Income Tax Deduction u/s 80C

Income Tax Deduction u/s 80C of Income Tax Act | Save upto Rs.150000 for AY 2018-19

Income Tax Deduction

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Income Tax Deduction u/s 80C of Income Tax Act | Save upto Rs.150000 for AY 2018-19 | Deduction u/s 80C, Deduction u/s 80C of Income Tax Act, Saving u/s 80C

This article discuss about income tax deduction you can claim to save your tax u/s 80C for the Financial Year 2017-18:

Basis of Deduction: The income tax deduction under section 80C is available on the basis of specified qualifying investments or contributions or deposits or the payments made by the assessee  during the previous year. Deduction under this section is available on actual payment basis. Only the actual payments made by the assessee during the previous year shall qualify for deduction to save your tax.

Who can claim Income Tax Deduction u/s 80C: The deduction u/s 80C is available only to the individual assessee and Hindu Undivided Family (HUF).

Amount of Income Tax Deduction u/s 80C: The maximum amount of deduction u/s 80C is Rs. 1,50,000.  The limit of Rs.150000 also includes the amount of deduction allowable to assessee u/s 80CCC and 80CCD. (In Union Budget 2017, no change has been made in the amount of income tax deduction u/s 80C)

Payments qualifying to claim deduction u/s 80C: There are many options available for you under this section to save tax. You can choose all or any of them. The payments made by you during the previous year towards various investments, contributions and deposits that will qualify for deduction under section 80C are described as follows:

  • Life Insurance Premium: Life Insurance Premium paid during the previous year. Insurance policy must be taken on own life or on the life of the spouse or any child of the assessee. Maximum deduction regarding the payment of life insurance premium w.e.f. 1st April 2012, can be 10% of sum assured.
  • Contribution Toward SPF/RPF: Any sum paid by the employee as contribution towards Statutory Provident Fund (SPF) or Recognized Provident Fund (RPF).
  • Contribution Towards PPF: Any contribution made by assessee as contribution towards Public Provident Fund or Approved Superannuation Fund
  • National Savings Certificate:Sum paid as subscription of National Saving Certificates (NSC) (VIII issue).
  • Bonds Issued by NABARD: Any sum paid as subscription towards notified bonds issues by NABARD.
  • Time Deposits of Post Office: Any sum deposited in five year or more time deposit scheme of Post Office.
  • Unit Linked Insurance Plan (ULIPs):Amount paid as contribution towards Unit Linked Insurance Plan (ULIP) of UTI , LIC or any other insurers.
  • Mutual Funds:Sum Paid as subscription towards units of a Mutual Fund or UTI.
  • Post Office Savings Account: Amount deposited in 10 or 15 years account of Post Office Savings Bank Account.
  • Tuition Fees of Student: Tuition fees paid to any school, college, university or other educational institution situated within India.
  • Repayment of house loan. Any amount repaid of house loan taken for the construction, purchase, repair or renovation of the house. But only principal component of  EMI qualify for deduction u/c 80C.
  • Post office Time Deposit Account: Amount deposited in five year Post Office Time Deposit Account.
  • Tax Saving Term Deposit with Banks: Terms deposits with certain banks of not less than 5 years duration and as per scheme framed by Central Govt.
  • Equity Linked Savings Schemes: Any amount invested in Equity Linked Savings Schemes (ELSS).
  • Eligible Issue: Amount invested in Equity Shares or Debentures in an eligible issue.
  • Sukanya Samriddhi Account: Amount deposited in Sukanya Samriddhi Account, a scheme of Girl Child Prosperity , launched by Prime Minister Sh. Narender Modi.
  • Pension Fund: Any amount invested in pension fund or in any annuity plan.
  • Infrastructure Bonds: Amount invested in infrastructure bonds issued by development finance companies or infrastructure companies.
  • Health Insurance Premium: Any amount paid as health insurance premium on health insurance policies.
  • Senior Citizens Savings Schemes: Any amount invested in Senior Citizens Savings Schemes.

There are also some others investment and deposits which qualify for deduction u/c 80C besides the above listed options.

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