Introduction: Under Income tax act Section 80C is important section and need to be known by every tax payer. The reason behind this knowledge about this section will save you income tax & secure your future also through savings. Here I want enlist the questions which frequently asked by the tax payers & other and answers for the same.
1. What is about section 80C?
Section 80C under Income tax deals with the eligible savings for deduction under income tax and their limits.
2. Who can take deduction & benefit u/s.80C?
Under section 80C only to an Individual & HUF taxpayer can take deduction and benefit.
3. What is scope of Section 80C?
Deduction is available on the basis of specified qualifying investments & contributions made by tax payer during the previous year.
4. What is the maximum deduction available under this section?
The maximum amount deductible under this section 80C,80CCC & 80CCD cannot exceed Rs.1 lakh
5. What is the basis the deduction can avail under this section?
The purpose of this section giving deduction on eligible investment on payment basis. Payment made under the specified schemes during the previous year are qualified for deduction, regardless of the fact whether the payment relate to this previous year or years preceding year or following the previous year.
6. What is the deduction available for LIC premium under this section?
LIC premium paid by the taxpayer for insurance policy on own life, spouse life and life of any children (Child may dependent, independent, married or un married) & incase of HUF the policy can be any member of the family.
7. What is treatment of provident fund contribution?
Employee share of contribution to statutory provident fund or recognized provident fund eligible for deduction under this section
8. What is treatment of Public provident fund contribution under this section?
Contribution towards Public provident scheme eligible savings under this section. According to this section deposit made by the tax payer to his own account, spouse a/c or account of any child is eligible for deduction.PPF contribution under income tax no ceiling limit, but as per PPF scheme the maximum limit is Rs.70000/- . In case of HUF amount deposited in account of any member is eligible for deduction.
9. Purchase of National savings certificate is eligible deduction u/s.80C?
Yes. Purchase of NSC by taxpayer in his name is eligible under this section. But NSC benefit not available for HUF tax payer.
10. Is the interest accrued under NSC also eligible for deduction u/s.80C?
Yes. NSC interest deemed as reinvested and also eligible for deduction under this section for first 5 years, however the same interest income needs to be show under Income from other sources.
11. What deduction available for children school fees under this section?
Only tuition fees paid to any university, college, educational institution in India for full time education for any 2 children of tax payer. Other fees like development fees, donation not eligible under this section.
12. Is this section allows deduction on re payment of Housing loan?
Yes. Any payment towards the cost of purchase/ construction of a new residential property is eligible for deduction under this section. This includes repayment of the principal amount of loan which taken from Government, banks, cooperative bank, LIC, National housing bank, Taxpayer`s employer where such employer is Public sector company/University/Cooperative society.
13. What does include the cost of purchase/ Construction of a residential property?
Cost of purchase, Stamp duty charges, registration charges and other expenses for the purpose of transfer of such house property to the tax payer. Interest payment on such loan taken on house purpose is not eligible for deduction under this section.
14. Is repayment of loan take for renovation/repair of house property eligible for deduction under this section?
No. cost of repair, renovation of residential property not eligible for section 80C deduction.
15. Is post office savings scheme eligible for deduction u/s 80C?
Yes. Deposit made in 5 Year time deposit scheme in post office is eligible deduction under this section.
Dear all, this is an attempt to give basic idea of section 80C of Income tax act to all. I am trying to cover this in 3 parts. And next 2 parts will be submitted soon.
CMA. Ramesh Krishnan