What is Section 80C?

Section 80C, including Sections 80CCC & 80CCD, prescribes a combination of activities. If you want to utilise 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 PY 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 PY.

How to avail tax deductions under 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) (under Section 80CCD) Atal Pension Yojana Retirement Plan
Equity Linked Savings Scheme (ELSS) Equity Mutual Fund
Pension Plans from Insurance Companies (under Section 80CCC) 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 a house
Home Loan Principal Payment Purchase of house on loan

Table 1: Investments & other venues for Deduction under Sections 80C, 80CCC & 80CCD

Section 80C Deductions List

ELSS funds

Equity-Linked Savings Scheme is a type of mutual fund that invests in equity and equity-related instruments. ELSS funds have a lock-in period of three years.

National Pension Scheme

The National Pension Scheme is a government-backed savings scheme for employees of private, public, and unorganised sectors. It cannot be used for investment by the armed forces. The NPS has a lock-in period for up to the age of 60 years.

ULIPs

A Unit-Linked Insurance Plan (ULIP) is a life insurance plan that offers investment opportunities along with a life cover. It offers the choice to invest in equity, debt and hybrid funds to fulfil your financial goals. The returns from a ULIP can vary based on the funds you choose. ULIPs have a five-year lock-in period.

Tax saving fixed deposits

These type of fixed deposits offer tax^ benefits subject to conditions under Section 80C of the Income Tax Act, 1961. They have a lock-in period of five years. Fixed deposits offer fixed returns.

Public Provident Fund

PPF is a government savings scheme that can be used for long-term financial goals. It matures 15 years after the date of account opening. However, you can withdraw money from your PPF account every year from the seventh financial year.

Senior Citizen Savings Scheme

It is a savings scheme for people over the age of 60. However, it can be used by people over 50 and 55 years under some special circumstances. It has a lock-in period of five years, after which it can be closed or extended for another three years.

Sukanya Samriddhi Yojana

The Sukanya Samriddhi Yojana is a savings scheme backed by the Government of India. It is an investment option for parents who have a girl child. The plan matures when the girl child reaches the age of 21.

How much can be claimed under Section 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 under Sections 80C, 80CCC & 80CCD(1).

How does ICICI Prudential Life help you save tax?

ICICI Prudential Life Insurance plans offer tax1 benefits subject to conditions under Section 80C of the Income Tax Act, 1961. The premiums paid towards the life insurance plan qualify for tax deductions of up to ₹ 1.5 lakh in a financial year. Additionally, the maturity benefits under the policy are also exempt subject to the conditions of Section 10(10D) of the Income Tax Act, 1961.

COMP/DOC/Jan/2023/301/2155

How long should you stay invested?

This is an important obligation often ignored by taxpayers while investing under Sections 80C, 80CCC & 80CCD. Different investment instruments have different time limits which you must follow 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 under Section 80C

Thus, you can reduce your total taxable income up to `200,000/- by fully utilising Sections 80C, 80CCC and 80CCD.

Are 80C and 80CCC the same?

Section 80C provides deductions on various investments up to ₹ 1.5 lakh per year from your taxable income. In comparison, Section 80CCC provides a deduction of up to ₹ 1.5 lakh per annum for the contribution made by an individual towards specified pension funds. Section 80CCE thereby limits the total exemption limit up to ₹ 1.5 lakh per annum.

What is the maximum tax exemption under Section 80C?

You can claim a maximum deduction of up to ₹ 1.5 lakh from your total income under Section 80C.

Who is eligible for an 80C deduction?

It is available for individuals and Hindu Undivided Families (HUFs).

How much should I invest to save tax?

To save tax, invest ₹ 1.5 lakh under Section 80C. Buy medical insurance and claim a deduction of up to ₹ 25,000/- (₹ 50,000/- for senior citizens) for medical insurance premiums paid under Section 80D. Also, an investment of up to ₹ 50,000/- in NPS could help you with additional tax savings under Section 80CCD (1B).  
COMP/DOC/Feb/2020/192/3239
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Unlike traditional products, Unit Linked Insurance Products are subject to market risk, which affects 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.

1Tax benefit of ₹ 54,600/- (₹ 46,800/- under Section 80C & ₹ 7,800/- under Section 80D) is calculated at the highest tax slab rate of 31.2% (including Cess excluding surcharge) on life insurance premium under Section 80C of ₹ 1,50,000/- and health premium under Section 80D of ₹ 25,000/-. Tax benefits under the policy are subject to conditions under Sections 80C, 80D, 10(10D) and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on the above.

2Tax benefit of ₹ 7,800/- is calculated at the highest tax slab rate of 31.2% (including Cess excluding surcharge) on health premium under Section 80D of ₹ 25,000/-. Tax benefits under the policy are subject to conditions under Sections 80D, 10(10D) and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on the above.

3Tax benefit of ₹ 46,800/- is calculated at the highest tax slab rate of 31.2% (including Cess excluding surcharge) on life insurance premium under Section 80C of ₹ 1,50,000/-. Tax benefits under the policy are subject to conditions under Sections 80C, 80D, 10(10D), 115BAC and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on the above.

^Tax benefits under the policy are subject to conditions under Sections 80C, 80D, 80CCC, 80CCE and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on the above.

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ICICI Pru iProtect Smart UIN:

ICICI Pru Heart/Cancer Protect UIN: 105N154V03

SmartKid with ICICI Pru Smart Life UIN: 105L145V08

ICICI Pru Future Perfect UIN: 105N153V02

ICICI Pru Signature UIN: 105L177V06

ICICI Pru Guaranteed Income For Tomorrow UIN: 105N182V08

ICICI Pru Guaranteed Income For Tomorrow (Long-term) UIN:

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

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