Section 80C of Income Tax

What is Sec­tion 80C

As per income tax act, under Sec­tion 80C up to a max­i­mum of Rs. 1,00,000 is deductible from your annual income. This means that your annual income gets reduced by Rs. 1,00,000 and you end up pay­ing no tax on it at all. This ben­e­fit is avail­able to every­one, irre­spec­tive of their income lev­els. You can invest in any of the invest­ment options but the tax ben­e­fit is lim­ited to Rs 1,00,000.

List of eli­gi­ble invest­ments are as follows –

• Employee Prov­i­dent Fund (EPF)
• Vol­un­tary Prov­i­dent Fund (VPF)
• Pub­lic Prov­i­dent Fund (PPF)
• Prin­ci­pal repay­ment of hous­ing loan installments
• Equity linked sav­ing scheme (ELSS)
• National sav­ings cer­tifi­cates (NSC)
• Post office term deposits
• Life insur­ance pre­mi­ums paid
• Tax Sav­ing Fixed Deposit
• Senior Cit­i­zens Sav­ings Scheme

But the limit for sec­tion 80C deduc­tions is Rs. 1 Lakh — so the max­i­mum income tax that you can save is Rs. 30,000 if you fall in the high­est tax bracket of 30%.

In addi­tion to the limit of Rs 1 Lakh for the fis­cal year 2010 – 11, an invest­ment of Rs 20,000 in infra­struc­ture bonds will qual­ify for income tax deduc­tions. If you have invested Rs 1 Lakh in the list of eli­gi­ble invest­ments and Rs 20,000 in infra­struc­ture bonds, you can save tax on Rs 1, 20,000.

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4. Income Tax – How can i save tax
5. Sec­tion 80G: Dona­tions to Char­i­ta­ble institutions