Filing an Income Tax Return (ITR) is a crucial financial responsibility for individuals and businesses. By filing ITR and claiming eligible deductions, taxpayers can significantly optimise their tax liability, ensuring compliance with tax laws while benefiting from various financial incentives provided by the government.
Section 80C of the Income Tax Act, of 1961, is one of the most popular and widely used sections for tax-saving among taxpayers in India. It allows individuals and Hindu Undivided Families (HUFs) to claim deductions on specific investments and expenses, reducing their taxable income. The maximum deduction under Section 80C is Rs. 1.5 lakh per financial year.
Also Read: Budget 2024: Will Govt Hike Rs 1.5 Lakh Limit Under Section 80C Of Income Tax Act?
Remember, this section is applicable under the old tax regime.
Eligible Investments and Expenses Under Section 80C:
What Can You Claim Under Section 80C?
Here’s a list of some common options for claiming deductions under Section 80C (remember, the total deduction is capped at Rs. 1.5 lakh for the financial year 2023-24):
Investments:
- Equity Linked Saving Schemes (ELSS) in Mutual Funds
- Public Provident Fund (PPF)
- National Savings Certificate (NSC)
- Employee Provident Fund (EPF) (voluntary contributions only)
- Unit Linked Insurance Plans (ULIPs) with a minimum premium allocation of 60%
- Sukanya Samriddhi Yojana Account
- Senior Citizen Savings Scheme (SCSS)
- Five-year tax-saving bank fixed deposits
Expenses:
- Tuition fees for your children’s education (up to two children)
- Repayment of principal amount on home loan
- Premiums paid for life insurance policies
- Contributions to pension schemes like NPS (National Pension Scheme)
Claiming Deduction under 80C and ITR Filing
While you make the investments or incur the expenses during the financial year, claiming the deduction happens when you file your ITR.
Here’s the connection:
Investments/Expenses: Throughout the financial year (April 1st to March 31st), make investments or incur expenses as per the options available under Section 80C. Keep all the investment proofs and receipts handy.
ITR Filing: When it’s time to file your ITR, you’ll need to report the amount invested/spent under Section 80C. The specific sections within the ITR form will depend on the type of investment or expense.
Tax Benefit: Once your ITR is processed, and if everything is in order, the claimed deduction under Section 80C will reduce your taxable income, leading to lower tax outgo.
By effectively utilising Section 80C, you can save a significant amount on your taxes. If you have any further questions about specific deductions or the ITR filing process, consider consulting a tax advisor for personalised guidance.
Will Section 80C Limit Increased In Budget 2024?
Every year, many taxpayers eagerly anticipate the finance minister raising the Section 80C limit in the Union Budget 2024. The current limit has not been adjusted to keep pace with rising incomes and expenses, leading many taxpayers to fully utilise the entire 80C limit.
As of now, there has been no official announcement regarding an increase in the Section 80C deduction limit for Budget 2024. The current limit of Rs. 1.5 lakh has remained unchanged since 2014. Given the rising inflation, many taxpayers and financial experts expect an increase.
