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Aruna Bhayana
| Updated: 15 Nov, 2018 | Category: Income Tax

Deduction of 80C, 80CCC & 80CCD Under Income Tax

Deduction of 80C

Section 80C of the Income-tax Act defines the deduction a taxpayer can claim from its total income bringing down its taxable income and thereby reduces its tax. Today, in this article we will discuss the important deduction of 80C, 80CCC & 80CCD under the Income-tax act.

Section 80C of The Income-Tax Act

Under section 80C, a taxpayer can claim a deduction of up to Rs 1, 50,000 from its total income. You can claim the amount of the tax up to 1, 50,000 from your total taxable income under 80C. The deduction under section 80 C, 80CCC & 80CCD for Assessment year 2018-2019 is allowed to the maximum of Rs 1, 50,000 for the FY 2018-2019, 2017-18 and FY 2016-17 each.

Section 80C includes the deduction made in LIC, Mediclaim, PPF, or incurred towards the tuition fees, etc. In case, you have paid excess taxes and have invested in the above-discussed list then you can claim your excess tax by just filing the Income-tax return.

80C Deduction List Includes The Following Payment Made-

  • towards the life insurance policies (for self, spouse or children)
  • to the provident fund or superannuation fund
  • towards the tuition fees to educate the maximum of two children
  • to the construction or purchase of residential property
  • towards the fixed deposit with a minimum tenure of 5 years.

In addition, this section also includes investment in mutual funds, senior citizens saving scheme, purchase of NABARD bonds, etc. These deductions have been in the act to encourage the members of the society to participate in certain useful activities by helping the process.

Section 80 C Investment Eligible for Tax Deduction   

Employee Provident Fund & Voluntary Provident

Employee’s own contribution to the Employee Provident Fund & Voluntary Provident Fund qualifies for deduction 80C.  If the employee basic salary increase with amount Rs 15,000 per month then he/ she has the option to enter the scheme. The current rate of the interest is 8.65% p.a. Both employer and the employee will contribute minimum of 12% of the Basic Pay +D.A.

Public Provident Fund

PPF scheme is a longtime investment scheme backed by the government of India. Resident Indian Individual in their own name or in the name of the minor child can open a PPF account. PPF account has the maturity period of 15 years but it also extended to 5 years where partial withdrawal is allowed after 7 years. The rate of interest is 7.9% p.a. The minimum investment limit is Rs 500 and the maximum limit is 1.5 lakhs.

National Saving Certificate (NSC)

This scheme is highly secured class of investment where Non- resident, Trust and HUF are not eligible to invest in it. The current rate of interest is 7.9% for 5 years NSC. The investment is eligible for deduction under 80C and the maturity amount is tax-free.

Read our article:Section 80GGB and Section 80GGC: Tax Deductions from Donations to Political Parties

Sukanya Samriddhi Scheme

It is also one of the best investment options that are trending in the market today. The compounded rate of interest is calculated annually. The minor account will be opened by the guardian of the minor girl child till she attains the age of 10 years. The minimum limit is Rs 1,000 and Rs 1.5 lakh is the maximum limit.

Senior Citizen Saving Scheme

An individual of age 60 years old more is eligible to open the account. Furthermore, an individual of the age of 55 years or more but less than 6year is eligible to retire under the Voluntary Retirement Scheme. The maturity period is 5years. The interest rate offered is 8.4% per annum. The minimum investment limit is Rs 1,000 and Rs 15 lakh is the maximum limit.

5 Year Tax Saving Bank Fixed Deposits

All resident individual can open account tax-saving bank fixed deposits and 60year senior citizen is also eligible.  The Maturity period is around for 5 years and a person is not allowed to break this fixed deposit before maturity. The minimum investment is Rs 1000.

Unit Linked Insurance Plan

An individual invested in Unit Linked Insurance Plan for spouse, self or child where a child can be married or unmarried, dependent or independent and minor or major. The maximum amount of deduction is only up to Rs 1.5 lakh.

Section 80 CCC Under The Income Tax Act

Now, after the Section 80C, we are heading towards its subsections which provide more clarity to the branches of the Section 80C deductions.

Section 80CCC of the Income Act[1] provides a ground for a tax deduction in which you can make an investment in pension funds. It relates to the deduction for premium paid for any annuity plan of LIC or Pension fund or another insurer. In these pension funds, a taxpayer can claim a maximum amount of deduction of Rs 1.5 lakhs. It could be from any insurer in the pension funds and an individual is only eligible to claim this deduction as a taxpayer.

The investment in a pension fund or annuity can easily claim in the deduction. However, the interest accrued is taxable in the year of receipt.

Section 80CCD Under Income Tax Act

This section aims to encourage the habit of savings in the people by alluring them with the exciting incentives they will get with the investment in the pension scheme that is notified by the central Government. Any contribution made by the employer/employee will be eligible for deduction in this section. The tax deduction will be subject to being less than 10% of the salary of the person. The Individual taxpayers are eligible for Section 80CCD deduction.

The total amount of deduction under 80C, 80CCC & 80CCD under Income act cannot be cross the limit of Rs 1, 50,000. The total deduction should not exceed Rs 1, 50,000 only. For instance – Mr. Ram has invested 50,000 in section 80C, 1, 00,000 in Section 80CCC and 70,000 in Section 80CCD. Here, Mr Ram is only eligible to claim Rs 1, 50,000 as it is the maximum limit you can claim a deduction in the Income-tax.

Other Important Deduction Under 80C –

Apart from the above-said deduction under Section 80C, there are the following deductions which are as follows–

  • Section 80 CCF- this deduction has opened its door for Hindu Undivided Family and Individuals. Section 80CCF includes the provisions for a tax deduction on the subscription of long-term infrastructure bonds that are notified by the government from time to time. Also, one can claim a maximum deduction of Rs 20,000.
  • Section 80CCG- the Income-tax permits a maximum amount of deduction of Rs 25,000 per year with the specified individual residents who are eligible for this deductions. The government has notified 50% of the investment is mandatory in equity saving scheme.
  • The maximum limit under 80C section is Rs 1, 50,000 covering all heads.

Read our article:Income Tax Slab and Rate for financial year 2020-21

Aruna Bhayana

Aruna is a legal counsel and a passionate writer. She has worked in various Firm as a lawyer after her studies for two years and one year in Legal Service company. Currently, She is working as a contact legal matter expert at corpbiz.

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