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Benefit under 80 c


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Benefit under 80 c

  1. 1. Benefits of Tax u/s. 80C in Assessment Year 2013-14 as per Income Tax Act. By Shankar Bose Inspector of Income-tax MSTU, Puri
  2. 2. Benefits of Tax u/s. 80C in Assessment Year 2013-14 as per Income Tax Act.Earlier Central Government has to view collection of Tax any wayfrom Taxpayee and thus the Taxpayee always search how to savelarge tax without or with minimum savings. Thus, in order toencourage savings, the government gives tax breaks on certainfinancial products under Section 80C of the Income Tax Act.Investments made under such schemes are referred to as 80Cinvestments. Under this section, you can invest a maximum of Rs. llakh and if you are in the highest tax bracket of 30%, you save a taxof Rs. 30,000. The various investment options under this sectioninclude :Provident Fund & Voluntary Provident Fund :Provident Fund is deducted directly from your salary by youremployer. The deducted amount goes into a retirement accountalong with your employer’s contribution. While employer’scontribution is exempt from tax, your contribution (i.e., employee’scontribution) is counted towards section 80C investments. You canalso contribute additional amount through voluntary contributions(VPF). The current rate of interest is 8.5% per annum and interestearned is tax-free.Public Provident Fund :An account can be opened with a nationalized bank or Post office.The current rate of interest is 8%, which is tax-free and thematurity period is 15 years. The minimum amount of contribution isRs 500 and the maximum is Rs 70,000.National Savings Certificate :These are 6-year small-savings instrument, where the rate ofinterest is 8% and is compounded half-yearly. The interest accruedevery year is liable to tax but the interest is also deemed to bereinvested and thus eligible for section 80C deduction.
  3. 3. Equity-Linked Savings Scheme :Mutual funds offer you specially-created tax saving funds calledELSS. These schemes invest your money in equities and hence,return is not guaranteed. Money invested here is locked for a periodof three years.Life Insurance Premiums :Any amount that you pay towards life insurance premium foryourself, your spouse or your children can be included in section80C deduction. If you are paying premium for more than oneinsurance policy, all the premiums can be included. Besides this,investments in unit-linked insurance plans (ULIPs) that offer lifeinsurance with benefits of equity investments are also eligible fordeduction under Section 80C.Home Loan Principal Repayment :Your EMI consists of two components, namely principal andinterest. The principal component of the EMI qualifies fordeduction under Section 80C.Stamp Duty and Registration Charges For Home :The amount you pay as stamp duty when you buy a house, and theamount you pay for the registration of the documents of the housecan be claimed as deduction under section 80C. However, this canbe done only in the year in the year of purchase of the house.Five-Year Bank fixed deposits :Tax-saving fixed deposits (FDs) of scheduled banks with a tenure offive years are also entitled for section 80C deduction.Others:Apart from the above, things like children’s education expenses thatcan be claimed as deductions under Section 80C. However, you needreceipts to claim the same. Thanks