What is Section 80C Deduction Limit?
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What is Section 80C Deduction Limit?

Save Tax Now
  • 31st Jan 2022
  • 419

What is Section 80C Deduction Limit?

As the year comes to an end, earning individuals who fall under the categories of the various tax slabs begin with expenditures and investments and start tax filing that will help them reduce their taxable income. One of them is section 80C of the Income Tax Act that helps people avail deductions by making various kinds of tax-saving investments. The end of the financial year is marked by 31st March every year and this is the time when people should file their tax returns to avail all possible deductions. Income Tax 80C, together with section 80CCC & 80CCD, offers a mixture of deductions that are quite beneficial. If you need to make use of your earnings at some stage in the Previous Year (PY), you may declare the amount as a deduction out of your general taxable earnings for the PY. Therefore, as an individual taxpayer, you have a lot of options to avail deductions and make significant savings

For instance, let us assume that you are an individual ‘X’ that has earned gross general earnings of ₹10,00,000 as taxable earnings in P.Y. 2015-16. In this case, the assessment Year might be 2016-17. while you will have to estimate and pay the tax on these earnings. For the purpose of investment, if you invest ₹100,000 of these earnings in any or a couple of investment schemes, mentioned under section 80C, then your general taxable earnings might be decreased to ₹900,000 for the P.Y. However, if you are thinking of investing beyond a certain amount of money, chances are that you might not be aware of the limit on Section 80C. Yes, you read that right! While investing, you can seek deductions on your taxable income under Section 80C of the Income Tax Act up to a certain extent only.

Ways to avail tax deductions below Section 80C

Before diving into the tax limit on savings, it is better to have an idea about the ways in which you can avail tax deductions. Deductions below segment 80C may be divided into the following parts:

Investment Activities of an individual

You deposit your cash in a fund or scheme for a while after which you get it back with added interest and benefits.

Spending Activities of an individual

You invest your money in investments mentioned below Section 80C:

A good deal claimed u/s 80C

Section 80 C of the Income Tax Act states that there are limitations on the tax return amount for both spending and investment activities. An individual can enjoy deductions worth ₹1,50,000 under Section 80C. However, the applicability of Income Tax 80C does not end here. There is a choice to expand this deduction amount by an additional ₹50,000 as mentioned under section 80CCD as that is applicable over and above section 80C.

The benefits under Section 80C extend to all the tax-paying individuals and help them expand their investment portfolios. Additionally, there are several options you can have a look at to save tax under the existing regime and that can benefit your investment goals in the best possible manner!

- A Consumer Education Initiative series by Kotak Life

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