Deduction Under Section 80 C

Who is allowed Deduction under Section 80C :-

A) An Individual

B) A Hindu Undivided Family

What is the Maximum Deduction allowed under Section 80C:- 

Its Rupees 1,50,000 . Up to Assessment Year 2014-15 it was Rupees 1,00,000.

What Kind of Investment, Deposits or Amount Paid Qualifies For Deduction Under Section 80C:- 

1) Insurance :- In case of individuals any sum paid as premium, whether first time premium or renewal premium. Along with any interest on delayed payment of premium. In order to Keep in force an insurance of :-

a) Individual Himself

b) His/her Spouse and

c) Child of such individual whether married or unmarried, dependent or not

In case of Hindu Undivided Family (HUF), deduction will be allowed of premium paid on the life insurance of any member of the family.

Insurance Includes Two Kinds of Insurance :-

i) Pure endowment assurance policy.

ii) Children Deferred endowment policy. 

In following cases entire premium paid will not be allowed as deductions :-

a) In case of Policy issued before 31.03.2012, Premium paid if greater then 20% of Capital Sum Assured (It Does not contain Bonus and Any Premium that is to be returned). Then Only 20% of Capital Sum Assured Is Allowed.

b) In case of Policy is issued on or after 01.04.2012. Premium paid if greater then 10% of Capital Sum Assured (It Does not contain Bonus and Any Premium that is to be returned). Then Only 10% of Capital Sum Assured Is Allowed.

c) If Policy is issued on or after 01.04.013 and the Insured is suffering from ailments under section 80U (Disability) or 80DDB (Diseases). Premium paid if greater then 15% of Capital Sum Assured (It Does not contain Bonus and Any Premium that is to be returned). Then Only 15% of Capital Sum Assured Is Allowed.

2) Annuity :- Only Individuals are allowed exemption under this point. Any payment to keep in force a contract of NON COMMUTABLE DEFERRED ANNUITY ON THE LIFE OF HIMSELF, SPOUSE OR CHILDREN will be allowed as deduction. 

In case of Government Employee's apart from these if THERE IS DEDUCTION MADE FROM SALARY NOT EXCEEDING 1/5 Th of SALARY,  that is payable by or on behalf of government for the purpose of DEFERRED ANNUITY is allowed as deductions.

3) Contribution of Employee or Individual to Recognised or Statutory PROVIDENT FUND.

4) Both Individual and HUF can deposit money in Public Provident Fund. In case of Individuals the investment can be made in name of Individual, Wife or Children. In case of HUF, can invest in the name of any member of family.

5) Any  contribution of an employee to Approved Superannuation Fund. 

6) Any Investment made by Individual and HUF in National Savings Scheme and Sukanya Samridhi Account Scheme.

7) Any Amount invested in NSC (National Savings Certificate) along with  Interest on the same, that is allowed as further deduction.

8) An Contribution in the name of Individual/Spouse/Children or by HUF in the name of any family member in Unit Linked Insurance Plan of Unit Trust of India or Unit Linked Insurance Plan of LIC.

9) Any premium paid in New Jeevan Dhara, New Jeevan Dhara 1, New Jeevan Akshay, New Jeevan Akshay 1, New Jeevan Akshay 11

10)  Subscribing Units of Equity Linked Saving Schemes, 2005 or Mutual Funds under section 10(23D).

11) Contribution by Individual to UTI Retirement Benefit Pension Plan or Notified Pension Funds under mutual funds of 10(23D)

12) Any contribution by Individual or HUF to deposit or contribution schemes of National Housing Bank pension funds. The Home Loan Account Scheme has been notified.

13) Subscription by an individual Hindu undivided family, any notified deposit scheme of:

a) a public sector company engaged in providing long term Finance for construction or purchase of houses in India for residential purpose.

b) any authority constituted in India by or under any law enacted for the purpose of dealing with and satisfying the need for house accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both. 

14) Any sum paid by an individual as tuition fees provided following conditions are satisfied:

a) no portion paid as development fees or donation or payment of similar nature shall be allowed as deduction

b) tuition fees may be paid on or after the admission

c) it is to be paid do any university, college, school or other Educational Institute situated in India

d) it is to be paid only for the purpose of full time education

e) deduction will be allowed for maximum 2 children

15) Any payment made by individual or Hindu undivided family, for purchase or construction of residential house property, the income from which is chargeable to tax under the head income from house property. Search payment maybe towards:

a) Any installment or part payment, of the amount due under any self financing or other schemes of any development authority, housing Board or other similar authority engaged construction or sale of house property on ownership basis.

b) any installment or part payment the amount due to any company cooperative Society of which the assessee, is a shareholder or member towards cost of the house property allotted to him

c) repayment of the amount borrowed by the assessee from

i) the central government or state government

ii) any bank including Cooperative Bank

iii) the Life Insurance Corporation

iv)  the national housing Bank

v)   an Indian public company with the main object carrying on the business providing long term Finance for construction or purchase of house in India eligible for deduction under section 36(1)(viii)

vi) any company in which the public are substantially interested any Co-operative Society, where such company or cooperative society is engaged in the business of financing the construction of houses

vii) the assessee's employer where such employer is a public company, public sector company, university established by law, college affiliated to search University or a local authority or a cooperative society. Also this is allowed if the employer is constituted under Central or state act.

d) payment towards stamp duty, registration fees and other expenses for the purpose of transfer search house property to the assessee.

However the following expenses can never be regarded as deduction under section:

a) admission fees, cost of shares and initial deposit which a share holder of a company or member of cooperative society has to pay for becoming such shareholder or member.

b) cost of addition, alteration, repair, or renovation after issue completion certificate or after asseesee occupied the premises.

c) in respect of which deduction is allowed under section 24 (Chapter House Property) 

16)  as subscription to equity shares or debentures forming part of any eligible issue of capital approved by the Board on an application made by a public company or as subscription to any eligible issue of capital by any public financial institution in the prescribed form 59.

Explanation.—For the purposes of this clause,—

 (i) "eligible issue of capital" means an issue made by a public company formed and registered in India or a public financial institution and the entire proceeds of the issue are utilised wholly and exclusively for the purposes of any business referred to in sub-section (4) of section 80-IA;

(ii) "public company" shall have the meaning assigned to it in section 3 of the Companies Act, 1956 (1 of 1956);

(iii) "public financial institution" shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956);

17) as subscription to any units of any mutual fund referred to in clause (23D) of section 10 and approved by the Board on an application made by such mutual fund in the prescribed form 60:

Provided that this clause shall apply if the amount of subscription to such units is subscribed only in the eligible issue of capital of any company.

Explanation.—For the purposes of this clause "eligible issue of capital" means an issue referred to in clause (i) of the Explanation to clause 16;

18)  as term deposit—

(a) for a fixed period of not less than five years with a scheduled bank; and

(b) which is in accordance with a scheme framed and notified, by the Central Government, in the Official Gazette for the purposes of this clause.

Explanation.—For the purposes of this clause, "scheduled bank" means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), or a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank, being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934);

19) As subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by notification in the Official Gazette, specify in this behalf;

20) in an account under the Senior Citizens Savings Scheme Rules, 2004; 

21) as five year time deposit in an account under the Post Office Time Deposit Rules, 1981.