Section 80C is the most important provision to save tax by accommodating a long list of expenditures or investments. Here we will see some interesting facts around Section 80C Investments.
Provident Fund & Public Provident Fund
- Maximum limit for PF is ₹1,50,000 and the contributions can be made throughout the year but are restricted to 12 times.
- EPF is mandatory for people earning less than Rs. 15,000 basic salary per month
- EPF is voluntary and you can waive it off but once you join it you cannot leave it
- EPF & PPF fall under EEE – Exempt from tax while investing, exempt from tax on the income generated on investment & exempt from tax on maturity
- Only resident Indians can open PPF Account, though NRI’s can contribute to the account if they opened it while they were in India.
Other Section 80C Investments
- Employer’s NPS contribution can be claimed as a deduction over and above 80CCD Contribution but should be less than 10% of the salary.
- In case of tax saving NPS, you can withdraw up to 60% on maturity while the remaining 40% has to be reinvested to get monthly pension.
- Interest earned in Tax Saving FDs is taxable
- ELSS is subject to 10% Long Term Capital Gain Tax(LTCG)
- Tax Saving FDs & NSC falls under ETE – Exempt from tax while investing, Gains are taxable & Exempt during maturity
- Health Plans, Educational Loan, Interest paid on Home Loan are not a part of the Section 80C Deductions
- Section 80C helps an individual to save taxes up to ₹60,000
- At the end of Financial Year, you have to submit all the Section 80C investment proofs to your employer for him to deduct the exact TDS based on your exemptions.
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Gaurav heads Growth & Marketing at Sorted AI. He is an IIT Kanpur Alumnus. He has more than 5 years of work experience in Entrepreneurship & Investment Banking where he worked with Credit Suisse & Tapp Me. He is an avid Keyboard/Percussion Player & a better discount hunter.