Mr X deposits 65,000 in a 5-year term deposit with the Post Office to avail deduction under Section 80C. Assuming Mr X does not opt for the concessional regime u/s 115BAC, what is correct?
Explanation & Strategy
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Investing in 5-year Post Office time deposits is a perfectly legitimate tax-saving instrument explicitly covered under Section 80C. Tax planning through legally available deductions is completely lawful — it's neither tax evasion (which involves illegal concealment of income) nor tax avoidance (which involves exploiting loopholes). The Supreme Court in UOI vs. Azadi Bachao Andolan recognized that taxpayers are entitled to arrange their affairs to minimize tax within the framework of the law.
The text reads: Section 80C IT Act: Deduction of up to Rs. 1,50,000 for investments in specified instruments including PPF, NSC, 5-year Post Office time deposits, ELSS, life insurance premiums, etc.