Tax Deductions Under Section 80C and 80D: How to Claim Together in Your Tax Filing and Maximize Savings
- Rajesh Kumar Kar
- Jun 2
- 9 min read
Section 80C of the Income Tax Act is a powerful tool used by taxpayers to reduce their taxable income by claiming deductions on eligible investments and payments. It is one of the most popular and widely used provisions to save tax in India, covering investments like Provident Fund, Life Insurance premiums, ELSS, and more. Despite its popularity, many taxpayers face challenges due to errors such as incorrect claims, missing documentation, or data mismatches, which can result in notices from the Income Tax Department. These errors can lead to penalties, disallowance of deductions, and increased tax liability. Let us understand how Section 80C deductions work, how to claim them correctly alongside Section 80D, how these benefits apply under the old and new tax regimes, common mistakes to avoid, and practical tips to maximize savings. Additionally, learn how TaxBuddy simplifies this process, ensuring smooth and error-free tax filing.
Table of Contents
How to Claim Section 80C and 80D Together in Your Income Tax Filing
Both Section 80C and 80D deductions can be claimed in the same financial year to maximize tax savings. When filing your Income Tax Return (ITR), ensure you include all eligible investments and premiums paid under these sections in the respective deduction fields. Accurate reporting and proper documentation, like receipts and insurance certificates, are essential. Many taxpayers use online platforms like TaxBuddy, which automatically suggest eligible deductions and help upload proof to avoid errors. Correctly combining these deductions reduces taxable income significantly and helps taxpayers plan their finances better.
Understanding Section 80C Deductions
Section 80C allows deduction of up to ₹1.5 lakh from your taxable income through various investments and expenses. Eligible options include contributions to Employee Provident Fund (EPF), Public Provident Fund (PPF), Life Insurance Premiums, Equity-Linked Savings Scheme (ELSS), National Savings Certificate (NSC), Principal repayment on home loan, Tuition fees for children, and more. Claiming these deductions lowers your taxable income, resulting in significant tax savings. However, only actual payments or investments made during the financial year qualify. The total deduction under this section cannot exceed ₹1.5 lakh, regardless of the number of investments made.
Understanding Section 80D Deductions
Section 80D provides deductions for health insurance premiums and medical expenses. Taxpayers can claim deductions for premiums paid for self, spouse, children, and parents. The maximum deduction varies: up to ₹25,000 for insurance premiums for self, spouse, and children; an additional ₹25,000 for parents below 60 years; and ₹50,000 if parents are senior citizens. Preventive health check-ups up to ₹5,000 are also included. This section promotes financial protection against medical emergencies and encourages taxpayers to invest in health insurance.
Is Claiming Both Deductions Allowed in the New Tax Regime?
The new tax regime introduced reduced tax rates but with limited or no deductions, including those under Sections 80C and 80D. Under this regime, taxpayers cannot claim deductions for most investments and expenses, opting instead for lower slab rates. Therefore, these deductions are generally not available if you choose the new tax regime. However, taxpayers can still opt for the old tax regime to benefit from these deductions if it results in better tax savings. Understanding the trade-offs between regimes is crucial for informed tax planning.
How Section 80C Works in the Old Tax Regime
Under the old tax regime, Section 80C offers taxpayers a deduction limit of ₹1.5 lakh on eligible investments and expenses, effectively lowering taxable income. This regime allows taxpayers to claim multiple deductions, including 80C, 80D, 80E, and others, along with tax rebates and exemptions. Taxpayers benefit from detailed deductions, but the tax rates are higher compared to the new regime. The old regime suits those who actively invest in eligible schemes and want to maximize deductions, often resulting in lower tax liability despite higher rates.
How Section 80D Works in the Old Tax Regime
Similar to Section 80C, Section 80D deductions are fully available in the old tax regime. Taxpayers can claim health insurance premiums and medical expenses up to the prescribed limits. This helps reduce taxable income and offers financial relief for healthcare costs. Alongside other deductions, Section 80D benefits contribute significantly to overall tax savings under the old regime, making it favorable for those with health insurance and medical expenditure.
Practical Tips to Maximize Your Tax Savings Under Sections 80C and 80D
Plan Investments Early
To fully benefit from Section 80C deductions, it is crucial to plan your investments well in advance. Instead of rushing to invest near the financial year-end, spreading your investments throughout the year helps manage your cash flow better and maximizes tax benefits. Early planning ensures that you meet the deduction limit of ₹1.5 lakh without missing out on eligible schemes like Public Provident Fund (PPF), Employee Provident Fund (EPF), National Savings Certificates (NSC), or Life Insurance premiums. Starting early also gives you enough time to evaluate and select investment options that align with your financial goals while maximizing tax savings.
