Other Deductions under Section 80 C:
- Any payments towards a deferred annuity – For individual, on life of self, spouse or any child.
- Contribution made under Employee’s Provident Fund
- Contribution Units of UTI/notified mutual fund.
- Investment in ULIP plans( Unit Linked Insurance Plans).
- Sum deposited in 10 year/15 year account of Post Office Saving bank
- Subscription to any notified securities/notified deposits scheme – for e.g. Sukanya Samridhi Account.
- Subscription to any notified savings certificate, Unit Linked Savings Certificates
- Contribution to Unit Linked Insurance Plan of LIC Mutual Fund.
- Contribution to notified deposit scheme/ pension fund set up by the National Housing Scheme.
- Payments made by way of instalment or part payment of loan taken for purchase/construction or residential house
- Contribution by employee to a recognized Provident Fund or a Superannuation Fund.
- Tuition fees paid at the time of admission or otherwise to any school, college, university or other educational institutions situated within India for the purpose of full time education of any two children. However, any payment towards any development feed or donation or payment of similar nature will not be eligible.
- Subscription to Bonds issued by NABARD as notified by Central Government.
Deductions under Section 80 CCC
This refers to payment of premium by the individual (i.e. you the assessee) towards pension plans of LIC or any other Insurer. Deduction is available upto a limit of Rs. 150,000 in conjunction with Section 80C and Section 80 CCD.
Deductions under Section 80 CCD
- Contribution made by an employee towards the National Pension Scheme (NPS) upto a maximum permissible limit of Rs 150,000 Additional contribution to NPS subject to maximum limit or Rs 50,000 under new section 80CCD (1B). Contributions for Atal Pension Yojana are also eligible for deduction.
- Under Section 80 CCD(2) – Deposit made by an employer towards an employee’s National Pension Scheme (NPS) account, where the deposit does not exceed 10% of his/her salary, does not have a Rs. 150,000 limit.
- In case of self –employed individuals, from FY 2017-18, contributions of upto 20% of gross total income are deductible (vs. 10% earlier). This is subject to the maximum limit of Rs. 150,000
What is ELSS and why is it so popular?
Equity Linked Saving Schemes (ELSS) are specific open ended mutual fund schemes, investment in which can yield tax benefits of up to Rs.45,000. These schemes have multi fold benefits such as –
- They aid in tax savings since they are deductible from your total income u/s 80C up to a maximum permissible limit of Rs. 150,000. Your tax saving will then be determined by your tax bracket. For example if you belong to the 20% tax bracket, that is your total annual income is between Rs. 5 lacs and Rs. 10 lacs and you have made an investment of Rs. 1,00,000 in ELSS, your effective tax saving is Rs. 20,000.
- They are a good avenue for capital growth. As per the CRISIL – AMFI ELSS Fund Performance Index, the 10 year return on these funds has averaged close to 18.6%. The 5 year return for the same is 16.9%.
- Most ELSS investments are made towards equities of publicly listed companies of the country and hence aid in nation building and also gives the investor a chance to participate in the nation’s economic growth.
ELSS Features –
- Amount – Any amount in multiples is Rs. 500
- Lock-in duration – 3 years
- Duration – Any
- Maximum amount – Rs. 500
- Minimum amount – Any, however deduction allowed is only upto Rs. 1.5 lacs u/s 80C
- Number of instalments in a year – Optional as – yearly, half yearly, quarterly or monthly
- Charges – There are no entry or exit loads for ELSS. The only fee charged is the fund management fee which is also capped at 2.25% for all ELSS Funds.
- Tax implications – LTCG > Rs.1Lakh will be taxable at 10%. (Partial Taxable). In case of dividend option- Dividend received is Tax free.
ELSS is one of the many investments tools under Section 80C that provide tax savings. A comparative study on the performance of some investments under Section 80C reveals that ELSS over the longer period has been a rewarding tool for tax payers.
|Instrument||Ease of Investment||Impact of relevant Tax|
|Public Provident Fund (PPF)||Interest is Tax free|
|Senior Citizen’s Saving Scheme||Not Taxable|
|Sukanya Samridhi Yojana||Interest earned is Tax free.|
|National Pension Scheme|
|Unit Linked Insurance Policies (ULIPs)||Tax Exemption on investment, accrual and maturity.|
|National Saving Certificates (NSCs)|
|Bank Fixed Deposits (FDs)||Interest Income from fixed deposits (FD's) is fully taxable|
|Traditional Insurance policies (excluding Term Insurance)||Any amount, which is received at the time of maturity, is exempt from tax u/s 10(10D).|