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September 23, 2022

Itax Software

Income Tax Software

Income Tax – 8 Deductions available under Section 80C of the Income Tax Act 1961

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Section 80C of the Income Tax Act, 1961 provides for deduction of investment in equity linked savings schemes. This section covers plans where the premiums paid are used to contribute towards purchase or redemption of shares in the plan.

The provisions of section 80C of the Income Tax Act, 1961 are explained below.

To be eligible for deduction under this section, a person must have contributed towards the purchase or redemption of shares in a recognized equity-linked savings scheme during the previous year. Shares can be held directly through the nominee or through any other legal form.

The amount invested in such a scheme can be claimed as deduction only if it is available for withdrawal without penalty and if it is not treated as capital gain in computing taxable income. In other words, you cannot claim deduction for amounts that have already been taxed as capital gains.

A person may also be eligible for deduction under this section even if he has not actually made any payment for the purchase or redemption of shares in the scheme.

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