The Indian government provides a number of tax benefits to encourage citizens to save money for their future. One of the most popular schemes is the 80C Tax Benefits scheme, which offers a deduction on certain types of investments.

If you're looking to avail of these benefits, it's important to know the ins and outs of the scheme. This blog post will give you an overview of what you need to know about the 80C Tax Benefits in India.
 

What are the 80C Tax Benefits in India?

» Who Can Avail These Benefits

The 80C tax benefits in India are available to Individual taxpayers and Hindu Undivided Family. There is no limit on the number of people who can avail these benefits. All that is required is that the taxpayer has an income above the basic exemption limit and has made eligible investments during the financial year.
 

» What Are the Different Types of Investments Eligible for These Benefits

The different types of investments eligible for these benefits include:
  • Life insurance premiums
  • Payments made towards a PPF account
  • Equity-linked savings schemes
  • National Savings Certificates
  • 5-year bank fixed deposits
  • Tuition fees paid for children’s education (up to 2 children)
  • Home loan principal repayment
  • Stamp duty and registration charges on purchase of a house
 

» How Much Benefits Can You Avail

The maximum limit for benefits that can be availed under section 80C is Rs. 1,50,000. This means that any eligible investment made during the financial year up to a maximum of Rs. 1,50,000 will qualify for a deduction from the total taxable income.
 

The Different Types of 80C Tax Benefits in India?

» Section 80C of the Income Tax Act

The Income tax act in India provides for various deductions from the gross total income of an individual taxpayer. Section 80C is one such section which provides for a deduction of up to Rs 1,50,000 for specified investments and expenses. This deduction is available to both individuals as well as HUFs (Hindu Undivided Families).
The deduction under section 80C is available on the following investments and expenses:
  1. Payment of life insurance premium
  2. Investment in PPF (Public Provident Fund)
  3. Investment in ELSS (Equity Linked Savings Scheme)
  4. Tuition fees paid for children’s education
  5. Repayment of housing loan principal amount
  6. National Saving Certificate (NSC) investment
  7. Sukanya Samriddhi Yojana account deposit
  8. Equity shares or debentures acquired under certain schemes of Central Government, etc.
 

» Section 80CCC of the Income Tax Act

This deduction is available for the premium paid towards annuity plans of LIC (Life Insurance Corporation) or any other insurer for receiving a pension from the fund. The maximum deduction that can be availed under this section is Rs 1,50,000.
 

» Section 80CCD of the Income Tax Act

This deduction is available for contributions made by an individual to his/her pension account with a government organization or a recognized provident fund. The maximum deduction that can be availed under this section is 10% of the salary (for employees) or 20% of gross total income (for self-employed individuals), subject to a maximum of Rs 1,50,000.
Under this section, you can get a deduction on the premiums that you pay towards your annuity plan. This deduction is available only up to a maximum of Rs 1,50,000 in a financial year.
 

» Section 80CCD of the Income Tax Act

This section provides for a deduction on the contributions made by an individual to his/her pension account with a maximum limit of Rs 1,50,000 in a financial year. This deduction is over and above the limit of Rs 1,50,000 provided under Section 80C of the Income Tax Act.
 

Different Ways to Invest and Save under 80C

As we have seen, there are various ways in which an individual can save taxes by investing under section 80C of the Income Tax Act. Some of the most popular investment options include:
  1. Equity-Linked Savings Scheme (ELSS): ELSS funds are mutual fund schemes that invest primarily in equity markets. They have a lock-in period of 3 years and offer attractive tax benefits.
  2. Public Provident Fund (PPF): PPF is a long-term investment option offered by the government. It has a lock-in period of 15 years and offers guaranteed returns.
  3. National Saving Certificate (NSC): NSC is a fixed-income investment option offered by the government. It has a lock-in period of 5 years and offers interest rates that are higher than those offered on bank deposits.
  4. Unit Linked Insurance Plan (ULIP): ULIPs are insurance plans that offer both insurance and investment benefits. They have a lock-in period of 5 years and offer attractive tax benefits.
  5. Senior Citizens Saving Scheme (SCSS): SCSS is a savings scheme designed specifically for senior citizens. It has a lock-in period of 5 years and offers interest rates that are higher than those offered on bank deposits.
 

How to Avail These Benefits

» Make the Right Investments

To avail of the maximum benefits under Section 80C of the Income Tax Act, it is important that you make the right investments. This means investing in instruments that are eligible for deduction under this section. Some of the most common investments that qualify for deduction under Section 80C include:
  • Life insurance premiums: You can claim a deduction of up to Rs 1.5 lakh for premiums paid towards life insurance policies.
  • Public Provident Fund (PPF): PPF is a long-term investment option with a lock-in period of 15 years. You can claim a deduction of up to Rs 1.5 lakh for contributions made to your PPF account.
  • Equity-Linked Savings Scheme (ELSS): ELSS is a type of mutual fund that allows you to save taxes as well as earn returns on your investment. You can claim a deduction of up to Rs 1.5 lakh for investments made in ELSS schemes.
  • National Pension Scheme (NPS): NPS is a retirement planning tool offered by the government. You can claim a deduction of up to Rs 1 lakh for contributions made to your NPS account.
 

» Keep All Relevant Documents Ready

It is important that you keep all relevant documents ready when filing your taxes so that you can avail of the deductions under Section 80C without any hassle. Some of the documents you will need include:
  • Investment proofs: This could be in the form of bank statements, passbook entries, etc., showing proof of investment in instruments such as life insurance policies, PPF, ELSS, etc.
  • Payment receipts: In case you have made any payments towards these instruments via cheque or demand draft, make sure you have the relevant payment receipts with you.
  • Form 16/16A: This is a document issued by your employer which contains details about your income and tax deductions applicable to you.
 

» File Your Taxes on Time

It is important that you file your taxes on time in order to avail of the deductions under Section 80C. This is because if you file your taxes after the due date, you will not be able to carry forward any unclaimed deductions from previous years and claim them in the current year.
 
The 80C Tax Benefits in India are a great way to save on your taxes. You can avail these benefits by making the right investments and keeping all relevant documents ready. File your taxes on time to ensure that you don't miss out on any of the benefits. Also read how to save tax on salary - more info.