A review of Section 80C for Tax Exemptions

An exemption of up to Rs. 1.5 lakh is allowed on the deductions made under Employees Provident Fund (EPF). The exemption also covers the sum invested under Public Provident Fund (PPF). EPF provides a return of 8.75% while PPF offers 8.7% as returns.

Jan 01, 2016 04:01 IST India Infoline News Service

As FY2015-16 comes to a close, it’s time to go through the tax saving options under the Section 80C of the income tax act. A brief review of the section with updated information is as under: -
 
Life insurance cover or unit-linked insurance plan (ULIP): Section 80C provides for the exemption on the premium payment against the life insurance cover or ULIP. However, if the annual premium paid on a policy exceeds 120% of the sum assured then only 10% of the sum assured is eligible for deduction.
 
Provident Fund: An exemption of up to Rs. 1.5 lakh is allowed on the deductions made under Employees Provident Fund (EPF). The exemption also covers the sum invested under Public Provident Fund (PPF). EPF provides a return of 8.75% while PPF offers 8.7% as returns.
 
Equity Linked Saving Schemes (ELSS): Section 80C extends the benefit to the ELSS schemes offered by various mutual fund houses. The investment under these schemes can be withdrawn at the end of three years.
 
Bank Fixed Deposits: Bank fixed deposits with a lock-in period of 5 years and more are eligible for exemption under this Section.
 
Retirement Benefit Plans: Retirement plans that are offered under by mutual funds such as UTI Retirement Benefit Plan and Templeton India Pension Plan are covered under Section 80C.
 
National Savings Certificate (NSCs): National Savings Certificate brought from designated Post Office is qualified for deduction under the Section 80C.
 
Children’s Tuition Fee Payment: Tuition fees for child paid to a school, college or university is allowed for exemption. However, school fee of up to two children only can be claimed.
 
Principal Repayment on Home Loan: The principal amount repaid on a loan taken for buying or constructing a residential house is covered under Section 80C. Also, the charges paid towards registration, stamp duty and other expenses related to the transfer of the property are also covered under the Section.
 
Sukanya Samriddhi account: A deduction of up to 1,50,000 is allowed for the deposits made under Sukanya Samriddhi account meant for a girl child. The interest offered under the scheme is 9.2%. 

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