- These deductions can be availed only by individuals and Hindu Undivided Families (“HUFs”)
- Partnership Firms, companies, etc. cannot avail of these benefits
- Taxes on an amount of up to INR 1.5 lakhs can be saved under Section 80C, 80CCC and 80CCD(1) combined
Let us understand these deductions in detail:
1. Life Insurance Premium3
You can claim a tax deduction U/S 80C of the Income Tax Act 1961, for the premium paid for insurance coverage for yourself, your spouse, and your children subject to provisions stated therein.
2. PPF (Public Provident Fund)3
Public Provident Fund is a government-initiated plan where an individual can invest from INR 500 - INR 1,50,000 in a financial year. This investment amount can be claimed as a deduction under section 80C.
3. Senior Citizen Savings Plan2
Individuals who are above 60 years can invest up to INR 1,50,000 per financial year, and this entire amount is deductible under section 80C.
4. Sukanya Samriddhi Yojana2
If you have a girl child who is below 10 years, you can invest in the Sukanya Samriddhi Yojana scheme which allows tax deduction under section 80C subject to provisions stated in the Act.
5. Tax Saving FDs2
If you deposit in fixed deposits for a period of 5 or more years, you can claim for a tax deduction.
6. Equity-Linked Savings schemes (ELSS)3
If you wish to invest in equity funds, you can claim a deduction under Section 80C as per the limits stated in the policy.
7. Home Loan Repayment3
If you have taken a home loan from any banking institution, you can claim up to INR 1,50,000 as a tax benefit on the principal amount. However, this can be claimed only when conditions stated in the Income Tax Act 1961 for claiming this deduction are met.
8. Unit Linked Insurance Plan (ULIP)3
You can claim premiums paid towards ULIPs for an amount up to INR 1,50,000 as a deduction from gross income under Section 80C.
How to Maximize Tax Saving under Section 80C?
The tax saving investment options discussed above are ways to maximise tax savings. While building a corpus for a financially safe future, you also get to reduce the burden of taxes on your monthly budget. As per the Union Budget 2022, you can opt for the old tax regime and continue taking tax benefits under Section 80C4. Choose an appropriate product that acts as tax saving investment and helps you save more.
Conclusion
Under Section 80C of the Income Tax Act 1961, you get a number of solutions to reduce your tax liabilities by making tax saving investments. That's why you may consider making investments in appropriate instruments to increase your financial savings and security by tax savings.
Based on your earnings, expenses, and requirements, you may consider creating a portfolio by integrating life insurance into it, as it offers life coverage and saves taxes. This will help you accomplish two goals in one step.
References
1https://cleartax.in/s/80c-80-deductions
2https://cleartax.in/s/80c-deductions
3https://www.outlookindia.com/business/best-tax-saving-investment-options-available-under-section-80c-news-192409
4https://economictimes.indiatimes.com/wealth/tax/how-your-tax-saving-looks-post-budget-2022-section-80c-more-for-taxpayers/what-happened-in-union-budget-2022/slideshow/89345798.cms
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