Tax Exemption On Instruments Under Section 80C

Tax planning is a critical aspect of a financial portfolio. Especially, if you are a salaried individual having the right knowledge about which instruments are taxable and how to claim tax on them helps you not only save money but build a good performing portfolio.

Additional Read: Taxation in India: Can income tax be abolished in India?

Provident Fund, Voluntary Provident Fund, Public Provident Fund

Under this investment, interest earned up to 9.5% if free from tax. Usually, the investor has the choice to increase or decrease the contribution of their Provident Fund and their Voluntary Provident Fund to match their financial preferences. Whereas, for Public Provident Fund scheme on investment of Rs. 500 up to Rs. 1,50,000 annually 9.5% tax deduction can be claimed.

Additional Read: 3 Simple Ways to Know your EPF Balance

Home Loan

The repayments paid towards a home loan consists of the capital repayment and the interest. The principal repayment amount qualifies for tax deductions under Section 80C of the Income Tax Act.

Fixed Deposit

Amount invested as fixed deposit in any financial institution for a tenure of 12 to 60 months is eligible for tax deductions under Section 80C.

National Savings Scheme

Any amount of contribution towards National Savings Scheme qualifies for tax deduction under Section 80C of the Income Tax Act. where, the duration of the deposit is up to 5 years. As interest from NSC is compounded on a half yearly basis it falls under the taxable bracket under Section 80C.

To claim tax deductions while filing your ITR or Income Tax Returns you need to fill in your income details in the ITR Form. Once these details are filed it calculates your gross total income. In order to minimize the gross total income and to reduce your tax liability you are required to enter details of deductions for which you want the claim under Sections 80C to 80U of the Income Tax Act. Additional Read: Top 5 Safe Investments For The Long-term in India


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