Saturday, December 24, 2011

Which investments are eligible for deductions u/s 80C?

The following investments/payments are inter alia eligible for deduction u/s 80C:-

Nature Of Investment
Life Insurance Premium
For individual, policy must be in the name of self or spouse or any child's name. For HUF, it may be on life of any member of HUF.
Sum paid under contract for deferred annuity
For individual, on life of self, spouse or any child of such individual.
Sum deducted from salary payable to Govt. Servant for securing deferred annuity for self, spouse or child
Payment limited to 20% of salary.
Contribution made under Employee's Provident Fund Scheme
Contribution to PPF
For individual, can be in the name of self/spouse, any child & for HUF, it can be in the name of any member of the family.
Contribution by employee to a Recognised Provident Fund.
Subscription to any notified securities/notified deposits scheme.
Subscription to any notified savings certificates.
e.g. NSC VIII issue.
Contribution to Unit Linked Insurance Plan of LIC Mutual Fund
e.g. Dhanrakhsa 1989
Contribution to notified deposit scheme/Pension fund set up by the National Housing Bank.
Certain payment made by way of instalment or part payment of loan taken for purchase/ construction of residential house property.
Condition has been laid that in case the property is transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year.
Subscription to units of a Mutual  Fund  notified  u/s 10(23D)
Subscription to deposit scheme of a public sector company engaged in providing housing finance.
Subscription to equity shares/ debentures forming part of any approved eligible issue of capital made  by a public company or public financial institutions.

Tuition fees paid at the time of admission or otherwise to any school, college, university or other educational institution situated within India for the purpose of full time education.
Available in respect of any two children.
Any term deposit for a fixed period of not less than five years with the scheduled bank.
This has been included in Section 80C by the Finance Act 2006.
Subscription to notified bonds issued by NABARD
This has been included in Section 80C by the Finance Act 2007 and has come into effect from 1.4.2008.
Payment made into an account under the Senior Citizens Savings Scheme Rules, 2004
This has been introduced by Finance Act, 2008 and shall come into effect from 1.4.2009.
Payment made as five year time deposit in an account under the Post Office Time Deposit Rules, 1981
This has been introduced by Finance Act, 2008 and shall come into effect from 1.4.2009.

It may be noted that the aggregate amount of deductions under sections 80C, 80CCC and 80CCD are subject to an overall ceiling of Rs.1 lakh.
Source: Income Tax Depa

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