Income tax has been a part of revenue generation for centuries in India. After independence, with the formalization of the taxation system, a structure was established for the same. As part of the same tax structure, the government has granted certain rebates on your income under the Income Tax Act, 1961. One such Section under the Act is Section 80C. It is a clause that highlights various expenditures and investments that are exempted from income tax. Relevant investments under the instruments listed under Section 80C allow tax deductions of up to ₹1,50,000 in a single fiscal year.
Tax deduction under Section 80 C
Equity-linked savings scheme (ELSS)
ELSS is an investment scheme, where you can enjoy tax rebate on the amount you invest. It offers high returns but is prone to market fluctuations.
Public Provident Fund (PPF)
PPF is a government scheme that allows you to invest anything between ₹500 to ₹1.5 lakh in a financial year. Not only does the invested amount provide a tax deduction, but the interest earned on the fund is also tax-free.
Employee’s Provident Fund (EPF)
If you have worked in the same company for at least 5 years, your EPF, including the interest, is eligible for a tax deduction. Also, if you make voluntary contributions to the EPF account, the amount invested by you is eligible for tax exemption.
Tax-saver Fixed Deposit (FD)
Tax saver fixed deposits are offered by both banks and post offices and allow tax deduction. The minimum lock-in period for these FDs is five years. However, the interest gained on the deposit is taxed.
Life insurance premium
Upon buying life insurance for yourself, your spouse or your children, you can claim a tax deduction on the premium being paid on the plan. In case you have more than one policy, you can receive benefits for all of them.
Unit Linked Insurance Plan (ULIP)
When it comes to ULIPs, you can either avail tax saving under 80C for up to 10% of the sum assured or on the annual premium amount, whichever is lower.
Home loan principal repayment
The Equated Monthly Instalments (EMIs) made towards the principal amount of a home loan qualify for tax exemption. However, the tax deduction claim can only be made if the construction of the house is complete.
Sukanya Samriddhi Yojana (SSY)
This is a savings scheme for a girl child under the age of 10 years. You can open this account for up to two girls and claim a tax deduction.
Senior Citizens Savings Scheme (SCSS)
This is a savings scheme for citizens over the age of 60 years or individuals over the age of 55 years, who have opted for voluntary retirement scheme. The contributions made under the scheme can be used as a tax rebate under 80C.
National Savings Certificate (NSC)
The invested amount, as well as the interest earned on the amount for the first four years, is eligible for tax exemption under Section 80C.
YES BANK – YES Tax Solutions platform
YES BANK’s YES Tax Solutions is a holistic approach towards providing you with answers to all your tax-related queries. The bank provides long-term resolutions that cover Section 80C, general income tax queries, and beyond. Their various offerings such as tax calculators, online income tax payment, etc. are a boon for customers.
Having discussed the avenues available to you under Section 80C, you would now be equipped to make tax-friendly investments. Given how only one such Section of the Indian Tax Act, 1961, was discussed, you can safely assume there are many more options available to you for tax-saving. The best way to educate yourself is by consulting your banks’ wealth manager and choosing relevant investments avenues that can help you save on your tax outgo.