How to Claim Tax Deductions Under Section 80C, 80D, and 80E and Maximize Savings in Your ITR Filing
- Nimisha Panda
- May 19
- 9 min read
Tax deductions under Sections 80C, 80D, and 80E are pivotal in reducing your taxable income and maximizing your savings during the Income Tax Return (ITR) filing process. These deductions are designed to encourage savings, investment in insurance, and education. By making informed choices regarding eligible deductions, you can significantly reduce your overall tax liability.
However, it is essential to fully understand the specific requirements for each section to take full advantage of the tax benefits they offer. Whether you're saving for retirement, securing health insurance, or supporting your child's education, these provisions provide opportunities to lower your tax burden. Let us explore how to claim these deductions efficiently, and also highlight how platforms like TaxBuddy can help streamline your ITR filing process, ensuring you maximize your savings without missing out on any deductions.
Table of Contents
What Are Tax Deductions Under Section 80C, 80D, and 80E?
Tax deductions under Section 80C, 80D, and 80E of the Income Tax Act allow individuals to reduce their taxable income by making specific investments or incurring certain expenses. Each section targets a different aspect of financial planning, and the benefits offered under these sections can significantly lower the overall tax liability.
Here’s an overview:
Section 80C: Primarily focuses on investments and savings. It allows deductions for contributions to life insurance premiums, employee provident fund (EPF), public provident fund (PPF), National Savings Certificates (NSC), and various other investment avenues.
Section 80D: Focuses on health-related expenses, allowing deductions for premiums paid for health insurance and preventive health checkups.
Section 80E: Provides relief to individuals who have taken loans for higher education by allowing a deduction on the interest paid on education loans.
Maximizing these deductions will reduce your taxable income, leading to significant tax savings. However, understanding which expenses qualify under these sections and ensuring you keep accurate records is essential.
Section 80C: Investments and Payments Eligible for Deduction
Section 80C is one of the most widely utilized provisions for tax saving, offering a maximum deduction of ₹1.5 lakh per financial year. Here are the primary investments and payments eligible for deduction under this section:
Life Insurance Premiums: Premiums paid for policies on your life or your family’s life qualify for deduction.
Employee Provident Fund (EPF): Contributions made by you or your employer to the EPF account qualify for a deduction.
Public Provident Fund (PPF): Contributions to a PPF account, a popular long-term saving scheme, qualify for tax deductions.
National Savings Certificates (NSC): Investments made in NSC are eligible for deductions under 80C.
5-Year Fixed Deposit: A 5-year FD with a bank or a financial institution is eligible for tax deductions.
Tuition Fees: Tuition fees for children’s education qualify for a deduction under 80C.
To make the most of Section 80C, ensure you plan your investments carefully to utilize the maximum deduction limit of ₹1.5 lakh.
Section 80D: Health Insurance Premiums and Preventive Health Checkups
Section 80D provides tax relief for health insurance-related expenses, promoting financial security and health coverage. The deduction available under Section 80D is:
Health Insurance Premiums: Premiums paid for policies covering yourself, your spouse, children, and parents qualify for a deduction. For self and family (excluding parents), the maximum deduction is ₹25,000. If the policyholder or the family members are senior citizens, the limit increases to ₹50,000.
Preventive Health Checkup: Under Section 80D, expenses incurred for preventive health checkups are eligible for deductions of up to ₹5,000 per year.
By utilizing Section 80D, you can lower your taxable income while securing health coverage for yourself and your family.
Section 80E: Interest on Education Loan
Section 80E provides a deduction for the interest paid on loans taken for higher education. This section is beneficial for individuals who are supporting their own or their children's education. Here’s what you need to know:
Eligibility: The deduction applies to individuals who have taken loans for higher education from recognized financial institutions. This includes loans for post-graduate courses, technical courses, and professional courses.
