to Rs. 50,000 under Section 80CCD(1B)
Withdrawals: Limited before retirement
Returns: Market-linked, depending on the fund chosen

6. Investments in ULIP (Unit Linked Insurance Plans)

The Unit Linked Insurance Plans (ULIPs) is an investment under 80c that combines life insurance with investment options. This allows policyholders to invest in a variety of market-linked assets while enjoying tax benefits on premiums paid and maturity proceeds.

Components: Investment and insurance
Flexibility: Choice of funds
Tax Benefits: Premiums and benefits are tax-free under Section 80C and Section 10(10D)
Lock-in Period: Minimum 5 years

7. Investments in Sukanya Samriddhi Yojana

Investments in Sukanya Samriddhi Yojana (SSY) are a government-backed savings scheme aimed at financial empowerment of the girl child in India, offering high-interest rates and tax benefits under Section 80C.

Purpose: To benefit the girl child
Rate of Interest: Higher than many debt-oriented investments, tax-free
Tax Benefit: Eligible under Section 80C
Account Operation: Till the girl reaches age 21 or upon her marriage after turning 18

Minimum Holding Period for Investments under Sections 80C, 80CCC, and 80CCD

To avail tax deductions under Sections 80C, 80CCC, and 80CCD of the Income Tax Act, specific investments must be held for a minimum period. This ensures that tax benefits are applied to long-term investments aimed at promoting savings and financial security. These sections cover investments in insurance policies, pension plans, and other savings instruments. Failing to meet the minimum holding period can result in the reversal of tax deductions and possible penalties.

Section

Investment Type

Minimum Holding Period

80C

ELSS (Equity Linked Savings Scheme)

3 years

80C

PPF (Public Provident Fund)

15 years

80CCC

Pension Plans

2 years

80CCD

NPS (National Pension Scheme)

Till retirement or 60 years


These durations are critical to ensuring eligibility for tax deductions while encouraging long-term wealth creation.

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Expenses that qualify for tax deductions under Section 80C

Apart from eligible investments, several expenses are also allowed as a deduction under Section 80C. Let’s check them out:

  • Premium payments made towards life insurance policies.
  • Contributions made to Employees’ Provident Fund (EPF). For those unaware, these are monthly savings deducted from an employee's salary and contributed to a retirement savings scheme.
  • Public Provident Fund (PPF) investments
  • National Savings Certificate (NSC) investments
  • Equity-Linked Savings Scheme (ELSS) investments
  • Sukanya Samriddhi Yojana (SSY) investments
  • 5-Year Fixed Deposit with Banks
  • Senior Citizens Savings Scheme (SCSS) investments
  • Payments made towards the educational expenses related to “tuition fees” of up to two children.
  • The portion of home loan payments that go towards repaying the principal amount of a loan.
  • Payments made in respect of stamp duty and registration charges for a home.

How to get tax deduction under section 80C?

To avail of tax deductions under Section 80C, follow these steps:

  1. Invest wisely: Choose from various options like PPF, ELSS, NSC, life insurance, etc., and invest up to Rs. 1,50,000 annually.
  2. Keep documentation: Retain all receipts and documents related to your investments as proof.
  3. Submit proofs: Provide these documents to your employer or include them in your tax return.
  4. Understand limits: The maximum deduction claimable is Rs. 1,50,000 across all investments under Section 80C.
  5. Plan early: Invest early in the financial year to maximise the benefits of accruals and compound interest.

How much can be claimed under Section 80C?

There are limitations on the amounts that can be claimed for different activities and the total amount that can be claimed under these activities.

The combined maximum claim under Sections 80C, 80CCC, and 80CCD(1) is Rs. 150,000/-.

An additional deduction of Rs. 50,000/- is available under Section 80CCD, increasing the total deduction.

Section 80CCD(1) and 80CCD(2) apply to contributions made by employees and employers, respectively:

1. 80CCD(1) and 80CCD(1B)

  • Deductible in the year of contribution, up to 10% of the salary
  • Additional Deduction of Rs. 50,000/- over and above the Rs. 150,000/- limit under 80C

2. Deductions on contribution to NPS schemes

Please note that the Rs. 50,000/- deduction is available for NPS contributions in addition to the Rs. 150,000/- deduction available under Sections 80C, 80CCC, and 80CCD(1).

