Purpose and Scope

• Section 80C of the Income Tax Act allows taxpayers to claim deductions from gross total income.
  
• It is aimed at encouraging savings and investments in specified financial instruments.
  
• The deduction reduces the taxable income, thereby lowering the overall tax liability.
  
• It is available to individual taxpayers and Hindu Undivided Families (HUFs).
  
• The benefit is allowed only under the old tax regime.
  

Maximum Deduction Limit

• The total deduction allowed under Section 80C is up to ₹1,50,000 per financial year.
  
• This limit is inclusive of all eligible investments and payments combined.
  
• Exceeding the limit does not provide any additional tax benefit.
  
• It is deducted from gross total income before applying tax rates.
  
• Proof of investments or payments must be retained for verification.
  

Eligible Investments and Contributions

• Contributions to Employees’ Provident Fund (EPF) and Public Provident Fund (PPF).
  
• Investment in Tax Saving Fixed Deposits with a tenure of five years.
  
• Premium paid for Life Insurance Policies of self, spouse, and children.
  
• Investment in Equity-Linked Savings Schemes (ELSS) of mutual funds.
  
• Subscription to National Savings Certificate (NSC).
  

Eligible Payments and Expenses

• Principal repayment of home loan taken from recognized financial institutions.
  
• Tuition fees paid for up to two children for full-time education in India.
  
• Stamp duty and registration charges paid for purchasing a residential house.
  
• Contribution to Sukanya Samriddhi Yojana for a girl child.
  
• Contribution to Senior Citizen Savings Scheme (SCSS) and Unit Linked Insurance Plans (ULIPs).
  

Additional Related Sections

• Section 80CCC allows deduction for pension plans from specified insurers.
  
• Section 80CCD(1) provides deduction for contributions to the National Pension System (NPS).
  
• Combined deduction under Sections 80C, 80CCC, and 80CCD(1) is limited to ₹1,50,000.
  
• An additional ₹50,000 is available separately under Section 80CCD(1B) for NPS.
  
• These sections offer a structured way to plan and reduce tax liability through investments.