Deduction Amount: There is no cap on the amount of interest eligible for deduction. The deduction is available for a maximum of 8 years or until the interest is paid, whichever is earlier.
This deduction can help you reduce your tax liability while making it easier to manage education loan payments.
How to Maximize Savings While Filing Your ITR
To fully capitalize on the deductions under Sections 80C, 80D, and 80E, here are a few tips:
Plan Your Investments in Advance: Don’t wait until the end of the financial year to start investing. Plan your investments and savings throughout the year to maximize your deductions.
Maximize the 80C Limit: Ensure that you utilize the full ₹1.5 lakh limit under Section 80C by investing in a mix of tax-saving instruments such as PPF, ELSS, and NSC.
Claim Health Insurance Premiums for Family Members: If you are paying health insurance premiums for your parents, ensure that you claim the appropriate deduction under Section 80D for yourself, your spouse, children, and parents.
Track Education Loan Payments: Keep track of your education loan interest payments and claim the deduction under Section 80E, especially if you are paying for your or your child's higher education.
By ensuring all your eligible expenses and investments are documented and reported correctly, you can maximize your savings while reducing your tax burden.
How to Claim Tax Deductions in the New Tax Regime
Under the new tax regime, the standard tax rates are lower; however, taxpayers cannot claim exemptions or deductions, including those under Sections 80C, 80D, and 80E. If you opt for the new tax regime, you won’t be able to use these tax-saving tools to reduce your taxable income. The new tax regime offers a simpler process, as there are fewer allowances and deductions to manage, but at the cost of losing out on benefits like the 80C and 80D deductions.
How to Claim Tax Deductions in the Old Tax Regime
The old tax regime allows taxpayers to claim a range of deductions, including those under Sections 80C, 80D, and 80E, along with other exemptions such as HRA and standard deduction. If you choose the old tax regime, make sure you account for all your eligible deductions to lower your taxable income.
Addressing Specific Questions Related to Tax Deductions and Filing
Is Section 80C Available in the New Tax Regime?
No, Section 80C is not available under the new tax regime. This is one of the significant trade-offs between the new and old regimes. The new tax regime offers lower tax rates but does not allow deductions under Section 80C or any other section (except for the standard deduction).
Is Section 80D Available in the New Tax Regime?
Similar to Section 80C, Section 80D is not available under the new tax regime. If you opt for the new regime, you won’t be able to claim deductions for health insurance premiums or preventive health checkup expenses.
Is Section 80E Available in the New Tax Regime?
No, Section 80E is not available under the new tax regime. However, if you have taken an education loan for higher studies, you can still claim a deduction for the interest paid on the loan if you choose the old tax regime.
Can I Claim Deductions for Health Insurance Premiums Paid for My Parents in the New Tax Regime?
No, deductions under Section 80D for health insurance premiums paid for parents are not available under the new tax regime. You must opt for the old regime to claim such deductions.
What if I Missed Out on Claiming Deductions for Life Insurance Premiums Under Section 80C?
If you miss out on claiming deductions for life insurance premiums or any other deductions under Section 80C, you can file a revised return (Section 139(5)) to correct the omission, provided the assessment has not been completed.
Can I Change My Tax Regime After Filing My Return?
Once you have filed your return, you cannot change the tax regime for the same assessment year. The decision to choose the old or new regime must be made at the time of filing the return.
Conclusion
Tax deductions under Sections 80C, 80D, and 80E are powerful tools to reduce your taxable income, but to fully maximize the benefits, it’s important to make informed decisions, maintain accurate records, and understand the rules regarding these provisions. Whether you choose the new or old tax regime, these deductions can significantly reduce your tax liability if applied correctly.
TaxBuddy can streamline this process by guiding you through your deductions, ensuring you don’t miss out on any eligible claims, and helping you file your return seamlessly. With TaxBuddy’s AI-driven platform and mobile app, you can easily track and manage your tax-saving investments and file your ITR with confidence.
