Question

Mr. X deposits ₹65,000 in the term deposit of 5 years with the Post Office to avail tax deduction under Section 80C. Assuming Mr. X does not opt for concessional tax regime u/s 115BAC of the Income Tax Act, 1961. On the basis of the above problem, select the correct option.

• A. Mr. X is not guilty of either tax evasion/tax avoidance.
• B. No tax deduction can be availed under Section 80C.
• C. It is an unlawful act to treat a personal expenditure.
• D. Mr. X is guilty of tax evasion/tax avoidance.

Hint:

Tax planning using legitimate deductions like 80C is lawful; it differs from tax evasion.

Answer 1

The Correct Option is A

Section 80C of the Income Tax Act, 1961 allows deductions for specific investments, including 5-year fixed deposits in post offices. Since Mr. X has invested in a permitted instrument and has not opted for Section 115BAC concessional regime, he is eligible for deduction. This is a lawful act and not tax evasion or avoidance.