Section 80C of the Income Tax Act, 1961 provides for a deduction of investment in equity-linked saving schemes. This section covers such schemes where the premium paid is used to contribute towards the purchase or redemption of shares in the scheme.
The provisions of section 80C of the Income Tax Act, 1961 are explained below.
To be eligible for deduction under this section an individual must have contributed towards the purchase or redemption of shares in a recognised equity-linked saving scheme during the previous year. The shares can be held directly, through a nominee, or through any other legal form.
The amount invested in such a scheme can be claimed as deduction only if it is available to withdraw without penalty and if it is not treated as capital gains in computing taxable income. In other words, you cannot claim deduction for amounts that have already been taxed as capital gains.
An individual may also be eligible for deduction under this section even if he did not actually make any payments towards the purchase or redemption of shares in the scheme.