Who is eligible for deductions under section 80C of the income tax act?

All individual taxpayers and Hindu Undivided Families (HUFs) are eligible for deductions under Section 80C of the Income Tax Act for various investments and expenses incurred during the fiscal year. This includes salaried employees, self-employed persons, and freelancers.

How to maximise tax saving under section 80C?

  • Diversify your investments by allocating your Rs. 1,50,000 limit across various instruments like ELSS, PPF, NSC, and tax-saving FDs. This strategy helps manage risks while enhancing potential returns.
  • Begin your investments at the start of the financial year to take full advantage of compound interest and secure all eligible tax deductions.
  • Aim to exhaust the Rs. 1,50,000 deduction cap completely. Utilising this limit fully can significantly decrease your taxable income.
  • Also, consider investing on behalf of family members, such as paying for children's tuition or purchasing life insurance, to fully leverage available deductions.

When should you invest to claim a deduction under Section 80C of the Income Tax Act?

In India, the income tax system operates on a financial year basis. A financial year (FY) commences on April 1st and concludes on March 31st. Income tax returns (ITRs) for earnings accrued within a financial year are filed in the subsequent financial year.

The financial year in which the ITR is filed is termed the Assessment Year (AY), and the financial year for which the ITR is being filed is referred to as the Previous Year (PY).

For instance, if an individual earned Rs. 10 lakhs and made investments of Rs. 3 lakhs in the financial year 2021-22, they would report this income and investments while filing their ITR in the financial year 2022-23. In this scenario, the financial year 2021-22 would be the Previous Year, and the financial year 2022-23 would be the Assessment Year.

To claim deductions under Section 80C of the Income Tax Act, such as for investments in eligible instruments, the investments must be made during the Previous Year. Continuing the example, if the individual invested Rs. 1 lakh in eligible instruments out of the total Rs. 3 lakhs, they could claim a deduction of Rs. 1 lakh under Section 80C in the Assessment Year 2022-23.

Key consideration: Old Tax Regime vs New Tax Regime

It's essential to remember that in order to claim deductions under Section 80C of the Income Tax Act, taxpayers must opt for the old tax regime.

The new tax regime offers lower income tax slab rates but does not allow most deductions under Section 80C.

The decision between the two regimes is up to the taxpayer. Based on individual savings and investments, taxpayers can select the regime that best suits their financial situation to maximize benefits.

When to invest for Section 80C deductions?

It is advantageous to make investments for Section 80C deductions before the financial year ends on 31st March. This approach allows you to claim the deduction and reduce your taxable income.

It’s also wise to spread your investments throughout the year, helping you avoid the last-minute rush and any potential issues that may arise in the final quarter of the financial year.

 

Other deduction options under Section 80C

  • Contributions to an approved Superannuation Fund
  • Subscription to any deposit scheme or pension fund of the National Housing Bank (NHB)
  • Investment in bonds issued by the National Bank for Agriculture and Rural Development (NABARD)
  • Deposits in the Senior Citizen Savings Scheme
  • Subscription to a notified deposit scheme of a Public Sector Housing Finance Company
  • Investment in bonds issued by the Housing Development Authority of cities, towns, and villages
  • Contributions to annuity plans offered by LIC, such as Jeevan Dhara, Jeevan Akshay, or any other insurer approved by the Central Government
  • Subscription to equity shares or debentures of a public company or public financial institution as part of an eligible capital issue approved by the Board, with proceeds utilized for an infrastructure company

Note: The total amount of deduction under Section 80C cannot exceed Rs. 1,50,000.

Conclusion

Utilising Section 80C for tax savings is a strategic approach that benefits various financial goals, including retirement planning, education funding, and wealth accumulation.

By understanding and making the best use of the provisions under this section, individuals depending on their income tax slab can significantly reduce their tax liability while securing their financial future.

Once you have maximised your tax benefit under 80C, you might consider exploring further investment opportunities.

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With access to more than 1,000 mutual funds, the Bajaj Finserv Mutual Funds Platform offers an excellent starting point for your investment journey.

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Frequently asked questions

What is Section 80 C new tax regime?

