Maximizing Tax Deductions Under Section 80D and Section 80G in Your ITR Filing to Avoid Penalties
- Bhavika Rajput
- Jun 4
- 8 min read
Tax deductions under various sections of the Income Tax Act provide an effective way for taxpayers to reduce their overall tax liability. Among these, Section 80D and Section 80G are popular for claiming deductions related to health insurance premiums and charitable donations, respectively. Navigating these provisions effectively can result in significant savings, but understanding their applicability under different tax regimes and knowing the correct way to claim them is crucial. Let us explore both sections, clarify their status under the new and old tax regimes, share tips to maximize benefits, highlight common mistakes to avoid, and explain how digital platforms like TaxBuddy can assist taxpayers in optimizing their deductions.
Table of Contents
Understanding Section 80D: Medical Insurance Deductions
Section 80D of the Income Tax Act, 1961 provides tax deductions to individuals and Hindu Undivided Families (HUFs) on premiums paid towards medical insurance policies. These deductions apply when you purchase health insurance for yourself, your spouse, dependent children, and parents.
The section also includes a deduction for preventive health check-ups up to ₹5,000 within the overall cap. The primary aim of Section 80D is to reduce the burden of rising healthcare costs while promoting financial responsibility for medical coverage.
Here’s how deductions work under Section 80D:
Insured Persons | Deduction Limit |
Self + Spouse + Dependent Children | ₹25,000 |
Parents (below 60 years) | ₹25,000 |
Parents (senior citizens ≥ 60 years) | ₹50,000 |
Self/Family (senior citizen) | ₹50,000 |
Preventive Health Check-ups | ₹5,000 (within above limits) |
This means if you and your parents are senior citizens, you can claim up to ₹1,00,000 under Section 80D.
Is Section 80D Allowed in the New Tax Regime?
One of the biggest shifts in Indian taxation came with the introduction of the new tax regime under Section 115BAC. While it offers reduced tax slab rates, it also eliminates most exemptions and deductions—including Section 80D.
If you're opting for the new regime in FY 2024-25 or AY 2025-26, you cannot claim any deduction for premiums paid under medical insurance. This becomes especially critical for taxpayers with high premiums or senior citizen parents, as the forgone deductions could significantly impact their overall tax liability.
Always evaluate whether staying in the old regime (with deductions) saves you more tax compared to the lower rates in the new regime.
How Section 80D Works in the Old Tax Regime
Under the old regime, Section 80D remains fully functional, enabling taxpayers to claim deductions for health insurance premiums paid during the financial year. The deductions directly reduce your gross total income, resulting in lower taxable income.
This is particularly beneficial for:
Families with senior citizen parents
Taxpayers with high-value family floater plans
Individuals getting regular preventive check-ups
Example:
Particulars | Amount (₹) |
Premium for self + spouse | ₹25,000 |
Premium for senior citizen parents | ₹50,000 |
Preventive health check-up | ₹5,000 |
Total Deduction | ₹75,000 |
So, if your total income is ₹10,00,000, claiming ₹75,000 under Section 80D reduces your taxable income to ₹9,25,000—offering real savings on tax.
Maximizing Deductions Under Section 80D: Key Tips
To get the full benefits of Section 80D deductions, follow these practical tips:
Pay digitally – Use net banking, UPI, or cheque to ensure traceable transactions. Cash payments are not eligible for deduction (except for check-ups).
Include all eligible members – Cover spouse, dependent children, and parents (even if not dependent).
Utilize preventive health check-up limits – Keep receipts of lab tests or wellness scans done during the year.
Pay before March 31 – Ensure the premium is paid within the relevant financial year.
Renew policies on time – A lapse in the policy period could mean missing out on the deduction.
Understanding Section 80G: Donations and Charitable Contributions
Section 80G allows tax deductions on donations made to specified funds, relief efforts, and charitable institutions. This section encourages public contributions toward national causes and NGOs while offering tax benefits to the donor.
