Proposed changes in 80(C) in Direct Tax Code.

POSTED BY naveenarichwal ON September 24, 2010 11:59 pm COMMENTS (6)


Sir I am investing in LIC(Rs 48000/-), ELSS(Rs26000),EPF(Rs26000) to limit of Rs 100,000/-. + Rs4440 in Mediclaim yearly(Financial year).

What changes will i have to bring about in my Tax saving investments when in 2012, DTC comes into action.

Please guide me.     Thanks

6 replies on this article “Proposed changes in 80(C) in Direct Tax Code.”

  1. Manish Bansal says:

    No ELSS wont be eligible for tax deduction

  2. There is lots of confusion over this matter. First of all, it is in draft mode. It will go many changes before it becomes a bill.

    In draft, it is proposed, Sec 80C benefit will not be given mutual funds ELSS. ULIP’s will be given this benefit for a max. of Rs.50,000 p.a. premium. This amount includes your children school fees & mediclaim premium.

    Sec80C will continue with PPF (limit Rs.70,000 in a year), NPS & other pension products. The maturity amount of these schemes will be in EEE.

    Even then, I suggest you to review & plan your portfolio, once it takes the shape of final bill.

    Hope it will your.

  3. Manish Bansal says:


    Currently, the Income Tax Act offers individuals an annual deduction of Rs 1 lakh under 80C that can be used for instruments such as PPF (up to a cap of Rs 70,000), PF, NPS scheme, ELSS, premium for pure life insurance or ULIP, principal repayment of home loan, NSC, fixed deposits with a maturity of five years, payment of tuition fees for full-time education for up to two children.

    In the current financial year (April 2010 through March 2011), one can get an additional deduction of Rs 20,000 for investing in certain notified infrastructure bonds under 80CCF. Additionally, 80D gives a deduction of Rs 15,000 towards medical insurance.

    Under the DTC Bill, some of the above deductions have changed. What was previously available as the 80C deduction of Rs 1 lakh is now available as a deduction towards investments only in retiral accounts such as PPF, PF, NPS and in savings schemes as notified by the government. These are all eligible for taxation under EEE treatment.

    EEE refers to the tax incidence – exempt at time of investment, exempt during accumulation and exempt at withdrawal. These will be available for the tax year starting April 1, 2012.

    Additionally, an aggregate deduction of Rs 50,000 is available for premium for pure life insurance, health insurance and tuition fees for two children.

    As a result, the total deduction available is Rs 1.5 lakhs.

    Please note that under the previous 80C deduction investments in ELSS and ULIPs were eligible for the Rs 1 lakh deduction, as was a deduction towards repayment of principal for an outstanding home loan. Under the DTC Bill all these three options are no longer eligible for a deduction.

  4. Gaurav Malik says:

    You can try the NPS ( NEw Pension Scheme) this will also fall under the EEE category. EEE Category is that the withdrawal income would not be taxable and it is more of a corpus which will help you in retirement. 50% of the amount can be invested in equity. It has two schemes Tier 1 and Tier 2. I have done a complete research on it and can share it with you. I am sure Manish would also be able to provide you good inputs on the same.

  5. Dr Naveen Arichwal says:

    Yes true but sir i want to know the range of product are available in 80(C) in DTC . If i have the option of investing Rs 300,000/- ,than where shall i invest, is there any Equity Linked tax saving schemes available in the option.

  6. Manish Bansal says:

    80C limit increase

    It is proposed in the New Direct Tax Code to increase the 80C limit to Rs 3 lakh (Rs 300,000) from the current Rs 1 lakh (Rs 100,000). There may be a marginal increase in this limit in the current Budget.

    The increase in limit is proposed to be applicable to individuals and HUFs (Hindu Unified Families).

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