Your 4-point guide to tax-saving under Section 80C

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As we inch closer towards the end of the financial year, most of us are in rush to make tax-saving investments and submitting the necessary documents to the employer to avoid excess TDS.

Deductions under Section 80 C of the Income Tax Act are most commonly used by individuals to bring down their tax liabilities.

Here’s a look at the features and investment options available:

What is Section 80C?

You can claim tax deduction on investments up to Rs 1.5 lakh in avenues specified under section 80C of the Income Tax Act. To put this into perspective, if your gross total income is Rs 10 lakh and you invest Rs 1.5 lakh in avenues specified under section 80C, your taxable income will be reduced to Rs 8.5 lakh.

Investment avenues under Section 80C

Investments such as Employee Provident Fund(EPF), Public Provident Fund (PPF), National Saving Certificate (NSC), Sukanya SmridhiYojana (SSY) and Post Office Time Deposit fall under the ambit of section 80C. Besides, money paid towards life insurance premium, children’s tuition fees, equity-linked saving scheme (ELSS), repayment of principal of home loan, NPS contribution, are also eligible for 80 deduction.

Deadline 

You must invest before the end of the given financial year i.e. 31 March to claim the 80C deductions. If you miss this deadline, you won’t be eligible for claim tax deduction for the given fiscal.

Submitting investment proofs

Salaried people usually submit the proof of investment to their employers to avoid excess TDS. The taxes deducted at source (TDS) is covered under Section 192 of the Income-tax Act and allows the employer to withhold taxes at the time of payment of salaries. Your employer computes your taxable income based on the investment proofs submitted by you in the previous fiscal.