Deduction under section 80c
Deduction under section 80c is allowed to an individual or HUF. However deduction is not allowed from Long term Caears pital Gains / casual income / Short Term Capital Gains under secton 111A.Deduction under section 80c is allowed in case of investment /expenditure listed below :-
National Savings Certificates are issued for 5 years / 10 years and interest is allowed at the rate of 8.6% p.a / 8.9% p.a and is taxable every year on accrual basis and also deduction for interest is allowed u/s 80 c considering it to be reinvestment but no deduction is allowed for the interest for last year .
National Savings Certificate can be purchased in the name of self / spouse / minor child and HUF can purchase in the name of any of its member. Principal amount received on maturity is exempt from income tax.
- Investment in Public Provident Fund (PPf) and account can be opened in the name of self / spouse / children and HUF can open the account in the name of any of its member and account can be opened in bank / Post office and payment is allowed after years and interest is allowed at a rate of 8.8% p.a and interest is exempt from income tax and no deduction is allowed for accrued interest of PPF .
Prinipal amount and interest received on maturity shall be exempt from income tax .
- Investment in Fixed Deposit with a schedule bank for a period of at least 5 years and investment should be in th name of self and HUF can invest the amount in name of any of its member . The assessee has the option to receive interest either at periodical intervals or at maturity and in either case it is txable . Deduction u/s 80c is not allowed for interest .
Amount received on maturity shall be exempt from income tax.
- Premium for life policy taken in the name of self / spouse / children and HUF can take policy, in the name of any of its memeber. Deduction shall be allowed for the premium paid but maximum to the extent of 10 % of sum assured (20% if policy have been issued before 31.3.2012)
Amount reeived on maturity shall be exempt from income tax u/s 10(10D) but if premium is exceeding 10 % of sum assured in any of the years, entire amount received on maturity shall be taxable but if the policyholder has edxpired, amount received after his death shll be exempt.
- Repayment of Housing loan provided loan was taken for purchase or construction pf residential house and loan should be taken only from notified instituion.
- Payment of tuition fee to any school / college / University etc for full time education of children and further for maximum two children and also education should be in Inia.
No deduction is allowed for donation or any other payment.
- Investment in units of Unit Trust of india or in the units of Mutual Fund including Unit Linked Insurance Plan of UTI.
- Investment in eligible issue i.e investment in equity shares or debenture of Infrastructure developement companies.
- Five years post office time deposit account and interest shall be paid on yearly basis and interest is taxable .
Pre-mature payment is allowed but it will be considred to be income of the year in which assessee has received pre- mature payment . Interest is allowed at a rate of 8.5% p.a .
- Employees contribution to Recognised Provident Fund / Statutory Provident Fund / Super annution Fund.
- Investment in notified Deposit Scheme of National Housing Bank.
- Senior citizens savings scheme and account can be opened in post office (interest rate is 9.3%p.a)
- any other investment notified under section 80c.
Deduction shall be allowed if the assessee has made the payment i.e amount is due but not paid, deduction is not allowed.
No deduction is allowed for Kishan vikas Patra (KVP) or Indira Vikas Patra (IVP) (also it is not now discontinued)
No deduction is allowed for capital investment bond issued by central Goverment, however interest is exempt from income tax.
No deduction is allowed for Relief Bond issued by RBI, however interest is exempt from income tax.