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Tax Deductions under Section 80(C) of the Income Tax Act

Section 80(C) of the Income Tax Act provides avenues for tax-payers to reduce their tax burden. Individuals and Hindu Undivided Families are both eligible to claim deduction under this section. Tax-payers can claim deductions of up of ₹1,50,000 per year depending on their contribution to the permissible tax saving instruments.

Investment options eligible for deduction under Section 80(C):

  1. Life Insurance - Deductions can be claimed under Section 80C for premiums paid on life insurance, including those on unit-linked insurance plans. Even if your insurance plan covers your spouse or children, you can still claim tax benefits for the premiums paid. But keep in mind that you can only claim the benefits if the premiums are paid by you and not your spouse or parents. 
  1. Public Provident Fund - Deposits made in PPF are eligible for tax deduction under Section 80(C). The deduction limit was earlier set at ₹1,00,000, which increased to ₹1,50,000 from FY 2014-15. There are other benefits to PPF as well. The interest that you earn is tax-free.
  1. National Savings Certificate - This is a government-launched scheme designed for salaried individuals, government employees and business owners. Investments made in these certificates qualify for tax benefits up to ₹1,50,000 under Section 80C.
  1. Senior Citizens Savings Scheme - Senior Citizens Savings Scheme is a long-term investment option introduced by the government of India. This scheme is exclusively meant for citizens above the age of 60. You can claim deductions on the amount deposited under Section 80(C).
  1. Equity Linked Savings Scheme - The amount invested in an equity-linked savings scheme is eligible for tax exemption under Section 80(C). ELSS is a kind of diversified equity mutual fund that comes with a lock-in period of 3 years. The advantage of investing in ELSS is that along with the tax deduction, you stand to benefit from the potential upswing of equity markets.

You can also claim tax deductions under Section 80(C) for investments in Employee Provident Fund, Tax-saving Fixed Deposit (has a lock-in period of 5 years), and many more. To compare and buy life insurance policies, visit OneInsure's website or reach us at 86559 86559.


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