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32.  Individual and HUFs are entitled to Claim Tax Deduction in the Name of Spouse and Children

Individuals and HUFs are entitled to claim tax deduction under Section 80C of the Income tax Act, 1961 on specified investments and expenses, upto a maximum of ` 1.5 lakh for FY 2014-15 relevant to the assessment year 2015-2016. This deduction is available irrespective of the tax payer’s taxable income.

Tax payers would remember that from FY 2005-06 the concept of granting tax rebate for investments etc. under the earlier Section 88 of the Income Tax Act 1961 has beerr done away with. Now, as a result of the insertion of new Section 80C to the Income Tax Act 1961, a deduction would be permissible to all individuals and Hindu undivided families in respect of investment made by them, or expenses incurred by them, as laid out in the said Section 80C. The maximum amount that can be invested/spent for claiming the tax deduction is ` 1.5 lakh.

The best part of the new provision is that the tax payer can invest the entire sum of ` 1.5 lakh in any one of the specified items, or spread it among any number of the items without any limit. Thus, if an individual is, say interested to pay ` 1.5 lakh only for Life Insurance Premium, then he can do so and enjoy full deduction to the extent of ` 1.5 lakh. Similarly, another tax payer wishes, he can offer for the full extent of the deduction on housing loan repayment. Similarly, one another person, say is interested to spend the entire ` 1.5 lakh on the education of his children; he can also do so and enjoy full tax benefit of deduction under the new Section 80C of the Income Tax Act, 1961.

The following is the list of main items which are eligible for tax deduction of ` 1 lakh as per Section 80C:

1.       Payment for Life Insurance Premium

2.       Payment for Deferred Annuity Plan

3.       Deferred Annuity payable by Government

4.       Contribution to Public Provident Fund

5.       Contribution to Provident fund set up by Central Government

6.       Contribution to Recognised Provident Fund

7.       Contribution to recognised superannuation fund

8.       Subscription to any security or deposit notified by Government

9.       Subscription to saving certificates

10.     Subscription for Unit Linked Insurance Plan 1971

11.     Contribution for Unit Linked Insurance Plan of LIC Mutual Fund

12.     Payment for Annuity plan of LIC or any other Insurer

13.     Subscription to units of notified mutual funds

14.     Contribution to notified pension fund of mutual fund

15.     Pension fund set up by National Housing Bank

16.     Subscription to deposit scheme of public sector company engaged in providing long term finance for house.

17.     Tuition fees of two children in India

18.     Payment of instalment for self-financing of a residential property for repayment of loan.

19.     Subscription to equity shares or debentures as approved for infrastructure.

20.     Subscription to any units of Mutual Fund as approved by the Central Board of Direct Taxes.

21.     Term-deposit for fixed period of not less than five years with a scheduled bank.

22.     Notified Bonds of NABARD.


23.     P. 0. Time Deposits

24.     Deposit in Senior Citizens Savings Scheme.


Note: (1) Total amount allowed as deduction is limited to ` 1 lakh inclusive of deduction as per Sections 80C, 8OCCC, 8OCCD and New Section 8OCCE


(2)      The deduction for items 1, 5, 10 and 11 alone would be available to an individual for self, wife and children. For other items the tax deduction is only for the individual tax payer.

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