Section 80C
Deductions in respect of Investment in Specified Assets

Deductions in respect of Payments

Section 80C provides for a deduction from the Gross Total Income, of savings in specified modes of investments. The deduction under section 80C is available only to an individual or HUF. The maximum permissible deduction under section 80C is Rs.1,50,000.

Deduction in respect of investments/contributions

The followings are the investments/ contributions eligible for deduction –

Premium paid in respect of life insurance policy - Premium paid for insurance on the life of the individual, spouse, or any child (minor or major) and in the case of HUF, any member thereof. This will include a life policy and an endowment policy.

Section 10(10D) Exemption on receipt from Life Insurance Policy (LIC) - Any sum received under a Life Insurance Policy, including the sum allocated by way of bonus on the such policy shall not be included in the total income of the person.

Contribution to the approved annuity plan of LIC - Contributions to approved annuity plans of LIC (New Jeevan Dhara and New Jeevan Akshay, New Jeevan Dhara I and New Jeevan Akshay I, II and III) or any other insurer (Tata AIG Easy Retire Annuity Plan of Tata AIG Life Insurance Company Ltd.) as the Central Government may, by notification in the Official Gazette, specify in this behalf.

Investment in a five-year Post Office time deposit - Investment in a five-year time deposit in an account under Post Office Time Deposit Rules, 1981 qualifies for deduction under section 80C.

Deposit in Senior Citizens Savings Scheme Rules, 2004 - Deposit in an account under the Senior Citizens Savings Scheme Rules, 2004 qualifies for deduction under section 80C.

Contribution to SPF/PPF/RPF Under section 80C, contributions to any provident fund - i.e Statutory Provident Fund (SPF), Public Provident Fund (PPF), Recognised Provident Fund (RPF) to which the Provident Funds Act, 1925 applies and recognized provident fund qualifies for the deduction.

The contribution made to any Provident Fund set up by the Central Government and notified on his behalf (i.e., the Public Provident Fund established under the Public Provident Fund Scheme, 1968) also qualifies for deduction under section 80C. Such contribution can be made in the name of the individual, his spouse and any child of the individual; and any member of the family, in case of a HUF. The maximum limit for deposit in PPF is Rs. 1,50,000 in a year.

Subscription towards notified units of a mutual fund or UTI - Subscription to any units of any mutual fund referred to in section 10(23D) or from the Administrator or the specified company under any plan formulated in accordance with such scheme notified by the Central Government

1. Any sum paid or deposited in Sukanya Samridhi Account - Subscription to any such security of the Central Government or any such deposit scheme as the Central Government as may notify in the Official Gazette. Accordingly, Sukanya Samriddhi Scheme has been notified to provide that any sum paid or deposited during the previous year in the said Scheme, by an individual in the name of –

   • Any girl child of the individual or
   • Any girl child for whom such individual is the legal guardian would be eligible for deduction under section 80C.
     
     

   Any sum deducted from the salary payable of a Government employee for securing a deferred annuity - Amount deducted by or on behalf of the Government from the salary of a Government employee in accordance with the conditions of his service for securing a deferred annuity or making provisions for his spouse or children. The excess, if any, over one-fifth of the salary is to be ignored.

   Contribution to notified pension fund set up by mutual fund or UTI - Contribution by an individual to a pension fund set up by any Mutual Fund referred to in section 10(23D) or by the Administrator or the specified company as the Central Government may specify (i.e., UTI-Retirement Benefit Pension Fund set up by the specified company referred to in section 2(h) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 as a pension fund.)