Not all donations qualify—you can only claim deductions if the recipient organization is approved under Section 80G.
Types of Deduction Under Section 80G:
Donation Type | Deduction Allowed |
National Defence Fund | 100% without limit |
Prime Minister’s National Relief Fund | 100% without limit |
Local NGOs or charitable trusts | 50% (with or without cap) |
The amount of deduction depends on whether it falls under:
100% deduction without qualifying limit
50% deduction without qualifying limit
100% deduction subject to 10% of gross income
50% deduction subject to 10% of gross income
Is Section 80G Allowed in the New Tax Regime?
No. If you choose the new tax regime under Section 115BAC, you cannot claim deductions under Section 80G either.
This is particularly disadvantageous for salaried or HNI taxpayers who routinely make large donations to charitable causes or institutions. Staying in the old regime could be more beneficial if your donations are substantial and consistent.
How Section 80G Works in the Old Tax Regime
To claim the 80G deduction, follow these steps under the old tax regime:
Get proper receipts from the institution, including their PAN, name, and 80G registration number.
Check if the donation qualifies for 100% or 50% deduction and whether it falls under restricted (10% of income) or unrestricted limits.
Make the donation in modes other than cash if the amount exceeds ₹2,000.
This can significantly reduce your taxable income, especially if you’re donating to recognized national funds or disaster relief.
Maximizing Deductions Under Section 80G: Important Points
To optimize tax benefits under Section 80G, follow these guidelines:
Ensure the donee is registered – Check if the NGO or institution is 80G certified.
Use digital modes of donation – Cash donations above ₹2,000 are ineligible.
Keep a clean paper trail – Save scanned copies of receipts and acknowledgments.
Donate before the financial year ends – Only donations made by March 31 will qualify for that year’s return.
Plan your donations – If your income is high, aim to donate to institutions offering 100% deduction.
Common Mistakes to Avoid While Claiming 80D and 80G Deductions
Many taxpayers lose out on deductions or receive notices due to avoidable errors:
Lack of valid documentation – Claims made without bills, receipts, or proofs are often rejected.
Incorrect understanding of eligibility – Donating to an unapproved institution won’t be allowed under 80G.
Miscalculating the deduction limit – Claiming more than permitted under caps may lead to demand notices.
Opting for the new tax regime unknowingly – You’ll lose all 80D and 80G deductions if you file under the new regime.
Late payments or donations – Only amounts paid within the financial year are allowed.
How TaxBuddy Helps Maximize Your Tax Deductions
TaxBuddy offers a comprehensive platform that simplifies income tax filing while maximizing deductions under various sections. It helps auto-fill deduction details, cross-checks claims against official records, and flags inconsistencies before filing. With expert assistance, TaxBuddy guides taxpayers through complex provisions like 80D and 80G, ensuring correct documentation and compliance. It also provides reminders for timely payments and donations, helping users avoid missed deductions. By leveraging TaxBuddy, taxpayers can confidently file returns, reduce tax liability, and handle any notices efficiently.
Conclusion
Deductions under Sections 80D and 80G provide valuable avenues for tax savings through health insurance and charitable donations. Understanding the differences between old and new tax regimes and following best practices ensures taxpayers can claim these benefits without errors. Digital tax platforms like TaxBuddy empower users with automation, expert support, and compliance checks to optimize deductions and file accurate returns. This reduces the risk of notices and penalties while maximizing tax savings.
FAQs
Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy provides flexible options to suit different taxpayer needs. It offers both self-filing plans, where users can independently file their returns using the platform’s user-friendly interface, and expert-assisted plans, where certified tax professionals review and file the return on behalf of the user. This dual approach ensures users have access to seamless filing experiences whether they prefer to handle the process themselves or seek professional guidance.
