These deductions are available to the tax payers for amounts up to Rs. 1.5 lac per year under Section 80C. They are basically used for certain expenses like investments, insurance premium payments, repayment of the principal amount of the home loans, provident funds etc. Individuals as well as Hindu Undivided Families are eligible to avail these tax deductions. This tax exemption supports a number of sections under them. This deduction form also supports a number of extra exemptions like mutual fund investments, savings schemes for senior citizens, amount paid for buying NABARD bonds etc. The main investment made by the tax payers which are eligible for tax deductions under Section 80C are as follows:
- Amount paid by the tax payers for fixed deposits with a minimum term of 5 years.
- Payment made by the tax payer for either constructing or buying a new residential property.
- Tuition fees paid for the education of children (max 2 children).
- Amount paid by the tax payer towards either a provident fund or superannuation.
- Payment made by the tax payer towards the life insurance policies of partner, self and even children.
The Income Tax deductions under section 80C are commonly known by their sub-sections. These sub-sections are as follows:
- Section 80CC- Section 80CC under Section 80C is applicable on investments made by tax payers in several pension funds. A maximum amount of Rs. 1.5 lacs can be availed by the tax payer under this sub section and the pension fund can be from any available insurer. But one limitation of this sub section is that the exemption that it offers can only be claimed by an individual tax payer.
- Section 80CCD- this tax deduction is available only to individual tax payers. This section helps tax payers inculcate a savings habit in them. There are various pension schemes available to the tax payers that are recognised by the Central Government. This section offers incentives and benefits to the tax payers who invest their money in those pension schemes. Financial contributions made by both the individual tax payer as well as his employer is taken into consideration for the purpose of tax deductions but those exemptions should not be more than 10% of the total salary of the person.
- Section 80CCF- there are a number of long-term infrastructure bonds that are Government notified and are available to the general tax payers. Thus, sub section 80 CCF offers tax exemptions to individuals as well as Hindu Undivided Families for subscribing to those bonds. A maximum amount of Rs. 20,000 can be treated as exempted under this section.
- Section 80CCG- under section 80CCG, only individual Indian residents that fit specific criteria are eligible for tax exemptions. An investment made by the tax payers in equity savings schemes that has been notified by the Central Government is only exempted in this section of tax deduction. These investments are subjected to a maximum limit of 50% of the investment amount of the tax payer. A maximum deduction of only up to Rs. 25,000 is made permissible to the tax payer by the Income Tax Act.