As per the section 80 C of the Income Tax Act, an individual can claim up to Rs. 1, 50,000 from his or her taxable income as a deduction. Deductions are provisions created by the government to help taxpaying citizen save their money. However, these deductions have to be put to good use, which means, this amount must be invested in a savings plan, endowment insurance, life insurance policy or endowment policy. Under this section, you can also claim deductions for the tuition fees for education, for medical expenses incurred or even for the payment of the principal amount of your home loan or the stamp duty and registration charges incurred while buying a new home.
Several investments, expenses, and payments can be claimed under Section 80C. These include the payment of life insurance policies, the premium for endowment policies, tuition fees paid and payments made towards construction or purchase of residential property.
Here are some schemes that’ll help you make the best use of section 80c
- PPF: You can open a Public Provident Fund account and claim deductions on the deposits made. You can invest a maximum of Rs. 1, 50,000 per year under this section. The interest received on PPF is fully tax-free. The PPF account matures after 15 years. Receipts on maturity or withdrawals are tax-free. You can also open a PPF account for your spouse or child and claim a tax deduction.
- National Saving Certificates: NSCs are eligible for deduction under this section. These can be bought at a designated Post Office. The National Saving Certificates have a term 5 years and interest earned is compounded annually and is tax-free.
- Sukanya Samridhi Account: You can deposit a maximum of Rs. 1,50,000 in Sukanya Samridhi Account for your girl child. Interest on this account is compounded annually and is completely exempt from tax.
- Equity Linked Saving Scheme: ELSS is a form of mutual fund investment. Investments made in this scheme are eligible for deduction under section 80C.
- Five- Year Fixed Deposits: Banks offer fixed deposits that provide tax benefits. These deposits are exempted under Section 80C and they have a lock-in period of five years.