2. Which is the best site to file ITR?
The best site to file Income Tax Returns depends on user preferences and needs. The official Income Tax Department portal (incometax.gov.in) is the primary and most secure option for filing returns directly. However, third-party platforms like TaxBuddy offer added convenience with features such as step-by-step guidance, auto-filled forms, document uploads, expert support, and error checks, making them ideal for those seeking a hassle-free and efficient filing experience.
3. Where to file an income tax return?
Income Tax Returns can be filed electronically on the official Income Tax Department’s e-filing portal at incometax.gov.in. Additionally, authorized e-return intermediaries like TaxBuddy provide platforms where taxpayers can file returns safely and easily. TaxBuddy is recognized by the government as an authorized intermediary, ensuring secure and compliant filing with added user support.
4. Can I claim Section 80D deduction for parents who are senior citizens?
Yes, taxpayers can claim Section 80D deductions for the health insurance premium paid for parents who are senior citizens. The deduction limit for premiums paid for senior citizen parents is higher, typically up to ₹50,000 per annum, compared to the standard limit for self and family. This helps taxpayers reduce their taxable income by covering medical insurance expenses for elderly parents.
5. What documents are required to claim Section 80G deductions?
To claim deductions under Section 80G for donations, taxpayers must retain the donation receipt issued by the donee organization. The receipt should clearly state the amount donated, the donee’s registration number under Section 80G, and the validity period. For donations exceeding ₹2,000, payment should ideally be made through modes other than cash, such as cheque, bank transfer, or digital payment, to qualify for the deduction.
6. Are preventive health check-ups included in Section 80D limits?
Yes, expenses incurred on preventive health check-ups are included under Section 80D deductions but are subject to an overall limit of ₹5,000 within the total deduction allowed. This means that out of the maximum deduction permitted for health insurance premiums and medical expenses, up to ₹5,000 can be claimed specifically for preventive check-ups.
7. Can donations above ₹2,000 be paid in cash to claim 80G deductions?
No, donations above ₹2,000 paid in cash are not eligible for Section 80G deductions. To claim deductions for donations exceeding ₹2,000, the payment must be made through a non-cash mode such as cheque, draft, electronic transfer, or digital wallets. This rule is enforced to maintain transparency and reduce cash-based transactions.
8. What happens if I claim deductions exceeding limits under Sections 80D or 80G?
If deductions claimed exceed the prescribed limits under Sections 80D or 80G, the excess amount will be disallowed by the Income Tax Department during assessment. This can increase taxable income and may attract penalties or interest if it leads to underpayment of tax. It is important to accurately calculate deductions within the allowed limits to avoid such consequences.
9. How does Section 80D apply to Hindu Undivided Families (HUFs)?
Hindu Undivided Families (HUFs) can claim deductions under Section 80D for premiums paid towards health insurance policies for the family members included in the HUF. The deduction limits remain the same as for individuals, with separate limits for self, family, and senior citizens. Proper documentation and receipts must be maintained for claiming these deductions.
10. Are deductions under Section 80G available under the new tax regime?
No, under the new tax regime introduced from FY 2023-24 onwards, deductions under Section 80G are not available. Taxpayers opting for the new regime forego various exemptions and deductions, including those under Section 80G. These deductions continue to be available only under the old tax regime.
11. How should I report Section 80D and 80G deductions in my ITR?
Deductions under Sections 80D and 80G should be reported in the relevant sections of the Income Tax Return form. Taxpayers need to enter the eligible amount along with details such as health insurance policy numbers for 80D and donation details for 80G. Accurate reporting helps in smooth processing and faster refunds, if applicable.
12. Can TaxBuddy help me with tracking and claiming my tax deductions correctly?
Yes, TaxBuddy offers tools and expert support that assist taxpayers in accurately tracking eligible deductions, including Sections 80C, 80D, and 80G. The platform auto-suggests deductions based on submitted documents, cross-verifies data with official records, and provides reminders and alerts to ensure nothing is missed. This reduces errors and helps taxpayers maximize their savings legally.
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