Section 80C – Income Tax Deduction under Section 80C

2. Public Provident Fund (PPF)

Public Provident Fund (PPF) is a government scheme that allows you to invest as low as Rs. 500 to Rs. 1.5 lakh in a given financial year. Under the provisions of Section 80C of the Income Tax Act, your taxable income will reduce by the amount you invest in the fund.

Also, the interest you receive on such a fund is tax-free, meaning you can gain an all-around financial advantage under Section 80C, by investing in PPF. 

3. Employees’ Provident Fund (EPF)

Under Section 80C of Income Tax Act, Employees’ contribution to the EPF account is also eligible for 80C deductions. Whereas, employer’s contribution remains free from tax but not available as 80C deduction.

4. Equity Linked Savings Scheme (ELSS)

ELSS is another type of investment scheme covered under Section 80C, in which you enjoy income tax saving benefits on the amount you put into the fund. Such a scheme offers you higher returns as your money gets invested in equity funds, but the point to note is that equity investment is prone to higher market-related risks.

There is no upper limit on the amount that you can invest in ELSS. However, you can only avail income tax saving benefit up to the total limit stated under Section 80C.

5. Unit Linked Insurance Plan (ULIP)

Unit Linked Insurance Plan offers the twin benefit of life cover and investment benefit. Under Section 80C, it also provides income tax saving benefit, up to Rs. 1.5 lakh, on the amount invested. You can avail of tax-deduction benefits up to either 10% of the sum assured or annual premiums, whichever is lower. Investing in ULIPs will help you enjoy flexibility of maximising your savings through a variety of market-linked fund options. Max Life Fast Track Super Plan (UIN: 104L082V04)(Unit Linked Non Participating Individual) offers you the option to invest in 6 types of funds and allows you up to 12 free switches in a year.

To get an estimate of how much insurance coverage will be enough for your loved ones and how much you need to pay for the same, then you can use a ULIP calculator to make the assessment yourself.

6. Tax Saver Fixed Deposits

Tax Saver Fixed Deposits (FDs) also come under Section 80C deduction. Any deposit that you make with a bank for a period of 5 years is eligible for tax deductions, up to the specified limit stated under Section 80C of Income Tax Act, 1961. 

Contributions made towards the National Pension System are tax deductible under Section 80CCD, which is a subset of Section 80C of Income Tax Act. However, the combined deduction under Section 80C and 80CCD cannot be more than Rs. 1.5 lakh.

In case, you contribute an additional Rs. 50,000 under NPS (over and above the Section 80C limit of Rs. 1.5 lakh), the total amount can be claimed as deduction under Section 80CCD (1B). 

In other words, you can claim tax deduction on the contributions made towards NPS, of up to Rs. 1.5 lakh and Rs. 50,000 as per Section 80C limit and Section 80CCD (1B) respectively. 

However, the additional deduction of Rs 50,000 can only be availed if you have a Tier 1 NPS account.

8. Home Loan Principal Repayment

If you have availed home loan from any bank or financial institution, you can avail 80C deduction up to Rs.1.5 lakh on the home loan principal repayment amount.

9. Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojana is a saving scheme for girl child and is eligible for 80C deduction of Income Tax Act. This account is for the girl child under 10 years of age. This account can be opened for a maximum of 2 girl childs and claim income tax deductions under Section 80C of Income Tax Act.

10. Senior Citizens Savings Scheme

Senior Citizens Saving Scheme is for senior citizens with at least 60 years of age. Senior Citizens who have opted for Voluntary Retirement Scheme (VRS) can opt for it after 55 years of age. Any investments made under this scheme is eligible for 80C deductions with the maximum 80C limit remains Rs.1.5 lakh only.

11. National Savings Certificate

Any investments made under the National Savings Certificate can also be claimed under Section 80C deductions. Not only the investment amount, but also the interest accrued for the first 4 years are eligible for deduction under Section 80C of Income Tax Act. You can reduce the taxable income up to Rs.1.5 lakh (Section 80C limit).