80C Tax Rebate

80C is the favourite of taxpayers. It gives tax rebate by lowering one's taxable income by up to Rs 1 lakh for certain investments and expenses made in that year.

Eligibility for 80C

This deduction is available for individual and HUFs. These investments allowed for exemption under section 80C:

  1. ELSS
  2. NSC, PPF, SCSS
  3. 5 year tax saving bank Fixed Deposit or 5 year post office Term Deposit
  4. PF, both mandatory and voluntary
  5. Life insurance premium on self, spouse and dependent children (premium should not exceed 20% of sum assured). This applies to ULIPs, traditional policy as well.
  6. Pension fund or annuity

And the following expenses can be claimed for deduction under section 80C 

  1. Principal on home loan
  2. Registration and stamp duty on home purchase
  3. Tution fee on children's full time education

If the house is sold before completing 5 years, ULIPS is surrendered or withdrawn before 5 years or in case of other life insurance policies if they are terminated before 2 years the income tax deduction under 80C will be cancelled. That amount will be added to your income for the current year and be taxable.

Maximum deduction limit under 80C

Exemption is capped at Rs 1 lakh a year. You can claim exemption for the amount of investment/expense you have made or Rs 1 lakh, whichever is greater. Deduction under section 80C, 80CCC (pension or annuity) and 80CCD (NSC) has been clubbed at Rs 1 lakh.

How to get 80C tax benefit

In general, PF happens automatically from your salary. So check how much has that covered, before putting the remaining in ELSS or PPF, which are by far the best among the rest. In case you are repaying a home loan provide details of this and your investments to your employer. They should give you the tax benefit by cutting less TDS.

You can also claim 80C deductions by putting them in appropriate cells allocated for them in the ITR form in the section Income & Deductions in the sheet Income Details, which is the first sheet in ITR form.

Make sure you are getting the full benefit of section 80C tax rebate you are eligible for by making investments on time and filling those details while filing tax returns.


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