Section 80C Tax Deduction Limit

Section 80C Tax Deduction Limit : In the recently announced Indian Budget 2024, the Finance Minister Nirmala Sitharaman has decided to retain the Section 80C tax deduction limit at Rs 1.5 lakh for the current fiscal year 2023-24 and the upcoming fiscal year 2024-25. Section 80C of the Income-tax Act offers individuals opportunities to reduce their gross taxable income by up to Rs 1.5 lakh annually through specified investments and expenses.

Understand, Section 80C Tax Deduction Limit

Eligible investments include options like EPF, PPF, ELSS mutual funds, NSC, and 5-year tax-saving fixed deposits with banks or post offices. Additionally, premiums paid towards life insurance policies also qualify for tax benefits under this section.

Each investment option under Section 80C has specific limits, rates of return, liquidity, and taxation rules for the returns earned. For example, while PPF investments are capped at Rs 1.5 lakh per financial year, there is no upper limit for investments in ELSS mutual funds, although the deduction remains limited to Rs 1.5 lakh.

In cases where specific investments are not feasible, taxpayers can still benefit from Section 80C deductions through expenses such as principal repayment of home loans, tuition fees for children, and stamp duty payments related to property purchases.

Since the fiscal year 2020-21, taxpayers without business income must choose between the old and new tax regimes annually. Starting from the fiscal year 2023-24, the new tax regime is the default choice, making it essential for those seeking Section 80C deductions to opt for the old tax regime.

Understanding these regulations is crucial for effective tax planning and investment decisions.

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