Correct Answer - Option 1 : Rs. 1,50,000
The correct answer is Rs. 1,50,000
Tax deduction: A tax deduction is a reduction in tax liability that tends to reduce a person's or an organization's tax burden. Deductions are the expenses incurred by a taxpayer during the year on which government does not charge tax and thus can subtracted from the assessee's gross income to determine the amount of tax owing.
Tax Deduction under 80C:
The investments in the following schemes are deductible under the Section 80C of tax deduction: -
- PPF , EPF,
- LIC premium
- Equity linked saving scheme
- Principal amount payment towards home loan
- stamp duty and registration charges for purchase of property
- Sukanya smriddhi yojana (SSY)
- National saving certificate (NSC)
- Senior citizen savings scheme (SCSS)
- ULIP
- tax saving FD for 5 years
- Infrastructure bonds etc.
Section 80C includes subsections, 80CCC, 80CCD (1), 80CCD (1b) and 80CCD (2)
| Section |
Eligible Investment for Tax Deduction |
| 80CCC- Deduction for life insurance annuity plan |
Payments to annuity pension schemes can be deducted under Section 80CCC. The annuity pension or amount received upon surrender of the annuity is taxable in the year of receipt, including any interest or bonus accrued on the annuity. |
| 80CCD (1)- Deduction for NPS |
Employee’s contribution under section 80CCD (1) Maximum deduction allowed is least of the following:
-
10% of salary (in case taxpayer is employee)
-
20% of gross total income (in case of self-employed)
-
Rs 1.5 Lakh (limit allowed u/s 80C)
|
| 80CCD (1b)- Deduction for NPS |
- Additional deduction of Rs 50,000 is allowed for amount deposited to NPS account
- Contributions to Atal Pension Yojana is also eligible for deduction.
|
| 80CCD (2)- Deduction for NPS |
Under this clause, employers can deduct up to 10% of their basic wage plus dearness allowance as a contribution. Only salaried employees are eligible for this benefit; self-employed individuals are excluded. |
The maximum permissible tax deduction under Section 80C including all of its subsections is Rs. 1,50,000.
