Budget 2025: Maximise Tax Deductions Under Section 80C In Just Two Minutes
Section 80C broadly includes contributions to insurance premium, Public Provident Fund, Employee Provident Fund, National Savings Certificate, ELSS along with others.
As things stand under the old tax regime, taxpayers can claim a deduction of up to Rs 1,50,000 under this section. The provision is basically a collection of tax-free instruments that one can invest in.
Section 80C broadly includes contributions to insurance premiums, public provident funds, employee provident funds, national savings certificates, equity-linked savings scheme mutual funds, children's school fees, and payment of principal in housing loans, among other things.
An individual can invest up to Rs 1,50,000 every year. This can be claimed as a deduction every year from the gross total income of the taxpayer as well. It is also important to note that companies and partnership firms cannot avail themselves of the benefits of this deduction.
Options And Interest
ELSS funds on an average deliver 12% to 15% returns. These schemes also come in with a lock-in period of three years.
NPS scheme, while is not covered under Section 80C, allows taxpayers to claim an additional deduction of Rs 50,000 under Section 80CCD (1B). This option can deliver with an 8% to 10% interest rate, and will remain locked till the individual retires. This means that the corpus can be withdrawn when the individual turns 60 years old.
A unit-linked insurance plan, or a ULIP, will bring the investor an eight to 10% interest. These units will have a five-year lock-in period.
Investing in a Public Provident Fund will return 7.90% interest. This investment comes with a lock-in period of 15 years as well.
Sukanya Samriddhi Yojana is also a scheme that taxpayers can invest in. This scheme gives an 8.50% interest. The funds can only be withdrawn when the girl turns 21 years old. Partial withdrawal is possible at 18 years old.
