• Notification Date: 13-01-2023
  • Notification No: N/A

Exemptions under Section 80C of the Income Tax Act

Individual taxpayers, especially the salaried ones, highly rely on deductions or exemptions permitted under Section 80C to bring their taxable income down by as much as â‚¹1.5 lakh in a financial year. 

The taxpayers can avail of these exemptions by making some pre-defined investments. These financial instruments offer dual advantage of tax saving while giving an interest income at the same time. In fact, the Institute of Chartered Accountants of India (ICAI) wants the exemption limit to be raised from Rs 1.5 lakh to 2.5 lakh in a year. 

Some of the common financial instruments which provide tax exemption benefits under section 80C include the following: 

1. National Savings Certificate (NSC): Any investment made under the NSC can be claimed under section 80C deductions up to a maximum limit of â‚¹1.5 lakh. 

2. Life Insurance Corporation (LIC): Upon buying any life insurance policy, you can claim 80C deduction on the premium paid towards the plan so long as the policy is meant for the tax payer or the immediate family members such as spouse and children. 

3. Public provident fund (PPF): Investment in PP also enables you to claim tax exemption up to a maximum of â‚¹1.5 lakh. Also, interest received on this investment scheme is tax -free. 

4. Employees Provident Fund (EPF): Employee’s contribution to the EPF is eligible for tax exemptions. The contribution by employer is not eligible for 80C exemption. 

5. Unit linked insurance plan (ULIP): The ULIP scheme gives the twin benefit of insurance as well as investment. So, any investment made towards this enables you to claim exemption under section 80C. 

6. Equity Linked Saving Scheme (ELSS): This is an equity scheme that has a lock in period of three years. Through this investment, one can get an exposure to equity instruments. 

7. National Pension Scheme (NPS): Contributions made towards this retirement scheme are tax deductible under Section 80CCD, which is a part of Section 80C. But it important to note that the joint deduction under both these cannot be more than â‚¹1.5 lakh. 

Also, one can claim an additional â‚¹50,000 deduction over and above of â‚¹1.5 lakh under 80CCD (1B). 

8. Loan principal repayment: Those who have taken home loan from a bank can use the principal amount as deduction under section 80C. 

9. Sukanya Samridhi Yojana (SSY): This is a saving scheme for the girl child under the age of 10. Any investment made in this scheme is eligible for exemption under section 80C. 

10. Registration and stamp duty: If you have bought a house and thereby, make payment for stamp duty and registration, this can also be claimed as deductions under Section 80C of the Income Tax Act.