What is Section 80C?

Section 80C, including section 80CCC & 80CCD, prescribes combination of activities. If you want to utilize your income in some of these activities during the Previous Year (PY) you can claim the amount as a deduction from your total taxable income for the PY.

For Example:Assuming you earned a gross total income of `10,00,000 as taxable income in P.Y. 2015-16 (Assessment Year will be 2016-17 when you will estimate and pay the tax on this income). If you invest `100,000 of this income in any or multiple activities listed under section 80C, your total taxable income will be reduced to `900,000 for the P.Y.

How to avail benefits of Section 80C?

Activities under section 80C can be divided into two parts:

  1. Investment Activities: You park your money in an investment for some time and then get it back.
  2. Spending Activities: You spend your money on the activities listed under section 80C.
Investments Nature of Investment
Fixed Income Products
Provident Fund (EPF/VPF) Retirement
Public Provident Fund (PPF) Retirement/Long Term Fixed Income
National Saving Certificate (NSC) Long Term Fixed Income
Tax Saving 5 years FD from Banks Long Term Debt
5 years Post Office Time Deposit (POTD) Long Term Debt
Senior Citizen Saving Scheme(SCSS) Long Term Debt
NHB deposit scheme Long Term Debt
Market-Linked Products
Life Insurance Premium (Participating Endowment Plans) Life Insurance + Investment
New Pension Scheme (NPS) (u/s 80CCD) Atal Pension Yojana Retirement Plan
Equity Linked Savings Scheme (ELSS) Equity Mutual Fund
Pension Plans from Insurance Companies Retirement Annuity
Unit Linked Insurance Plan (ULIP) Life Insurance + Investment
Spending Activities
Tuition fee for 2 children Full-time Education cost
Stamp duty and registration cost of the House Only at the time of purchase of house
Home Loan Principal Payment Purchase of house on loan

Table 1: Investments & other venues for Deduction u/s 80C, 80CCC & 80CCD

How much can be claimed u/s 80C?

There are limits to the amounts that can be claimed for different activities and the total that can be claimed under these activities.

The total amount that can be claimed under sections 80C, 80CCC and 80CCD(1) combined is `150,000.

There is an option to increase the total deduction by an additional `50,000 under section 80CCD. Here’s how it works:

*80 CCD(1) and 80 CCD(2) applies for contributions by employee and employer respectively.

*80CCD (1) & 80CCD(2)
Deductible in the year contribution is made, up to 10% of the salary
Additional Deduction of ` 50,000 over and above 80C limit

Table 2: Deductions on Contribution to NPS Schemes

Note that, the deduction of `50,000 is available on NPS over and above `150,000 deduction available U/S 80C, 80CCC & 80CCD(1).

How long should you stay invested?

This is an important obligation often ignored by taxpayers while investing under section 80C, 80CCC & 80CCD. Different investment instruments have different time limits which you must followed to avoid reversal of the deduction:

Investment Minimum Holding Period
Unit Linked Insurance Plan 5 years
Term Life Insurance Plan 2 years
Repayment of Home Loan Principal/ Cost of purchase or construction of residential house 5 years
Deposit in Senior Citizen Saving Scheme 5 years
Time Deposit in Post Office/Bank 5 years
Equity Linked Savings Scheme (ELSS) 3 years
PPF 6 years
NPS Till Retirement

Table 3: Minimum Holding Period for Various Instruments u/s 80C

Thus, you can reduce your total taxable income up to `200,000 by fully utilizing sections 80C, 80CCC and 80CCD.

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Unlike traditional products, Unit Linked insurance products are subject to market risk, which affect the Net Asset Values & the customer shall be responsible for his/her decision. The names of the Company, Product names or fund options do not indicate their quality or future guidance on returns. Funds do not offer guaranteed or assured returns.

Tax benefit of `54,075 is calculated at highest tax slab rate of 30.9% (including Cess) on insurance premium of `1,50,000 u/s 80C/80CCC and health premium of `25,000 u/s 80D of the Income Tax Act, 1961. Tax benefits under the policy are subject to conditions under Sec. 80C, 80D and Sec 10(10D) of the Income Tax Act, 1961. Applicable taxes will be charged extra as per prevailing rates. Tax laws are subject to amendments from time to time.

ICICI Pru iProtect Smart (UIN: 105N151V01)

ADVT No - W/II/1090/2016-17

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