ARTICLES

What is Section 80C? : 

It is a clause that shows different expenditures and investments that are exempted from Income Tax. Maximum deduction of up to Rs. 1.5 lakh is allowed every year from an investor’s total taxable Income if invested in Section 80 C Products.

Products offered under Section 80 C:

ELSS:

Equity Linked Savings Scheme is offered by Mutual funds as Tax savings instruments. Such schemes are diversified equity schemes having a lock-in period of 3 years.

EPF:

Employee’s Provident Fund is a retirement benefits scheme in which employer and employee both contribute a certain % of salary. And on retirement, an employee gets a lump sum amount with interest. The interest rate of EPF is 8.5% for 2020-2021.  

PPF:

PPF is the most popular form of investment in the fixed income category which offers tax savings and investment. It allows individuals to invest up to 1.5 lakh each year. It has a tenure of 15 years and the minimum deposit amount is Rs. 500 each financial year. The interest rate of PPF for the quarter ending March 2021 is 7.1%.

Sukanya Samriddhi Yojana:

This is a government scheme for a girl child. A Sukanya Samriddhi Account can be opened any time through the post office or authorized branches of commercial banks, after the birth of a girl's child till she turns 10. It has a minimum deposit of Rs 250 and a maximum of Rs.1.5 lakh can be deposited during the financial year. The interest rate on new deposits is subject to revision every quarter. The interest rate for the quarter ending on March 31, 2021, is 7.6%.

Life insurance premium:

Life Insurance is a life protection plan offered by Insurance companies. It provides a specific amount to the nominee in case of death of the life insured. As against life insurance amount, the company takes premium. The amount you pay towards the life insurance premium of yourself, your spouse, or your children can be included in Section 80 C deductions.

The principal component of the home loan:

Home loans have a specific amount of EMIs (Equated Monthly Installments). EMIs consist of 2 components. Principal and interest. The Principal qualifies for a deduction of Section 80 C.

Section 80 CCD (1B) - NPS: National Pension Scheme is a pension cum investment scheme launched by the Government of India to provide retirement benefits to all citizens of India. By investing in NPS, an additional deduction of Rs. 50000 under section 80CCD (1B) over and above Rs. 1.5 lakh can be availed in a financial year.

Section 80 D - Health Insurance Premium: Health Insurance Plan covers hospitalization and medical expenses. Premium paid for health insurance of self, spouse and children can be exempted from tax up to Rs. 25000/. An additional amount of Rs. 25000 can be allowed for a premium paid for parents. 

Section 80 TTA: Interest earned from a savings account from a bank is allowed for a deduction up to Rs. 10000 under section 80 TTA.