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Section 80C of the Income Tax Act offers many tax-saving opportunities for Individuals and Hindu Undivided Families (HUFs), allowing them to claim deductions on various investments and expenses.
What is Section 80C?
Section 80C of the Income Tax Act, 1961 helps you get tax exemption through investments. With the help of Section 80C, you can avail financial growth and reduce your tax liabilities. By diversifying your investments across options like Sukanya Samriddhi Yojana and Public, life insurance Premiums, National Pension System(NPS), you can claim a deduction of up to ₹ 1.5 lakh per financial year under Section 80C.
| Investment options | Interest | Minimum lock-in period | Risk factor |
| ELSS funds | 12% – 15% | 3 years | High |
| NPS Scheme | 8% – 10% | Till 60 years of age | High |
| Tax saving FD | Up to 8.40% | 5 years | Low |
| PPF | 7.90% | 15 years | Low |
| ULIP | 8% – 10% | 5 years | Medium |
| Senior citizen savings scheme | 8.60% | 5 years | Low |
| Sukanya Samriddhi Yojna | 8.50% | Till girl child reaches 21 years of age | Low |
| National Savings Certificate | 7.9% | 5 years | Low |
Public Provident Fund
Public Provident Fund is a popular government savings scheme. Investments made in PPF accounts are eligible for deduction under Section 80C. The minimum contribution to Public Provident Fund is Rs 500 and maximum contribution is Rs 1.5 lakh
Sukanya Samriddhi Yojana
SSY is a government-backed savings scheme designed to promote the welfare of the girl child. Under this scheme, bank accounts can be opened for girls below 10 years of age, and contributions can be made till they complete 15 years from the date of account opening. Through this scheme you can invest minimum Rs 1000 and maximum Rs 1.5 lakh.
Senior Citizen Savings Scheme
This scheme is for people above 60 years of age. People who have crossed the age of 60 years or above are eligible to participate in this scheme and can avail tax deduction of up to Rs 1.5 lakh.
National Pension Scheme (NPS)
National Pension Scheme is a government-backed savings scheme designed for employees from various sectors including private, public and unorganized sectors. Section 80C of the Income Tax Act allows tax deduction on investments up to Rs 1.5 lakh in the scheme.
National Savings Certificate
The National Savings Certificate (NSC) is a fixed-income investment scheme. Contributions to NSC are eligible for tax deduction under Section 80C, which allows individuals to claim a maximum deduction of Rs 1.5 lakh per financial year.
The minimum investment is Rs 100, and there is no restriction on the maximum amount that can be invested.
Life Insurance Premiums
Under Section 80C, deduction is available on premiums paid for policies on the life of the taxpayer, the taxpayer's spouse and the taxpayer's children.
ELSS funds
Equity Linked Savings Scheme (ELSS) funds are tax-saving mutual funds that invest primarily in equity and equity-related instruments. They offer investors the benefit of tax deduction under Section 80C of the Income Tax Act with a lock-in period of three years.
Limit for Deductions Under Section 80C
Individuals can claim deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act for various investments and expenses like EPF, PPF, NSC, ELSS, life insurance premium and tuition fees for children's education.
Eligibility for an 80C deduction?
Individual taxpayers, Hindu Undivided Families (HUFs) are eligible for deductions under Section 80C of the Income Tax Act.
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