Chapter VI-A of section 80C clarify about complete information about deductions from Gross Total Income. It is important to note that if there is no Gross total Income than no deduction will be permitted. The chapter comprise deductions in respect of some payments, deductions in respect of some incomes, deductions in respect of other incomes and other deductions. Let’s discuss on Section 80C which include certain Investment which can be claimed as deduction for the purpose of computing total income.
Section 80C is applicable only for Individual and HUF. Corporate bodies, partnership firms, and other businesses are not eligible to get deduction u/s 80C. It allows maximum deduction of Rs. 1.5 lacs to an investor in a previous year.
There are some specific Investment and their conditions where an investor get. See below points:-
Life Insurance Premium – Premium paid on life insurance of the individual, spouse or any child (minor or major) and in the case of Hindu Undivided Family. This will include a life policy & an endowment policy.
Contribution to PPF/RPF/SPF – Contributions to any PF to which the Provident Funds Act, 1925 embeds and recognized provident fund eligible for deduction under section 80C.made to any PF set up by the Central Government and notified in his/her behalf also eligible for deduction u/s 80C. This kind of contribution can be made in the name of the individual, his spouse & individual’s child; and any member of the family, in case of a HUF. The max. limit for deposit in PPF is Rs. 1.5 lacs in a year.
Contribution to Superannuation fund – Contribution by an employee to an approved superannuation fund is eligible for deduction u/s 80C.
Amount Deposited In Sukanya Samridhi Account – Subscription to any such Central Government’s security or any kind of deposit scheme as the Central Government as may notify in the Official Gazette. Accordingly, Sukanya Samriddhi Scheme has been notified to provide that any sum paid or deposited during the previous year, by an individual in the name of–
a) any girl child of the individual would be eligible for deduction under section 80C or
b) any girl child for whom such individual is the legal guardian would be eligible for deduction under this section 80c
Subscription to National Savings Certificates VIII – Subscription to any Savings Certificates under the act which is known as Government Savings Certificates Act, 1959 notified by the Central Govt. in the Official Gazette issued under the Government Savings Certificates Act, 1959.
Contribution in Unit-linked Insurance Plan 1971– Contributions in the name of the individual, his spouse or individual’s any child for participation in the Unit-linked Insurance Plan 1971. In case of a HUF, the contribution can be made in the name of any member family.
Contribution in Unit-linked LIC Mutual Fund Insurance Plan– Contributions in the name of the individual, his spouse or any child for participation in any Unit linked Insurance Plan of the LIC Mutual Fund. In case of a HUF, the contribution can be made in the name of any member family.
Contribution To Approved Annuity Plan Of LIC – Contributions to approved LIC annual plan like New Jeevan Dhara and New Jeevan Akshay, New Jeevan Dhara I and New Jeevan Akshay I, II and III or any other insurer like Tata AIG Easy Retire Annuity Plan of Tata AIG Life Insurance Company Ltd. as the Central Govt may, through notification in the Official Gazette, enumerate in this behalf.
Subscription towards notified units of mutual fund or UTI – Subscription to any units of any mutual fund or from the Administrator or the specified company under any plan delineated in accordance with such scheme notified by the Central Govt.
Investment in 5 year term deposit – Investment in term deposit for a period of not less than 5 years with a scheduled bank; and which is according to scheme structured and notified by the Central Government in the Official Gazette.
Housing loan Repayment including stamp duty, registration fee & other expenses – Any payment made towards the cost of purchase or construction of a Repayment of amount borrowed by the assessee from: new residential house property. The income from such property –
- Should be taxable under the head “Income from house property”;
- Would have been taxable under the head “Income from house property” had it not been used for the assessee’s own residence. The approved kind of payments are as follows:
(a) Any instalment of the due amount under any self- financing or any development authority’s other schems, Housing Board or other authority engaged in the construction and sale of house property on ownership basis; or
(b) Any instalment of the amount due to any company or a cooperative society of which the assessee is a shareholder or member towards house allotted cost to him; or
(c) Repayment of amount debted by the assessee from
- The Central Government or any State Government;
- The life insurance corporation
- Any national housing bank
- Any Schedule Bank
(d) Stamp duty, registration fee and other expenses for the motive of transfer of such house property to the assesse.
Tuition fees payment to any university, school, college or other educational institution within India for full-time education for max. two children.
Other kind of Investment u/s 80C Which comes Deduction under Section 80C
- Subscription to notified bonds issued by NABARD
- Investment in 5 year Post Office time deposit
- Investment in 5 year Post Office time deposit
- Contribution to additional account under NPS.
An assesse can generate some additional income by investing schemes given under section 80C and also get deductions from gross total income. This is the reason behind this to call this section as Investment come deduction.