Under Sections 80C and 10(10D), investments in certain financial instruments can reduce taxable income. The maximum deduction allowed under 80C is Rs. 1.5 lakhs annually, while 10(10D) benefits apply to investments up to Rs. 2.5 lakhs made in policies purchased after February 1, 2021. It is important to note that tax benefits and savings are subject to modifications in tax legislation.

Can I claim both 80C and 80CCD?

Section 80C deductions are mutually exclusive with those under 80CCD. The aggregate limit for these deductions is Rs. 1.5 lakhs. However, an additional deduction of Rs. 50,000 is permissible under Section 80CCD(1B).

How much is 80 C exemption?

Under Section 80C of the Income Tax Act, you can avail a deduction of up to Rs. 1.5 lakh from your total taxable income. This deduction can be claimed for various investments and expenditures, such as life insurance premiums, tuition fees, and contributions to provident funds.

What is covered under 80C?

The Income Tax Department offers taxpayers the opportunity to reduce their taxable income through deductions. These deductions are available for specific investments and expenses outlined in Chapter VI A. Section 80C allows deductions for investments in Public Provident Fund (PPF), Employee Provident Fund (EPF), Life Insurance Corporation (LIC) premiums, Equity Linked Savings Schemes (ELSS), and principal repayments.

Which investment comes under 80C?

Section 80C of the Income Tax Act allows tax deductions for various investments and expenses. Eligible investments include Equity-Linked Saving Schemes (ELSS), Public Provident Funds (PPF), Life insurance premiums, the principal repayment of a home loan, Sukanya Samriddhi Yojana (SSY), National Savings Certificate (NSC), and Senior Citizens Savings Scheme (SCSS). By making these investments, individuals can claim deductions up to a maximum of Rs. 1,50,000 and reduce their taxable income as well as the overall tax burden.

Do contributions to PF come under 80C?

Yes, contributions to the Provident Fund (PF) are eligible for tax deductions under Section 80C. Other expenses that qualify for 80C deductions include the principal amount repaid under a home loan, tuition fees for children's education (up to 2 children), and life insurance premiums. By investing in these eligible options, individuals can reduce their taxable income.

Is FD allowed in 80C?

Making investments in tax-saver fixed deposits are eligible for deduction under Section 80C of the Income Tax Act, 1961. By investing in a fixed deposit, you can claim tax deductions of up to Rs. 1,50,000 and reduce your taxable income.

Do SIP investments come under 80C?

Systematic Investment Plan (SIP) investments also offer tax benefits under Section 80C. By investing in SIPs, specifically in Equity Linked Saving Schemes (ELSS), you can claim a tax deduction of up to Rs. 1.5 lakh. Such an investment reduces your overall tax liability while allowing you to invest regularly and build a sizeable corpus over time.

What is the maximum limit of 80C?

Under the Income Tax Act, 1961, the total deduction limit for Section 80C is Rs. 1.5 lakh per financial year. Eligible options for 80C deductions include life insurance premiums, Public Provident Fund (PPF), Employees’ Provident Fund (EPF), Equity Linked Savings Scheme (ELSS), Unit Linked Insurance Plan (ULIP), and tax saver fixed deposits. These investments help reduce your taxable income and, ultimately, your final income tax liability.

Is 80C tax-free?

Section 80C of the Income Tax Act provides tax exemptions for specific investments and expenditures. By investing in various financial assets like the Public Provident Fund (PPF), National Savings Certificate (NSC), and Equity Linked Savings Scheme (ELSS), you can claim tax deductions up to Rs. 1.5 lakh. This helps reduce your taxable income and overall tax liability. However, it must be noted that the returns generated from the Section 80C investments are taxable. You are required to include them in your taxable income while computing taxes.

Can I claim deductions u/s 80C every year?

By spreading your investments across different options like Life Insurance Plans, National Savings Certificates (NSC), and the Public Provident Fund (PPF), you can claim tax deductions under Section 80C. This allows you to deduct up to Rs. 1.5 lakh from your taxable income each financial year which reduces your overall tax burden.

What is the difference between Section 80C, 80CCC, and 80CCD?

