Section 80 C under the income tax act is the most talked about section of the IT act because it offers many tax deductions on income. A deduction is a beneficial thing for all taxpayers. A tax deduction benefits the taxpayer by reducing their tax liability and thereby helps them in saving funds. These funds can be utilized on other purposes like making investments, buying assets or making necessary expenses like on education or healthcare.
The tax exemption from section 80 C can be enjoyed both directly and indirectly for a maximum sum of Rs 1.5 lakhs. Apart, this section is more beneficial for people less than 60 years of age earning less than Rs 2.5 lakhs, by allowing exemptions upto Rs 4 lakhs, instead of regular exemptions of Rs 1.5 lakhs. It must be noted that tax exemptions as per section 80 C vary in terms of clauses and different claims. Also, to avail, the tax benefits one is required to meet certain conditions. Exemptions on section 80 C can is applicable on both online income tax and offline tax payable systems as well. The various exemption and tax benefits provided by section 80 C of the income tax act are listed as follows:
Tax exemptions on provident funds: Section 80 C provides tax exemptions on all provident funds including PPF or public provident funds, VPF or voluntary provident fund, and on EPF or employee provident fund. The exemption provided is of RS 1.5 lakhs per fiscal year.
Exemptions on Government-regulated savings scheme: Section 80 C provided various tax benefits on Government-regulated saving schemes like NPS or National Pension System, Sukanya Samriddhi Scheme, SCSS or senior citizens saving schemes and on National saving certificates. The exemption provided is of Rs 1.5 lakhs as per section 80 C.
Tax-saving fixed deposits: Fixed deposits is one of the most popular investment options in the country. It not only keeps the money secure but also is considered the safest and reliable investment option. However, with section 80 C, fixed deposits can become more beneficial due to the tax-saving fixed deposits. Tax saving FDs allow exemption of Rs 1.5 lakh as per the income tax act as per this section 80 C.However investments should be made for a period of five years.
Exemptions on life insurance policies: Another common investment option is a life insurance policy. A life insurance policy is a protection plan that an insured person buys from an insurance company, to receive financial coverage in case of loss of life. Section 80 C provides maximum exemptions up to Rs 1.5 lakhs, bought for your spouse, parents or even children, and is eligible for tax deductions.
Exemption made on education expenses: Section 80 C of the income tax act, provides exemptions on education expenses. Higher tuition fees that a person pays on their children education fee is provided tax exemption. This exemption can be enjoyed on tuition fee whether it is paid before exemption, after exemption or at the time of exemption.
Exemptions on home loans: The section 80 C of the income tax act, provides exemptions on the home loans. The section provides exemption on the principal amount paid on home loans up to Rs 1.5 lakhs per year. Further, the section even allows exemption on the stamp duty and registration charges paid during a home loan. However, exemptions on stamp duty and registration charges can be availed only in the year when the charges are paid, and not before or after that.
On a concluding note, a tax exemption is a beneficial option that helps one make the best use of their funds and resources. If one owns a complete knowledge of tax exemption, and of sections like Section 80 C of the income tax act, he can best utilize his funds and prompt his savings by ensuring better financial planning.
