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Deduction under section 80C

 

Section 80C provides deduction to Individual/HUF in respect of various items like life insurance premium, investment in Public Provident Fund, investment in NSC, investment in notified units of mutual funds, deposit in Sukanya Samriddhi account, investment in mutual funds, amount paid for tution fees, repayment of principal component of housing loan, investment in Post Office Time Deposit Scheme, Senior Citizens Saving Scheme, etc.

Deduction on account of payment of life insurance premium is restricted to 10% of sum assured.

Overall deduction u/s 80C (along with deduction u/s 80CCC & 80CCD(1)) allowed is up to Rs. 1,50,000.

Minimum holding period

Following is the minimum holding period in respect of certain investments, deposits, etc., prescribed above which should be kept in mind while claiming deduction under section 80C:

Nature of Investments/Deposits Minimum Holding Period
ULIP of UTI or LIC5 years
Life insurance policy 2 years
Senior Citizens Saving Scheme and Post Office Time Deposit5 years
Principal Repayment of loan including Cost of Purchase/construction of residential house property5 years

If any of the aforesaid investments, subscriptions, etc., is terminated, sold, etc., before the minimum holding period specified above, then the deduction allowed in earlier years would be deemed as income of the previous year of termination, sale, etc. Further, no deduction will be allowed in respect of contribution, payment, etc., made towards such policy, units, etc. (i.e., which is terminated) during the year of termination.

In case of withdrawal during the life time of depositor from Senior Citizens Savings

Scheme or Post Office Time Deposit before the aforesaid period (i.e., before 5 years), the amount received on such withdrawal (excluding interest which is already taxed in earlier years) will be charged to tax in the year of withdrawal.‚Äč

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