Section 80C has become effective with effect from 1st April, 2006 as a replacement to the earlier Section 88 with almost same investment mix available in Section 88. Even the section 80CCC on pension scheme contributions was merged with the above 80C. However, this new section has allowed a major change in the method of providing the tax benefit.
Section 80C of the Income Tax Act allows certain investments and expenditure to be tax-exempt. One must plan investments well and spread it out across the various instruments specified under this section to avail maximum tax benefit. Unlike Section 88, there are no sub-limits and is irrespective of how much you earn and under which tax bracket you fall.
The total limit under this section is Rs 1 lakh. Included under this heading are many small savings schemes like NSC, PPF, life insurance, ELSS and other pension plans. Payment of life insurance premiums and investment in specified government infrastructure bonds are also eligible for deduction under Section 80C.
Most of the Income Tax payees try to save tax by saving under Section 80C of the Income Tax Act. However, it is important to know the Section in total so that one can make best use of the options available for exemption under income tax Act. This section provides tax rebate not only for the investments you made but also for the expenditures you incurred to acquire various assets.
The investments that fall under Section 80C can be broadly classified as contributions / investments to:
• Provident Fund
• Public Provident Fund
• Life insurance premium
• Pension plans
• Equity Linked Saving Schemes of mutual funds
• Infrastructure bonds
• National Savings Certificate
Source : http://www.indianmoney.com/article-display.php?cat_id=1&sub_id=110&aid=105&ahead=Definition%2520of%2520Section%252080C%2520of%2520the%2520Income%2520Tax%2520Act%2520and%2520the%2520benefits%2520available
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