Deduction under section 80C

You know that under Section 80C there are certain deductions from the salary and if it is up to Rs 150000 in a year.

For this there are many schemes available as follows:

PPF, NSC, POSS, Life insurance, Senior citizen saving scheme, mutual fund and ulip scheme.

Deduction under 80c is available only to an individual or Hindu undivided family.

1. Public provident fund:

It is 15 years scheme where you cannot withdraw within 3 years. After that you can take loan on your deposit.

According to the public provident fund scheme, an individual can open ppf account in his own name or in the name of minor of whom is guardian. According to the income tax act ,to get the benefit under section 80C,amount deposited by individual in his own account or in the account of his /her spouse or in the account of any child is eligible for deduction.

In ppf we can invest minimum Rs 6000 p.a. or maximum Rs 150000.but there is no ceiling under income tax act.

2. National saving Certificate (VIII issue).

This certificate is available in Rs 100, 500, 1000, 5000, and 10000. This is available for six years. Accrued interest is also qualified for any year except for last year, received amount after 6 year is totally tax free.

Current interest rate is 8.5%.

3. Post office deposit scheme:

If amount is deposited for 5 years or more in post office then it qualifies for deduction under sec 80C. Present rate on this scheme is 8.5%. Under this we can open individual or joint account. Incase of joint account, primary account-holder gets the benefit.

4. Life insurance

Premium paid under different scheme (life insurance, pension scheme) should be qualified under section 80C.i.e notified annuity plan of LIC (jeevan dhara, jeevan akshay) or any other issuer (immediate annuity plan of ICICI prudential life insurance company), TATA AIG Easy retirement annuity plan.

5. Mutual fund:

Contribution under ELSS, or any notified pension fund setup by mutual fund or UTI.

6. Unite linked insurance plan (ULIP):

Contribution in ULIP of LIC mutual fund (DHANRAKSHA plan of LIC mutual fund). It should be taken by individual on his own life, life of spouse or any child. In case of undivided Hindu family ULIP may be taken on the life of any member of the family.

7. Senior citizen saving scheme 2004:

Any individual who has attained the age of 60 years or defence person retiring at any age or any person retiring at age of 55 years or more can eligible for this scheme. Account can be opened in any authorized post office, any bank.etc. deposit is multiple of 1000 and total deposits not exceed 15,00,000.in this account we can get sec 80C benefit up to 150000 in a year. Current interest rate is 9.2%.From 1/04/2013.

Note:-aggregate deduction under section 80C, 80CCD cannot exceed Rs. 1,50,000.