   "Specified company": It means a company formed and registered under the Companies Act, 1956 and whose entire company is subscribed by such financial institutions or banks as may be specified by the Central Government, by notifications in the Official Gazette for the purpose of transfer and vesting of the undertaking." "Administrator": It means a person or body of persons appointed as Administrator by the Central Government.  The Central Government shall appoint a person or body of persons as the "Administrator of the Specified Undertaking of the Unit Trust of India" for the purpose of taking over the administration thereof and the Administrator shall carry on the management of the specified undertaking of the Trust for and on the behalf of the Central Government." "Specified Undertaking": It includes all business, assets, liabilities, and properties of the Trust representing and relatable to the scheme and Development Reserve Fund

2. Investment in a five-year Term Deposit: Investment in a term deposit

   • For a period of not less than five years with a scheduled bank; and
   • which is in accordance with a scheme framed and notified by the Central Government in the Official Gazette.
   • Then it qualifies as an eligible investment for availing deduction under section 80C.

    
3. The maximum limit for investment in a term deposit is Rs. 1,50,000. 
   Scheduled bank means-
   • The State Bank of India constituted under the State Bank of India Act, 1955, or
   • A subsidiary bank as defined in The State Bank of India (Subsidiary Banks) Act, 1959, or
   • A corresponding new bank constituted under section 3 of the -
   • Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, or
   • Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, or
   • Any other bank, being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934. 
     
     
4. Payment of tuition fees to any university, college, school, or other educational institutions within India for full-time education for maximum 2 children - Payment of tuition fees by an individual assessee at the time of admission or thereafter to any university, college, school, or other educational institutions within India for the purpose of full-time education of any two children of the individual.
   
   

   This benefit is only for the amount of tuition fees for full-time education and shall not include any payment towards development fees or donation or payment of similar nature and payment made for education to any institution situated outside India.
   
   
5. Contribution to additional accounts under NPS - Contribution by a Central Government employee to an additional account under NPS (specified account) referred to in section 80CCD for a fixed period of not less than 3 years and which is in accordance with scheme 2 notified by the Central Government for this purpose qualifies for deduction under section 80C. It may be noted that only the contribution to the additional account under NPS will qualify for deduction under section 80C.
   
   

   There are two types of NPS accounts i.e., Tier I and Tier II, to which an individual can contribute.
   

    

   Section 80CCD provides deduction in respect of contribution to individual pension accounts [Tier I account] under the NPS [referred to in section 20(2)(a) of the Pension Fund Regulatory and Development Authority Act, 2013 (PFRDA)] whereas deduction under section 80C is allowable in respect of contribution by Central Government employee to additional account [Tier II account] of NPS [referred to in section 20(3) of the PFRDA], which does not qualify for deduction under section 80CCD.

    

   Thus, the Tier II account is the additional account under NPS, a contribution to which would qualify for deduction under section 80C only in the hands of a Central Government employee.
   
   Repayment of housing loan including stamp duty, registration fee, and other expenses - Any payment made towards the cost of purchase or construction of a new residential house property.
   
   

   The income from such property –
   

   • should be chargeable to tax under the head “Income from house property”.
   • would have been chargeable to tax under the head “Income from house property” had it not been used for the assessee’s own residence.

     
6. The approved types of payments are as follows-
   
   • • Any installment or part payment of the amount due under any self-financing or other schemes of any development authority, Housing Board, or other authority engaged in the construction and sale of house property on an ownership basis; or
     • Any installment or part payment of the amount due to any company or cooperative society of which the assessee is a shareholder or member towards the cost of the house allotted to him; or
     • Repayment of the amount borrowed by the assessee from
     • The Central Government or any State Government
     • Any bank including a co-operative bank;
     • The Life Insurance Corporation;
     • The National Housing Bank;
     • Any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for the construction or purchase of houses in India for residential purposes which is eligible for deduction under section 36(1)(viii)
     • Any company in which the public is substantially interested or any cooperative society engaged in the business of financing the construction of houses;
     • The assessee’s employer, where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act;
     • The assessee’s employer where such employer is a public company or public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society.
     • Stamp duty, registration fee, and other expenses for the purposes of transfer of such house property to the assessee.
       