Section 80C allows deductions for investments in PPF, ELSS, etc. Section 80CCC focuses on contributions toward pension plans, while Section 80CCD offers deductions for contributions to the National Pension Scheme (NPS), including an additional Rs. 50,000 beyond the 80C limit under 80CCD(1B).

Can I claim deductions for contributions to both EPF and PPF under Section 80C?

Yes, you can claim deductions for contributions made to both the Employees' Provident Fund (EPF) and Public Provident Fund (PPF) under Section 80C, provided the total deduction does not exceed the limit of Rs. 1.5 lakh in a financial year.

Can I claim deductions on registration charges and stamp duty for property purchases?

Yes, you can claim deductions on the registration charges and stamp duty paid during property purchases under Section 80C of the Income Tax Act. This deduction is part of the overall Rs. 1.5 lakh limit for all eligible 80C investments.

Is the maximum limit of Rs. 1.5 lakh for each investment under Section 80C?

No, the maximum deduction limit under Section 80C is Rs. 1.5 lakh in total for all eligible investments combined, not for each individual investment. This includes contributions to instruments like PPF, NSC, life insurance premiums, and more.

What is the lock-in period for different investment options under Section 80C?

The lock-in period varies across investment options: ELSS has a 3-year lock-in, PPF has 15 years, NSC has 5 years, and tax-saving fixed deposits have a 5-year lock-in period. Each option has a mandatory holding period to qualify for tax deductions.

Can companies claim benefits under Section 80C?

No, Section 80C deductions are only available to individual taxpayers and Hindu Undivided Families (HUFs). Companies, firms, or other business entities are not eligible to claim benefits under Section 80C of the Income Tax Act.

What are the benefits of investing in NPS under Section 80CCD?

Investing in the National Pension Scheme (NPS) under Section 80CCD provides tax benefits. Contributions up to Rs. 1.5 lakh are deductible under 80CCD(1), with an additional Rs. 50,000 under 80CCD(1B). NPS offers long-term retirement savings with tax-efficient growth and annuity options.

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1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.

Disclaimer:

Bajaj Finance Limited ("BFL") is registered with the Association of Mutual Funds in India ("AMFI") as a distributor of third party Mutual Funds (shortly referred as 'Mutual Funds) with ARN No. 90319

BFL does NOT:

(i) provide investment advisory services in any manner or form:

(ii) carry customized/personalized suitability assessment:

(iii) carry independent research or analysis, including on any Mutual Fund schemes or other investments; and provide any guarantee of return on investment.

In addition to displaying the Mutual fund products of Asset Management Companies, some general information is sourced from third parties, is also displayed on As-is basis, which should NOT be construed as any solicitation or attempt to effect transactions in securities or the rendering any investment advice. Mutual Funds are subject to market risks, including loss of principal amount and Investor should read all Scheme/Offer related documents carefully. The NAV of units issued under the Schemes of mutual funds can go up or down depending on the factors and forces affecting capital markets and may also be affected by changes in the general level of interest rates. The NAV of the units issued under the scheme may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities forming part of the Mutual Fund. The NAV will inter-alia be exposed to Price/Interest Rate Risk and Credit Risk. Past performance of any scheme of the Mutual fund do not indicate the future performance of the Schemes of the Mutual Fund. BFL shall not be responsible or liable for any loss or shortfall incurred by the investors. There may be other/better alternatives to the investment avenues displayed by BFL. Hence, the final investment decision shall at all times exclusively remain with the investor alone and BFL shall not be liable or responsible for any consequences thereof.

Investment by a person residing outside the territorial jurisdiction of India is not acceptable nor permitted.

Disclaimer on Risk-O-Meter:

Investors are advised before investing to evaluate a scheme not only on the basis of the Product labeling (including the Riskometer) but also on other quantitative and qualitative factors such as performance, portfolio, fund managers, asset manager, etc, and shall also consult their Professional advisors, if they are unsure about the suitability of the scheme before investing.


Disclosure: Bajaj Finance Limited (BFL) is a distributor of Mutual Funds with ARN - 90319 and distributes mutual funds of Bajaj Finserv Asset Management Limited (BFSAMC). BFL receives commission towards distribution of mutual fund products. BFSAMC is a group company of BFL, carrying business on arm’s length basis without any conflict of interest and in accordance with the prevailing law / regulation.