Section 80C of the Income Tax Act provides tax deductions for individuals and HUFs (Hindu Undivided Families). Under this section, taxpayers can claim deductions up to a limit of INR 1.5 lakh/year on investments and expenses made on various items. The primary objective of section 80C is to promote personal savings and investments and reduce the tax burden on individuals.
Here’s how you can save tax under section 80C:
Investment in Provident Fund:
Investing in Employee Provident Fund (EPF), Public Provident Fund (PPF), and Voluntary Provident Fund (VPF) is considered one of the most common ways to save tax under Section 80C. Contributions made by the employee and employer to EPF are eligible for deductions under Section 80C up to the limit of INR 1.5 lakh per annum.
Life Insurance Premiums:
Purchasing a life insurance policy can also help you save tax under Section 80C. The premiums paid towards a life insurance policy are eligible for deductions under Section 80C. However, the deduction is limited to 10% of the sum assured. The policy must be in the taxpayer’s name, their spouse’s name, or their child’s name.
Investing in Equity Linked Savings Scheme (ELSS):
Investing in equity-linked savings schemes (ELSS) is a tax-efficient investment option that is eligible for deductions under Section 80C. ELSS is a mutual fund scheme that invests in equity markets and has a lock-in period of three years. Investments in ELSS up to INR 1.5 lakh are eligible for tax deductions under Section 80C.
National Saving Certificate:
The National Saving Certificate (NSC) is a government-backed savings instrument that allows taxpayers to save tax under Section 80C. The interest earned on NSC is reinvested and is eligible for tax deductions under Section 80C up to a limit of INR 1.5 lakh per year.
Tuition Fees:
The tuition fees paid towards a full-time course of education of the taxpayer’s children can also be claimed as a tax deduction under Section 80C. This deduction is available for up to two children. The fees paid for the child’s education must be in India, and the course of study can be in any field after class 10.
Home Loan Principal Repayment:
Home loan principal repayment can also be claimed as a tax deduction under Section 80C. The principal repayment component of the home loan EMI is eligible for tax deductions under Section 80C. This deduction, along with the interest component of the home loan, can be claimed under Section 24.
Conclusion:
Saving tax under Section 80C is essential for reducing the tax burden on individuals and encouraging personal savings and investments. By investing in schemes like PPF, NSC, ELSS, and paying for life insurance premiums, tuition fees, and home loan principal repayment, taxpayers can save up to INR 1.5 lakh per year on their taxable income. However, it’s essential to understand the different tax-saving instruments available and consult a financial expert before investing in them. By making informed investment decisions, taxpayers can save tax and build a more secure future for themselves and their families.
Section 80c of the income tax form is a provision of the Income Tax Act that enables a taxpayer to decrease his or her tax liability. Before filing your taxes it is essential to understand this provision; taking advantage of section 80c will greatly benefit the amount of taxes an individual is forced to pay.
The income we earn from our jobs is subjected to taxation through the Internal Revenue Service of the Federal Government. The rate of tax an individual pays depends on the respective incomes; each income falls under a specific bracket that yields a specific tax rate or percentage.
Understanding your individual tax bracket is a fundamental step taken by taxpayers. To save tax under sec 80c you must understand your particular tax bracket, the amount of money withheld from your employer, and all deductions or applicable write offs attached to your application.
Section 80c was created to encourage savings. Certain types of savings ultimately yield consumption in the future; in addition, long term savings for retirement enable individuals to properly invest in assets without the prospect of foreclosure. Section 80c of the Income Tax Act is a section that deals with the tax breaks associated with long term savings.
In section 80c, it states that all qualifying investments are deductible from a person’s income, because it qualifies investments and renders them deductibles. An individual can save tax under sec 80c by lowering their taxable income through the presence of these investments.