        
       Inadmissible payments: However, the following amounts do not qualify for a rebate
       • Admission fee, cost of share, and initial deposit which a shareholder of a company or a member of a co-operative society has to pay for becoming a shareholder or member; or
       • The cost of any addition or alteration or renovation or repair of the house property after the issue of completion certificate in respect of the house property or after the house has been occupied by the assessee or any person on his behalf or after it has been let out; or
       • Any expenditure in respect of which deduction is allowable under section 24.
         
    
7. Subscription to National Savings Certificates VIII - Subscription to any Savings Certificates under the Government Savings Certificates Act, 1959 notified by the Central Government in the Official Gazette (i.e. National Savings Certificate (VIII Issue) issued under the Government Savings Certificates Act, 1959).
   
   
8. Subscription to certain equity shares or debentures - Subscription to equity shares or debentures forming part of any eligible issue of capital approved by the Board on an application made by a public company or as a subscription to any eligible issue of capital by any public financial institution in the prescribed form. A lock-in period of three years is provided in respect of such equity shares or debentures. 
   
   
   In case of any sale or transfer of shares or debentures within three years of the date of acquisition, the aggregate amount of deductions allowed in respect of such equity shares or debentures in the previous year or years preceding the previous year in which such sale or transfer has taken place shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to the such previous year.
    
   A person shall be treated as having acquired any shares or debentures on the date on which his name is entered in relation to those shares or debentures in the register of members or of debenture-holders, as the case may be, of the public company.
   
   
9. Subscription to certain units of mutual fund - Subscription to any units of any mutual fund referred to in section 10(23D) and approved by the Board on an application made by such mutual fund in the prescribed form. It is necessary that such units should be subscribed only in the eligible issue of capital of any company.

   
   Eligible issue of capital for (15) and (16) means an issue made by a public company formed and registered in India or a public financial institution and the entire proceeds of the issue are utilized wholly and exclusively for the purposes of any business referred to in section 80-IA(4).

   
   
10. Contribution to approved superannuation Fund - Contribution by an employee to an approved superannuation fund qualifies for deduction under section 80C.
    
    
11. Contribution to National Housing Bank (Tax Saving) Term Deposit Scheme, 2008 - Subscription to any deposit scheme or contribution to any pension fund set up by the National Housing Bank i.e., National Housing Bank (Tax Saving) Term Deposit Scheme, 2008.
    
    
12. Subscription to notified deposit scheme: Subscription to any such deposit scheme of
    
    

    • A public sector company that is engaged in providing long-term finance for the construction, or purchase of houses in India for residential purposes or
      
      
    • Any such deposit scheme of any authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, and villages or for both.
      
      

    The deposit scheme should be notified by the Central Government, for example, the public deposit scheme of HUDCO.
    

     
13. Subscription to notified bonds issued by NABARD - Subscription to such bonds issued by NABARD (as the Central Government may notify in the Official Gazette) qualifies for deduction under section 80C.
    
    
14. Premium paid in respect of a contract for a deferred annuity - Premium paid to effect and keep in force a contract for a deferred annuity on the life of the individual and/or his or her spouse or any child, provided such contract does not contain any provision for the exercise by the insured of an option to receive cash payments in lieu of the payment of the annuity. It is pertinent to note here that a contract for a deferred annuity need not necessarily be with an insurance company. It follows therefore that such a contract can be entered into with any person.
    
    
15. Unit-linked Insurance Plan 1971 -This plan includes contributions in the name of the individual, his or her spouse, or any child of the individual for participation in the Unit-linked Insurance Plan 1971. In the case of a HUF, the contribution can be in the name of any member. 
    
    
16. Contribution to Unit-linked Insurance Plan of LIC Mutual Fund - Contribution to Unit-Linked Insurance Plan of LIC Mutual Fund in the name of the individual, his or her spouse, or any child of the individual for participation in any Unit linked Insurance Plan of the LIC Mutual Fund. In the case of a HUF, the contribution can be in the name of any member.