Taxes are an essential part of the Indian economy. All people, companies or entities who earn more than a specified income are bound to pay taxes to the government which enables the government to earn revenue and let a taxpayer enjoy some basic facilities. If you are also a resident of India who needs to pay a hefty amount of sum in taxes, then you must be wondering if there is any way of reducing your tax liability.
Well, there are many types of deductions that can help you save taxes and keep more money with you. Whether an individual/company or entity is eligible for a deduction or not and how much money can be saved in this manner depends on some factors. Some of the common deductions include but are not limited to medical expenses, charitable contributions, tuition fees or investing in life insurance plans, national savings schemes, retirement saving schemes, etc.
These tax deductions are allowed by the government of India as it wants to encourage individuals, companies, and entities to pay taxes on time. If you are wondering what is 80c, then you should know that Section 80c of income tax act is also a type of deduction provided to individuals and Hindu Undivided Families. Are you excited to make an investment under 80c? Read on before you make a decision.
Exemption Under 80C Income Tax
The limit of an exemption under section 80c, 80CCC and 80CCD is INR 1.5 lakh. A few popular investments that are eligible for 80c deduction list are:
- Payment made towards the provident fund
- Payment made towards life insurance policies for self, children or a spouse
- Tuition fees paid to educate two children
- Payment made towards construction of new residential property or made towards purchasing a residential property
- Payment made towards a fixed deposit with a tenure of at least 5 years.
- It also includes additional 80c investments like purchasing NABARD bonds, senior citizens saving schemes, investment in mutual funds, etc.
Subsections of Section 80C
Now that you have an idea of almost every deduction under section 80c, you should also know about relevant subsections of income tax section 80c that offer better clarity to you as a taxpayer.
This section is dedicated to tax deductions one can get by investing in pension funds. You can buy them from any insurance provider and get a maximum deduction of up to INR 1.5 lakh. This option is available to only individual taxpayers.
Section 80 CCD
This section helps people to boost their savings by allowing them incentives regarding the same. If you invest in pension schemes that are notified by the Central Government of India, you as well as your employer will get a deduction in taxes if the deduction is less than 10 percent of your salary. This option is also limited to individual taxpayers only.
The tax deductions are offered to individuals and Hindu undivided families if they subscribe to long-term infrastructure bonds that are notified by the Indian government. The maximum possible amount of deduction is INR 20,000.
Section 80 CCG
Specified individuals can get a maximum deduction of INR 25,000 every year if he or she invests in equity savings schemes that have been allowed by the Indian government. The deductions are subject to a limit which is 50 percent of the amount that has been invested by a specific individual.
In essence, it can be said that section 80c is meant for the benefit of all Indian residents because it allows them many options to reduce their tax liability. It is hoped that you will try any of the methods above and save some money when you file taxes this time around.