Tax deduction under section 80C is available to an individual or HUF who has invested in certain specified investments like PPF, life insurance and/or have incurred certain expenses like tuition fee.
In budget 2014, the earlier maximum tax deduction limit of section 80C has been increased from Rs. 100000 to Rs. 150000 by keeping the list of investments and expenses unchanged.
If your investments and/or amount spent on specified expenses as listed in section 80C are more than Rs. 100000 in earlier years and due to that you are unable to take extra benefit in earlier year’s income tax return then you need not worry this year. Now for the financial year 2014-2015, you can claim tax deduction in your income tax return up to a maximum limit of Rs. 150000.
Here is an analysis of tax saving because of increase in section 80C tax deduction limit;
| Income | Calculations | Extra Tax saving |
| Up to Rs. 500000 | (Rs. 50000 * 10%) + (50000*10%*3%) | Rs.5150 |
| Up to Rs. 1000000 | (Rs. 50000 * 20%) + (Rs. 50000*20%*3%) | Rs 10300 |
| Above Rs. 1000000 below Rs. 1 Crore | (Rs. 50000*30%) + (Rs.50000*30%*3%) | Rs. 15450 |
| Above Rs. 1 Crore | (Rs. 50000*30%) + 10% surcharge on (Rs. 50000*30%) + [(Rs.50000*30%)+(Rs. 50000*10%)*3%] | Rs. 16995 |
Provisions of Section 80CCE are also amended to provide aggregate of the tax deductions under section 80C, 80CCC and 80CCD shall not exceed Rs. 150000.
Specific changes to provident fund act also introduced to increase the maximum investment limit of PPF scheme from Rs. 100000 to Rs. 150000. Due to this change, one can invest only in PPF scheme to get entire tax deduction of Section 80C or you can invest in PPF in addition to other investments as listed in Section 80C to claim up to the maximum tax deduction of Rs. 150000.
