Tax Savings Under Section 80C

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Section 80C of the Income Tax Act provides deductions on various investments and expenses. Taxpayers can claim a maximum deduction of ₹1,50,000 per financial year under this section.

Eligible Investment Options:

Public Provident Fund (PPF): A long-term investment with a tenure of 15 years. The interest earned is tax-free.
Employee Provident Fund (EPF): Contributions made by an employee to the EPF account are eligible for deduction.
Employee Voluntary Provident Fund (VPF): Contributions made by an employee to the VPF account are eligible for deduction.
National Savings Certificate (NSC): A fixed income investment scheme with a tenure of 5 years. Interest is taxable.
5-Year Tax-Saving Fixed Deposit: A fixed deposit with a lock-in period of 5 years. Interest earned is taxable.
Equity Linked Savings Scheme (ELSS): A diversified equity mutual fund with a lock-in period of 3 years. Returns are subject to capital gains tax.
Senior Citizens Savings Scheme (SCSS): A government-backed savings scheme for senior citizens with a tenure of 5 years, extendable by 3 years.
Sukanya Samriddhi Yojana (SSY): A savings scheme for the girl child with a tenure of 21 years. Interest earned is tax-free.
Life Insurance Premium: Premiums paid for life insurance policies for self, spouse, and children are eligible for deduction.
Home Loan Principal Repayment: Repayment of the principal amount of a home loan is eligible for deduction.
Tuition Fees: Tuition fees paid for up to two children for full-time education in India are eligible for deduction.

Example Calculation:

Let's consider an example of an individual who invests in various instruments under Section 80C:

PPF Contribution: ₹50,000
ELSS Investment: ₹30,000
Life Insurance Premium: ₹20,000
Home Loan Principal Repayment: ₹40,000
Tuition Fees: ₹10,000

Total Investment: ₹50,000 + ₹30,000 + ₹20,000 + ₹40,000 + ₹10,000 = ₹1,50,000

The total eligible deduction under Section 80C for this individual is ₹1,50,000, which is the maximum limit.