Section 80C is probably the easiest & most important tax saving channel for those early in your career.
The current Financial year is coming to an end. If your annual income is even a rupee above 5 Lakhs (incl all sources), you need to know & understand 80C.
The current Financial year is coming to an end. If your annual income is even a rupee above 5 Lakhs (incl all sources), you need to know & understand 80C.
1. WHAT IS 80C?
A section of the Income Tax returns where you mention investments which will be EXEMPT from any income tax.
This means that if the investment is eligible under 80C, you do not have to pay any income tax ON THAT AMOUNT of your earnings.
A section of the Income Tax returns where you mention investments which will be EXEMPT from any income tax.
This means that if the investment is eligible under 80C, you do not have to pay any income tax ON THAT AMOUNT of your earnings.
2. HOW MUCH?
The MAXIMUM AMOUNT that can be made tax-exempt under 80C is INR 1.5 lakhs.
There is a way to increase this to 2 lakhs. Will explain later in the thread.
The MAXIMUM AMOUNT that can be made tax-exempt under 80C is INR 1.5 lakhs.
There is a way to increase this to 2 lakhs. Will explain later in the thread.
The total amount can be from one single investment or multiple eligible investments put together in the year.
If you exceed the max amount, any additional amount is taxable.
If you exceed the max amount, any additional amount is taxable.
3. WHEN?
You have to make the eligible investments within the respective financial year, for which you are filing income tax returns.
01 April to 31 March …
The amount of 1.5 lakhs is applicable every financial year.
You have to make the eligible investments within the respective financial year, for which you are filing income tax returns.
01 April to 31 March …
The amount of 1.5 lakhs is applicable every financial year.
4. ELIGIBLE INVESTMENTS:
- PPF / EPF / PF
- Life Insurance Premiums & ULIPs
- Tax-saver FDs (5 year lock-in)
- ELSS mutual funds
- Principal payment towards Home Loan
- Stamp duty & registration towards property purchase
- National Pension Scheme (NPS)
- PPF / EPF / PF
- Life Insurance Premiums & ULIPs
- Tax-saver FDs (5 year lock-in)
- ELSS mutual funds
- Principal payment towards Home Loan
- Stamp duty & registration towards property purchase
- National Pension Scheme (NPS)
- National Savings Certificate
- Sukanya Samridhi Yojana
- Senior Citizen Savings Scheme
There are a few more too, but these are the most commonly preferred.
- Sukanya Samridhi Yojana
- Senior Citizen Savings Scheme
There are a few more too, but these are the most commonly preferred.
5. 80C SUBSECTIONS:
a. 80CCC: Deduction towards payment of annunity pension plans
b. 80CCD (1): NPS Investment
The maximum eligibility under this is least of the below
- 10% of salary (for salaried people)
- 20% of total income (for self-employed)
- 1.5 Lakhs (max limit of 80C)
a. 80CCC: Deduction towards payment of annunity pension plans
b. 80CCD (1): NPS Investment
The maximum eligibility under this is least of the below
- 10% of salary (for salaried people)
- 20% of total income (for self-employed)
- 1.5 Lakhs (max limit of 80C)
c. 80CCD (1b): This subsection provides an additional exemption of 50,000 under NPS Tier 1 investment.
d. 80CCD (2): Exemption for NPS amount contributed by your employer. This is not applicable for self employed people.
d. 80CCD (2): Exemption for NPS amount contributed by your employer. This is not applicable for self employed people.
PLS NOTE: The total limit of 1.5 lakhs includes the subsections of 80C too…. Except for 80CCD (1b) under which you can claim an additional 50,000.
This takes the total to 2 lakhs.
This takes the total to 2 lakhs.
Only if your 1.5 lakhs quota is fulfilled should you worry about the additional 50k.
If you haven’t taken the full benefit of 80C for this financial year, you should do so before 31 March… that’s coming up soon.
We pay a lot of direct & indirect taxes. When there is a legal way of saving taxes, why shouldn’t you do it!
We pay a lot of direct & indirect taxes. When there is a legal way of saving taxes, why shouldn’t you do it!
There are other sections such as 80D, 80G, 80EE, etc too.. for saving tax.
But these aren’t always applicable to all.
Let me know if you’d like me to write about them.
END.
But these aren’t always applicable to all.
Let me know if you’d like me to write about them.
END.
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