article Income Tax

Deduction Under Section 80 C

Team Freetaxguru

 

 Deduction Under Section 80 C

 

Income Tax Deduction under section 80 C… First assesse calculate total income form five Head of income

  1. Income from salary
  2. Income from House Property
  3. Income from Business & Profession
  4. Income from Capital Gain
  5. Income from other sources

Aggregate of Five head of income are called Total income

Income Tax Deduction under section 80 C is allowable from total taxable income under Income Tax Act 1961

Income Tax Deduction under section 80 C     any individual or a Hindu undivided family paid or invest any income in the following

1..Life Insurance premium paid for self and spouse & children’s

  1. Contribution to provident Fund
  2. Contribution to public provident Fund
  3. Tuition Fee for full time education for collage, school or other educational institution situated in India.
  4. Contribution to a recognized provident fund.
  5. Contribution to an approved superannuation.
  6. Repayment of home loan for the purpose of purchase or construction of a residential house property.
  7. Term deposit (Fixed deposit for a period not less than five years with a bank.
  8. Subscription to any unit of mutual fund referred to in clause 23D
  9. Subscription to a bond issued by National Bank for agriculture and rural development.

Deduction

  1. Amount spent on above.

  2. Rs.1, 50,000

Whichever is less?

For Example

Mr. Krishnan paid premium for spouse Rs.35, 000 and tuition fee Rs.45, 000 paid for two children’s. He also paid Rs.50, 000 for house loan repayment and Rs.60, 000 for contribution to provident fund.

Above mention Mr. Krishnan   total spent Rs. 1, 90,000

So that he can claim deduction under section 80C Rs.1, 50,000

If Mr. Krishnan   Total spent Rs. 1, 40, 000

then he can claim deduction maximum Rs.1, 40,000

Conclusion:

Income Tax Deduction under section 80 C is allowable from total income to an assesse.

So maximum deduction Rs. 1, 50,000 or Amount spent under above mention whichever is less is allowable under section 80C.

Deduction on account of certain payments are allowed from sections 80C

Deduction in respect of life insurance premium, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc. (Section 80C)

This deduction is allowed only to the following assessees from their gross total income computed as per provisions of the act:

(1) an Individual; or

(2) a hindu undivided family

The above assessees shall be entitled to a deduction of whole of the amount paid or deposited in the previous year, being the aggregate of sum referred to below as does not exceed rupees 1,50,000

(1) Any sum paid by an individual to effect or to keep in force an insurance on the life of:

(a) An individual himself,

(b) his/her spouse, and

(c) any child of such individual.

The children may be married/unmarried, dependent/not dependent on the individual. In the case of hindu undivided family te premium should be paid on the life of any member of the family.

The expresion insurance shall include;

(a) A pure endowment assurance policy; and

(b) A children deferred endowment assurance policy.

Premium paid on life insurance policy exceeding certain percentage of the capital sum assured not eligible for deduction (Section 80 c (3)

Premium paid on insurance policy other than contract of deferred annuity
Amount paid eligible for deduction
(a) for policy issued on or before 31.3.2012
(b) for policy issued on or after 1.4.2012
(c) for policy issued on or after 1.4.2013 for the insurance on life of a person, who is
(1) a person with disability or a person with severe disability as referred to in section 80 U, or
(2) suffering from disease or ailment as specified in the rules made under section 80DDB
20% of  the capital sum assured
10% of the capital sum assured
15% of the capital sum assured

any payment made by the individual only to effect or keep in force a contract of a non-commutable deferred annuity (other than mentioned in clause (x) below) on the life of: (a) an individual himself, (b) his/her spouse, and (c) any child of such individual;

(3) any sum deducted in accordance with the conditions of services from the salary payable by or on behalf of the government to any individual for the purpose of securing to him a deferred annuity or making provision for his spouse or children. the sum dedicated should not exceed 1/5th of the salary ;

(4) Any contribution by the employee towards a statutory fund or recognised provident fund. thus deduction in this respect is allowable to an individual only;

5) any contribution to a public provident fund by an individual or HUF. The contribution may be made to an account standing in the name of any person mentioned under clause (1) above;

(6) any contribution by an employee to an approved superannuation fund;

(7) (any subscription, in the name of any person specified in sub-section (4), to) any such security of the central government or any such deposit scheme as that government may, by notification in the official gazette, specify in this behalf;

Following schems have since been notified:

(a) subscription by an individual or HUF to national saving scheme, 1992

(b) sum paid or deposit in the name of a girl child under the sukanya samriddhi account scheme, w.r.e.f.A.Y 2015-16.

For the purpose of clause (b) above, the sum may be paid by the individual for any girl child of that individual, or any girl child for whom such person is the legal guardian;

(8) any subscription by an individual to National savings certificates (8 issue) or 9 issue. Any interest accrued on these certificates which is deemed to be reinvested also qualifies for deduction;

(9) any contribution by an individual or HUF for participation in the unit linked insurance plan of the unit trust of india or unit linked  insurance  plan (formerly known as dhanraksha- 1989) of LIC Mutual Fund referred to in section 10 (23D). The contribution may be made in the name of any person mentioned under clause (1) above;

(10) payment made by an individual or HUF to effect or keep in force a contract for notified annuity plan of the life insurance corporation or any other insurer. new jeevan dhara, new jeevan dhara – i and new jeevan akshay, new jeevan akshay-i and new jeevan akshay- II are the schemes which have been notified;

(11) any subscription, by an individual or HUF to notified units of (a) any mutual fund referred to in section 10 (23D), or (b) the Administrator or the specified company as referred in section 2 of the unit trust of india. equity linked saving scheme, 2005 has since been notified;

(12) any contribution by an individual to a notified pension fund set up by any mutual fund referred to in section 10 (23D) or (b) the administrator or the specified company as referred in section 2 of the unit trust of india. equity linked saving scheme, 2005 has since been notified;

(13) any subscription by an individual or HUF to any deposit scheme or contribution to any pension fund set up by the national housing bank. the home loan account scheme of the national housing bank has been notified;

 

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