Deduction Under Income Tax (Under 80C)

Deduction Under Income Tax On Payment basis

In India income tax is applicable to the person resident in India. As the income tax is applicable on the total income earned by the person in financial year included all source of income chargeable to tax. Although the income tax is collected by the government of India is main source of revenue of the government, despite of being decrease in revenue government provide deduction from gross total income to the resident individual. Deduction is based on the investment made out of taxable income earned by the person during the financial year is invested in the notified scheme of income tax department. The purpose of deduction is to appreciate the long term saving to individual including health and life covering policies, Eligible deduction Under Income Act, Tax Saving Schemes at Lex N Tax Associates.

Deduction Under Income Tax payment basis:

  1. Section 80C [Deduction in respect of investment/contribution towards specified assets]

Under this scheme the deduction is allowed on the basis of payment made in specified scheme of investment within permissible limit. Deduction is providing from gross total income up to monetary limit of Rs. 1,50,000/- to resident individual and HUF only.

Deduction in respect of investment/contributions

The following are the investments /contribution eligible for deduction-

(1) Contribution in Unit-linked Insurance Plan 1971/ Contribution in Unit-linked Insurance Plan of LIC Mutual Fund

An investment can be made in the name of Individual, his or her spouse or any child in any Unit linked Insurance Plan of LIC Mutual Fund. HUFs are also eligible to take deduction on behalf of payment made for members.

(2) Premium paid in respect of the life insurance policy

Premium paid for insurance on the life of individual, spouse or any child (minor or major) and in case of HUF, any member thereof. This will include life insurance policy and an endowment policy for deduction.

(a) In respect of policies issued before 1.4.2003

(b) In respect of policies which had been between issued 1.4.2003 and 31.3.2012
Premium paid to the extent of 20% of the actual capital sum assured. While calculating actual capital sum assured,

(1) The amount of any sum toward premiums agreed to be returned or
(2) The amount of benefit by way of bonus or otherwise, over and above the sum actually assured. Shall not be taken into account.
In respect of policies issued on or after 1.4.2012 but before 1.4.2013Premium paid to the extent of 10% of actual capital sum assured.
In respect of policies issued  after 1.4.2013(a) Where the insurance is on the life of a person with disability or severe disability as section 80U or Section 80DDB or

(b)Where the insurance is taken for life of any other person, other than mentioned in (a) above – Premium paid to the extent of 15% of actual capital sum assured.

(3) Premium amount paid toward of a contract for deferred annuity scheme    

Premium paid to effect and keep in force a contract for a deferred annuity on the life of the individual and his or her spouse or any child, provide such contract does not contain any provision for the exercise by the insured of an option to receive cash payment in lieu of the payment of the annuity.

(4) Any sum deducted from the salary payable of a Government employee for securing a deferred annuity       

Any sum deducted by or on behalf of the government from the salary of a government employee in accordance with the conditions of his service for securing a deferred annuity or making such provisions for his spouse or children for deduction.

(5) Contribution to SPF/PPF/RPF

Contribution made to any provident fund set up by the central government and notified in his behalf or contribute to any provident fund to which the provident fund act 1925 and recognize provident fund. Such contribution can be made in the name of individual, his spouse and any child of the individual, and any member of the family, in case of a HUF. The threshold limit for deposit under PPF scheme is Rs. 1,50,000 in a year.

(6) Contribution to approved superannuation Fund

Contribution by an employee to an approved superannuation fund qualifies for deduction under section 80 C.

(7) Subscription to notified deposit scheme

  • A Public sector company which engaged in providing long term finance for construction or purchase of houses in India for residential purposes or
  • Any such deposit scheme of any authority constituted by India by or under any law. Like public deposit scheme of HUDCO.  

Repayment of housing loan including stamp duty, registration fee and other expenses.

  • Inadmissible Payments: the following amount do not qualify for rebate
  • Admission fees, cost of share and initial deposit which a shareholder of the company or a member of a of a co-operative society has to pay for becoming a shareholder or member or
  • The cost of any addition or alteration or renovation or repair of the house property after the issue of completion certificate to assesse or any other person on behalf of assesse.
  • Any expenditure in respect of which deduction is allowable under section 24.

Tax planning at Lex N Tax Associates

Subscription to certain equity shares or debentures

Subscribe eligible issue of capital approval by the Board on an application made by a public company or any public financial institution in the prescribe form. There is lock in period of three years from date of purchase provided in respected of such equity shares or debentures.

There are various different specified organization and trust approved by government to invest for getting exemption under this chapter as follows:

  • Subscription to certain unit of mutual fund referred to in section 10(23D)
  • Investment in five-year Term Deposit in schedule bank and notified by Central Government in official Gazette.
  • Subscription to notified bonds issued by NABARD.
  • Deposit in Senior Citizens Savings Scheme Rules 2004
  • Investment towards five-year Post Office time deposit scheme
  • Contribution to additional account under NPS 
  • Any Sum paid or deposited in Sukanya Samridhi Account 
  • Subscription to National Savings Certificate viii
  • Contribution to approved annuity plan of LIC
  • Subscription or investment towards notified units of mutual fund or UTI Units.
  • Contribution to notified pension fund set up by mutual fund of UTI
  • Contribution or invest toward National Housing Bank (Tax Saving) Terminal Deposit Scheme, 2008
  • Payment of tuition fees to any university, college, school, or other educational institution within India for full-time education for maximum 2 children.

Why Choose Lex N Tax Associates?

  • Today’s Business world demands quality professional services and meet the demands of increasingly complex business environment, Tax Saving Schemes at Lex N Tax Associates.
  • Lex N Tax Associates strives to fulfill your requirement by providing services in a timely and cost effective manner. For us, quality is synonymous with aiming to embody highest standards of professional excellence.
  • Lex N Tax Associates primarily aims at providing diverse services in a most competent and excellent manner. With a large pool of experienced human resource, the sole purpose of each member of the firm is to perform his best for their clients.
  • Our professionals comprise a talented group of multifunctional industry specialists dedicated to helping clients regarding ITR Filing in Delhi NCR and Online income tax return filing.

~ By Shaista Siddiqui

Leave a Reply

Your email address will not be published.