Section 80C

Long term savings are encouraged by the Government of India. These are basically for the investors' retirement benefits and therefore, tax breaks are offered on the same.

Sec 80C of the Income Tax Act states that qualifying investments up to a maximum of Rs.1 Lakh, are deductible from your income. This means that you pay no tax on the said Rs.1 Lakh and your taxable income gets reduced by Rs.1 lakh.

Qualifying Investments

Equity Linked Savings Scheme (ELSS): There are certain Mutual Fund (MF) schemes known as ELSS that are eligible for deduction under Section 80C. Click here to know more about the ELSS advantage

Provident Fund (PF): The PF amount that gets deducted from your salary every month is counted towards Section 80C investments.

Voluntary Provident Fund (VPF): The increased amount which you contribute to your PF over and above that which is deducted by your employer also qualifies for deduction under Section 80C.

Public Provident Fund (PPF): The amount invested in your PPF account (upto a minimum of Rs.500 and a maximum of Rs.70,000 per year) can be included in Section 80C deduction.

Life Insurance Premiums: Section 80C also encompasses any amount that you pay towards life insurance premium for yourself, your spouse, your children or your parents.

All the premiums (even of multiple policies) whether of LIC or of a private insurer, can be included.

Home Loan Principal Repayment: Your Equated Monthly Installment (EMI) has two components, Principal and Interest. The Principal component qualifies for deduction under Section 80C.

Various instruments that entail tax benefits under Section 80C have different characteristics that may or may not be enumerated above. Please consult your tax advisor / financial advisor before investing.