Deduction in respect of LIC premium, Deferred Annuity, PF, etc. Sec80C

Deduction in respect of LIC premium, Deferred Annuity, PF, etc. Sec80C
In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year, being the aggregate of the sums undermentioned, as does not exceed one lakh rupees.
1. Life Insurance premium- Paid by the assessee during an assessment year on the life of himself, spouse and children and also in case of HUF any member of family.
Important point to be kept in mind is that such premium (during the year) should not exceed 20% of the capital sum assured (amount of final claim). This is important because many people in order to get greater tax benefits deposit amount in excess of 20% of assured amount, but they do not get corresponding exemption.
For e.g. where an assessee has taken life insurance policy of Rs.100000 and has deposited premium of Rs.30000 during a previous year in such a case he will get deduction upto Rs.20000(20% of Rs.100000).
Also, deduction is allowed for amount actually paid and not for amount due.
2. Contribution by an employee to Recognised Provident Fund or a Statutory Fund, approved superannuation fund.

3. Contribution by an individual to public provident fund – PPF is one of the safest way to invest money and to get tax benefits. The current rate of interest on PPF is 8% which is also tax exempt. Thus a person investing in PPF does not only get benefit of deduction of amount deposited in PPF A/c during a year, he will also earn tax exempt income on it. PPF account can be opened in a bank or a post office having such facilities.

4. Amount of repayment of loan taken for purchase or construction of house( residential)
- deduction shall be allowed out of the gross total income of the assessee for the amount paid by him during the year as repayment of loan taken for purchase or construction of residential house. The amount allowed is of principal amount and not the interest on such loan ,however a person can claim deduction of interest U/s 24(b) from the income under head house property.
Deduction is allowed on paid basis. Such a loan can be taken from Central or State Govt., any bank, LIC housing scheme, National housing bank, employer if such an employer is a statutory corporation or a company, or a cooperative society.
The purpose of loan amount should be purchase or construction and has to be in the name of the assessee and repayment has too be made by the same person.
5. Tuition Fees – An individual shall be allowed deduction of “Tuition Fees” expensed out of his income towards the education of his children subject to maximum of 2 children.
It will not include donations or development fees.
Educational institute can be a university, college, school or other educational Institute situated in “India”.
Type of education shall be full time and not correspondence based.
6. Deductions are also allowed of the subscription of NSC VII, equity linked saving scheme of UTI, Fixed deposits with lock-in period of 5 yrs, mutual funds (tax –saving) of public company, bonds of NABARD etc.
7. 2 new options have been added in this list i.e. the Senior citizens saving scheme and the 5 year term deposits of Post offices.


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