Frequently Asked Question (FAQs)
1. Can I claim deductions under Section 80C for investments made in the current financial year only?
Yes, only investments or payments made during the current financial year are eligible for deductions under Section 80C. These include contributions to PPF, EPF, life insurance premiums, tax-saving fixed deposits, and other qualifying investments. For example, if you make a PPF contribution or pay life insurance premiums during FY 2024-25, they will be eligible for deduction when filing your ITR for the same financial year.
2. Does TaxBuddy support filing for self-employed individuals with 80C, 80D, and 80E claims?
Yes, TaxBuddy supports tax filing for self-employed individuals, freelancers, and business owners. It provides expert assistance for individuals claiming deductions under various sections, including Section 80C (investments), Section 80D (health insurance premiums), and Section 80E (education loan interest). Whether you're filing as a salaried individual or self-employed, TaxBuddy makes the process seamless by guiding you through each claim accurately.
3. How soon after filing can I track my refund status on TaxBuddy?
Once your Income Tax Return (ITR) is filed through TaxBuddy, you can track your refund status in real-time immediately via the TaxBuddy mobile app. This feature allows you to stay updated on the progress of your refund, ensuring that you are always aware of the timeline and any additional steps needed.
4. Can I get help from TaxBuddy if I receive a tax notice related to deductions claimed?
Yes, TaxBuddy provides expert assistance for handling any tax notices you may receive, including those related to deductions claimed. The team at TaxBuddy ensures that your response is timely and accurate, helping you resolve issues quickly and efficiently to avoid penalties or further complications.
5. Are health checkup expenses covered under Section 80D deductible?
Yes, under Section 80D, expenses up to ₹5,000 incurred on preventive health checkups for yourself, your spouse, children, and parents are deductible. It’s important to note that this limit is part of the overall ₹25,000 (₹50,000 for senior citizens) that can be claimed for health insurance premiums under Section 80D.
6. Can I claim tax deductions for my children's education under Section 80C?
No, Section 80C does not provide deductions for children's education fees. However, you can claim deductions for investments in qualifying instruments like PPF, ELSS, and tuition fees under other specific sections like 80E for education loans, but not for direct educational expenses under Section 80C.
7. Does TaxBuddy provide guidance for tax-saving investment options under Section 80C?
Yes, TaxBuddy offers guidance on the various tax-saving investment options available under Section 80C, including PPF, EPF, NPS, and life insurance. The platform helps you understand how to maximize your tax savings by ensuring that your eligible investments are properly reported while filing your ITR.
8. How can TaxBuddy help with filing a revised return if I made an error in my initial ITR?
TaxBuddy allows you to file a revised return under Section 139(5) if you notice an error in your original ITR submission. The process is simple and efficient, and TaxBuddy offers expert assistance throughout, ensuring that your revised return is filed correctly and promptly to avoid penalties.
9. Is there a limit on the number of times I can file a revised return?
You can file a revised return as many times as needed until the final assessment order is passed or until the assessment period expires. However, it is advisable to file a revised return as soon as you identify any errors or omissions to avoid complications.
10. How does TaxBuddy help in case of tax audits or disputes?
In case of a tax audit or dispute, TaxBuddy provides expert assistance by guiding you through the process, helping you prepare the necessary documents, and representing your case efficiently. TaxBuddy’s team ensures that your tax filing complies with regulations and minimizes the chances of disputes or audits.
11. Can I track the status of my ITR filing through the TaxBuddy app?
Yes, TaxBuddy’s mobile app allows you to track the status of your ITR filing, including whether your return has been accepted or processed, and whether your refund has been issued. The app provides real-time updates to keep you informed.
12. Can TaxBuddy help me with responding to a Section 143(2) notice?
Yes, TaxBuddy provides assistance if you receive a Section 143(2) scrutiny notice. The platform helps you understand the notice, gather necessary documents, and submit your response promptly to ensure compliance and avoid penalties.
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