Algo Trading


Stock Market Blogs

Income Tax Deduction Under Section 80C Explained With Example June 23 2020Income Tax Deduction Under Section 80C

Visit Count: 697

 How to save income tax under section 80C ?

Every year as the return filing date approaches, most of us stress out thinking about how to save taxes. Some approach their ‘gyani’ friends, while others reach out to their colleagues and there are some who seek help from tax advisors. Whichever way you choose, the point is, you need to be aware of the various tax saving options available to you as per the Income Tax Act, 1961.


One of the most widely used option to save income tax is Section 80C of the Income Tax Act. It helps you reduce the tax burden by allowing a deduction from the total taxable income in a financial year. Let us understand how you can benefit from Section 80C deductions.


What is Section 80C Deduction?

As per Section 80C, an individual or a Hindu Undivided Family (HUF) can claim a deduction of up to Rs. 1.5 lakh from the gross total income if investments are made or expenses are incurred in specified avenues. These avenues include contribution to ULIP, Public Provident Fund (PPF),payment for life insurance premium, contribution to any recognised provident fund and superannuation fund, tax-saving fixed deposit plans, subscription to National Savings Certificate, among others. We will see this list in detail in the next section. While the maximum limit for tax saving under Section 80C is Rs. 1.5 lakh, there is no minimum limit.

When you claim a deduction, you reduce your gross taxable income and thereby the total tax payable by you in the financial year. Let us understand this with an example.

Let’s say, in FY 2019-20, your gross total earnings are Rs 10 lakh and you have invested Rs 1.5 lakh in the various schemes which are eligible for deduction under section 80C. Now, you can claim the tax benefit and reduce your income tax liability to Rs. 8.5 lakh (i.e. Rs. 10 lakh – Rs. 1.5 lakh) and pay tax on the same.


Eligibility to Claim Section 80C Deduction

As mentioned earlier, an individual or a HUF can claim a deduction under this section. Note that this deduction is not available to partnerships, companies and other corporate bodies. Besides, you can claim a deduction only from the income of the financial year in which you have made these specified investments or incurred the expenditures.


What Qualifies as Eligible Investment and Expenditure for Deduction Under Section 80C?

Some of the popular investments and payments eligible for tax deductions under Section 80C are as follows:

1.     Investment Schemes - Unit Linked Insurance Policies (ULIPs), Equity Linked Savings Scheme (ELSS) Mutual Funds

2.   Retirement Savings Schemes - Public Provident Fund, (PPF), Employees Provident Fund (EPF), Voluntary Provident Fund (VPF), National Pension System (NPS), Superannuation Funds

3.     Fixed Income Schemes -Sukanya Samriddhi Yojana, National Savings Certificate (NSC), Kisan Vikas Patra (KVP), Senior Citizens Saving Scheme (SCSS), 5-year Post Office Term deposits, 5-year bank fixed deposits

4.     Insurance Schemes - Term Insurance, Annuity Plan, Endowment Insurance

5.     Miscellaneous - Home loan repayment, tuition fee payment


Taxation Rules, Lock-in Period and Returns of Various Section 80C Investments


Taxation Rules

Lock-in period

Approximate Returns

Public Provident Fund

Completely exempt

15 years

7% to 8%

Employees’ Provident Fund

Completely exempt unless withdrawn before completion of 5 years of service

5 years


Equity Linked Savings Schemes

Principal investment is tax deductible. Returns are taxable if annual capital gains exceed Rs. 1 lakh

3 years

15% to 18%

National Pension Scheme

Amount deposited annually is tax deductible. Pension pay-out is taxable as per slab rate

Till retirement

12% to 14%

Tax saving fixed deposits

Investments are tax deductible. Interest earned is taxable at pay-out.

5 years

6% to 7%

National Savings Certificate

Principal investment and reinvested interest are tax deductible. Final year’s interest is taxable

5 years

7% to 8%

Sukanya Samriddhi Yojana

Investments are tax deductible

21 years


Senior Citizen Savings’ Scheme

Investments are tax deductible. Returns are taxable as per slab rate of senior citizens

5 years



Apart from the above investment options, deductions are also available for certain payments. Let us understand the tax rules regarding them.


Taxation Rules of Various Section 80CExpenses / Payments

Expenses / Payments

Taxation Rules

Home Loans

Principal amount of a home loan is exempt every year, if the house is not sold within 5 years of possession. A deduction is also available on registration fee and stamp duty payments

Premium Payment on Life Insurance Policies

Amount paid annually as premium is tax deductible

School or Tuition Fees paid for your Child’s Education

Amount paid as tuition fees for college, school, university, etc. for the education of up to two children is exempt


Tax Exemptions other than Section 80C

Apart from the above-mentioned deductions, there are also certain tax exemptions available from various other sub-sections of Section 80. These include:

· Section 80D

Under this section, you can claim an exemption on the premium payments towards health insurance of self, parents, spouse and children. A deduction is available up to Rs. 25,000 for self and spouse and an additional Rs. 25,000 for parents.

· Section 80G

Under this section, you can claim an exemption of up to 50% or 100% for the donations made towards various charities and social causes, depending on the cause of donation.

· Section 80GGC

Under this section, you can claim an exemption for donations made towards any political party, provided payments are made through modes other than cash.


Tax deductions are an excellent way through which you can do your tax planning and reduce your overall taxable income. However, the amount of deduction varies depending on the type of investment and claim.

For more updates on tax planning, financial planning, investments and other latest stock market updates, follow our articles at Indira Securities.


Blog Enquiry

Prevent Unauthorized Transactions in your demat and trading account --> Update your Mobile Number/Email id with your Depository Participant and Stock Broker. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat/trading account directly from CDSL and Stock Exchanges on the same day.........issued in the interest of investors...

1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.

2. Update your Mobile Number & Email Id with your Stock Broker/ Depository Participant and receive OTP directly from Depository on your Email Id and/ or Mobile Number to create pledge.

3. Pay 20% upfront margin of the transaction value to trade in cash market segment.

4. Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued by NSE vide. Circular No. NSE/INSP/45191 dated: July 31, 2020 and NSE/INSP/45534 and BSE vide Notice No. 20200731-7, dated: July 31, 2020 and 20200831- 45 dated: August 31, 2020 and dated: August 31, 2020 and other guidelines issued from time to time in this regard.

5. Check your Securities/ MF/ Bonds in the Consolidated Account Statement issued by NSDL/ CDSL every month.


  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to ₹ 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost
"As per the directives of CDSL and esteemed Exchanges, it has been made mandatory for every client to furnish their latest KYC details viz. Valid Mobile No., Email- Id & Income range on or before 31.05.2021 else your Account will be marked as Non Compliant and will be Freezed till the compliance of such requirement."
"No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorize your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."
"KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary."
Dear Investor if you wish to revoke your un-executed eDis mandate, please mail us with ISIN and quantity on by today EOD."

INDIRA SECURITIES PVT.LTD. (SEBI REG.NO.):NSE TMID: 12866, BSE TMID: 663, CDSL DPID: 17000 SEBI REG. NO.: INZ000188930, MCX TM ID: 56470, NCDEX TM ID: 01277, CDSL REG. NO.: IN-DP-90-2015, CIN : U67120MH1996PTC160201




Indrendu Joshi. Email: Call : 0731-4797275

Investor grievance complaint :