With a little over 10 days left for individuals opting for the old tax regime to save income tax in this financial year, it is time to take action! If you are looking for tax-saving instruments that offer income tax deductions to reduce your taxable liability, Section 80C of the Income Tax Act can come to your rescue.
Herein, you have many tax-saving options, in which you can invest until March 31, 2025, to help you bring down your taxable income by as much as Rs 1.5 lakh. Take a look at all the investments and deductions you can claim under this section.
Which investments are eligible under Section 80C under the old tax regime?
Says Shefali Mundra, tax expert at ClearTax, “Section 80C covers various investments and expenses that can be used for tax savings, including provident funds, life insurance premiums, tax-saving FDs, principal repayment of home loans, equity-linked savings schemes (ELSS), etc. Their benefits extend beyond simple tax savings, fostering financial discipline and encouraging long-term savings and investments. “
The deduction under this section is available to HUFs and individuals, both resident and non-resident, and has a combined limit of Rs 1,50,000. Here is a comprehensive list of investments you can make to claim a deduction under Section 80C of the Income Tax Act.
- Provident Fund and Superannuation Fund: Most popularly, individuals claim deduction towards contributions they make towards any central/recognised Provident Fund (PF) or an approved superannuation fund Explains Kinjal Bhuta, secretary, Bombay Chartered Accountants’ Society (BCAS), “Apart from the tax deduction benefits on PPF, the account provides multiple benefits, such as partial withdrawal and loans against PPF, as they are government-backed and assured returns and interest on the PPF is also exempt from tax.”
- Pension Plans: Investments in a pension scheme notified by the central government for a fixed period of not less than 3 years
- Equity Linked Savings Scheme (ELSS): Investment in ELSS of a mutual fund qualifies for deduction. However, they come with a 3-year lock-in period, and are riskier as compared to other investments in this section, since ELSS are linked to the stock market.
- National Savings Certificate (NSC): Any investments made under the National Savings Certificate (NSC) can also be claimed under Section 80C deductions.
- 5-year Tax Saver Fixed Deposit: A deposit made in any scheduled bank towards tax saver FDs, or a post office time deposit. However, the minimum investment tenure should be 5 years.
- Senior Citizens Saving Scheme (SCSS): Investments made under the Senior Citizens Saving Scheme (SCSS) and Sukanya Samriddhi Yojana can also be claimed as deductions under this section.
- Life Insurance Premium: A taxpayer can claim an exemption under this section towards life insurance premiums or contributions to deferred annuity plans paid for self, spouse, children, or any member of the HUF.
Can I claim investments made under ULIPs (Unit-Linked Insurance Premiums) under Section 80C?
Yes, you can claim a deduction of premiums paid towards ULIPs. However, this is subject to certain conditions. As Bhuta explains, “Where the premium is below Rs. 2,50,000/- per year, the income remains tax-free up to Rs. 1.5 lakhs. The deduction can be claimed only if the premium paid is up to 10% of the sum assured.”
“In the case of a person with severe disability u/s 80U or suffering from specified disease u/s 80DDB, they can claim a deduction under this section even if the premium paid is up to 15% of the sum assured. Contribution in the name of self, spouse, child, or member of HUF towards ULIP specified in Schedule II of Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002) or of LIC Mutual Fund referred in 10(23D) shall also be eligible for deduction,” she adds.
Can I claim a deduction for the payment made towards annuity plans under this section?
Your contribution towards annuity plans of LIC like Jeevan Dhara, Jeevan Akshay, etc., or any other insurer as approved by the central government, can be claimed as a deduction. Adds Bhuta, “A deduction from salary for the taxpayer’s annuity plan is eligible for deduction under this section. The annuity may be for self, spouse, or children. But to claim a deduction under this annuity plan, there should be no provision for receiving cash in lieu of an annuity.”
Which expenses are eligible for deduction under Section 80C of this Section?
If you have undertaken any of the following expenses during the financial year, or plan to make these, you can reduce your taxable income by claiming deductions for them under this section.
Children’s Tuition Fee: Payment made towards the tuition fees of children: This applies for a maximum of 2 children to any university, college, school, or other educational institution situated in India.
Principal repayment of housing loan: The repayment of just the principal amount of your home loan is also eligible for deduction under this section. Also, if you have just purchased a home, the amount paid towards its stamp duty and registration can be claimed as a deduction.
