Deductions available under Section 80C of the Income Tax Act

Deduction under section 80C for Assessment Year 2016-17.


  The aggregate amount of deduction under section 80C, Section 80CCC and Section 80CCD, shall not be more Rs. 1,50,000


Section 80C :  Deduction in respect of life insurance premium, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc.

Limit : A deduction of maximum Rs 1,50,000 can be claimed from your total income. In other words you can reduce your total taxable income by Rs. 1,50,000. Please note that this limit is same for the Financial Year 2016-17 (or assessment year 2017-18). But the individual or HUF can invest more than Rs. 1,50,000 but can claim deduction upto a limit of Rs. 1,50,000

Who can avail: Individual or a HUF, depending on the type of investment.

How to avail this deduction: 

     By way of Investment or Subscription

  1. Contribution to notified annuity Plan of Life Insurance Corporation of India  (LIC) (like  New Jeevan Dhara, New Jeevan Dhara – 1, New Jeevan Akshay, New Jeevan Akshay – 1, New Jeevan Akshay - II) or Units of UTI
  2. Investment in Public Provident Fund (PPF) by Resident Individual– A maximum of Rs 1,50,000 can be invested in PPF account. The minimum amount to be invested each year is Rs 500. Interest earned on PPF account is not taxable. PPF term is for 15 years.
  3. Purchase of National Savings Certificate (NSC) –NSC can be bought from designated Post Office. NDC term is for 5 years.
  4. Investment in Sukanya Samridhi Yojana  account (notification no. 9/2015 dated 21.1.2015) – This is girl child account. A minimum amount of Rs 1,000 must be deposited in a year.
  5. Investment in Equity Linked Savings Scheme (ELSS) -  These funds usually have a 3 year lock in period.
  6. Unit Linked Insurance Plan (ULIPS) - ULIPS sold with life insurance are also eligible for deduction under section 80C.
  7. Sum deposited in Five Year Deposit Scheme in Post Office.
  8. 5 year term fixed deposit with a a scheduled bank.
  9. Amount deposited under Senior Citizens Saving Scheme Rules 2004.
  10. Subscription to any notified securities/notified deposits scheme. e.g. public sector companies engaged in providing long-term finance for purchase/construction of houses.
  11. Contribution to notified Pension Fund set up by Mutual Fund or UTI. (under section 10(23D))
  12. Sum paid as subscription to Home Loan Account Scheme of the National Housing Bank or contribution to any notified deposit scheme/pension fund set up by National Housing Bank.
  13. Subscription to deposit scheme of a public sector company engaged in providing housing long term finance.
  14. Subscription to equity shares/ debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions.
  15. Subscription to any notified bonds of National Bank for Agriculture and Rural Development(NABARD).

     By way of payment expenditure

  1. Any contribution by the employee towards a statutory provident fund i.e. Employee's share of PF Contribution
  2. Amount paid on Life Insurance Premium.
  3. Any sum paid by an Individual as Children's Tuition Fee
  4. Any payment made by the individual only to effect or keep in force a contract of a non-commutable deferred annuity
  5. Any payment by an Individual or HUF for purchase or construction of a residential house property.

Under Section 80CCC : Deduction in respect of contribution to certain pension funds.

This was introduced to promote social security. Payment towards the premium for annuity plan of LIC or any other insurer deduction is available upto a maximum of Rs. 1,50,000.

Under Section 80CCD : Deduction in respect of contribution to pension scheme of Central Government by Central Government or any other employer

It is allowed to Individual who makes deposits to his or her Pension account.

How much allowed? 

in case of Individual being an employee

Maximum deduction allowed is 10% of salary

in case of Individual being self-employed

Maximum deduction allowed 10% of gross total income

Or Rs 1,50,000 whichever is less

Section 80 CCD(1B)

Deduction of Rs. 50,000 under this section is allowed for contribution many any individual under the NPS. Individuals contributing to NPS would enjoy tax deduction upto Rs. 50,000 which shall be over and above the limit of Rs. 1,50,000 of Section 80C.

Under Section 80CCG : Deduction in respect of investment made under an Equity Saving Scheme.

It is available to an Individual who is resident in India and it is allowed to who have in the previous year, acquired listed equity shares or listed unit of equity oriented fund in accordance with the scheme notified by the Central Government.

How much allowed? 

50% of the amount invested

Or Rs. 25,000 whichever is less

 

Suggested Reading : Income Tax Slab Rates of the AY : 2016-17