Maximize Your Savings: A Complete Guide to Tax Benefits Under Section 80C

What is Section 80C?

Section 80C of the Income Tax Act, 1961, helps to save taxes by making smart investments. It allows to reduce taxable income while also growing money through various investment options.

Section 80C is a popular choice for taxpayers to save on taxes. Many people use this section to reduce their tax burden. If you want to understand Section 80C, it is also important to know about Section 80CCC and Section 80CCD because they all offer tax-saving benefits on different types of investments.

What is Section 80CCC?

Under Section 80CCC, you can claim a tax deduction for investments in pension plans offered by LIC or other insurance companies. The plan must be a pension-paying scheme to be eligible for the deduction.

What is Section 80CCD(1)?

Section 80CCD provides a tax deduction for contributions to the Central Government’s pension scheme. A deduction can be claimed if 10% of the salary is invested in the pension plan, with a maximum limit of Rs. 1.5 lakh.

What is Section 80CCD(1B)?

Under this section, an additional tax deduction of up to Rs. 50,000 can be claimed by investing in an NPS account. Also, up to 60% of the maturity amount received from NPS is tax-free. The monthly annuity received is taxable as income.

Most of the taxpayers still prefer the old tax regime for paying tax, under the old tax regime, a tax deduction of up to Rs. 1.5 lakh can be claimed under Section 80C. On the other hand, the new tax regime offers only a few tax deductions.

The financial year 2024-25 is ending soon, and the new financial year 2025-26 will begin on April 1, 2025. Those who have not saved on taxes yet still have time until March 31, 2025.