Maintain Proper Documentation
Proper documentation is the backbone of smooth tax filing and claim approval. Keep all receipts, certificates, and proofs of your investments and expenses safely organized. These include insurance premium receipts, PPF account statements, fixed deposit certificates marked as tax-saving, and school fee receipts if applicable. Retaining and submitting these documents when required helps substantiate your claims and prevents deductions from being disallowed during assessment. Digital copies can be maintained alongside physical ones for easy retrieval and backup.
Leverage TaxBuddy
TaxBuddy offers powerful digital tools to simplify the tax filing process. Its auto-fill feature pre-populates forms based on your previous filings and linked financial data, reducing manual errors. The platform also cross-checks your claimed deductions against official records like Form 26AS and the Annual Information Statement (AIS), highlighting discrepancies before filing. Additionally, TaxBuddy sends timely reminders about upcoming deadlines and outstanding documents, ensuring you avoid last-minute rushes or missed deductions. Using TaxBuddy enhances accuracy and confidence while filing.
Review Form 26AS
Form 26AS serves as a consolidated statement of all tax credits, including TDS, TCS, and advance tax payments reported to the government. Regularly reviewing Form 26AS and reconciling it with your ITR deductions is essential for accuracy. Any mismatch between your claimed deductions and data in Form 26AS can trigger notices or delay refunds. The Annual Information Statement (AIS) provides additional data from various sources, so verifying both these statements helps ensure your deductions are correctly reported and accepted by the Income Tax Department.
Combine Deductions Strategically
For optimal tax savings, combine your Section 80C investments with deductions under other sections like 80D for health insurance premiums. While Section 80C allows deductions up to ₹1.5 lakh on eligible investments, Section 80D offers additional tax benefits on premiums paid for health insurance for self, family, and senior citizens. Strategically planning investments and insurance payments allows taxpayers to maximize overall deductions, reducing taxable income significantly and making the most of available tax benefits under the Income Tax Act.
Opt for the Right Tax Regime
Choosing between the old and new tax regimes can significantly impact your tax liability. The old tax regime allows taxpayers to claim deductions and exemptions, including Section 80C, but has higher tax rates. The new tax regime offers lower tax slabs but removes most deductions. Before finalizing your filing, calculate your total tax payable under both regimes considering your eligible deductions and exemptions. Selecting the regime that results in the lowest tax liability ensures effective tax planning and maximizes savings.
Common Mistakes to Avoid While Claiming 80C and 80D
Claiming Non-Eligible Investments: Avoid claiming deductions for ineligible or non-qualifying investments.
Inadequate Documentation: Missing or improper proof can lead to disallowance of deductions.
Incorrect ITR Form: Filing with the wrong return form causes rejection or delays.
Not Reconciling with Official Records: Discrepancies with Form 26AS or AIS can trigger notices.
Missed Verification: Not verifying your ITR within 30 days renders the filing invalid.
Avoiding these mistakes can help prevent notices and penalties.
How TaxBuddy Simplifies Claiming Section 80C and 80D Deductions
TaxBuddy offers a user-friendly platform that simplifies the tax filing process. It automatically detects eligible deductions under Sections 80C and 80D, suggests investment options, and helps organize documentation. Its interface ensures accurate form selection and filing while cross-verifying data with official tax records to minimize errors. TaxBuddy also provides expert assistance for handling notices or discrepancies, making it easier for taxpayers to file returns confidently and accurately. The mobile app further enhances convenience by allowing users to manage their tax filings anytime, anywhere.
Conclusion
Maximizing tax savings under Sections 80C and 80D requires careful planning, accurate documentation, and correct filing. The choice between the old and new tax regimes affects the availability of these deductions, so it’s important to assess which option benefits you more. Avoiding common mistakes and leveraging digital platforms like TaxBuddy can make tax filing smooth, error-free, and stress-free. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
Frequently Asked Question (FAQs)
Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy offers flexible filing options tailored to individual needs. Users can choose between self-filing plans, where they file their returns independently with guided assistance, or expert-assisted plans, where tax professionals handle the entire filing process. This dual approach allows taxpayers to select the level of support they prefer, ensuring both ease and accuracy in filing.
Which is the best site to file ITR?
The best site to file Income Tax Returns (ITR) depends on user preference for simplicity, security, and expert support. Official government portals like incometax.gov.in provide direct filing options but may lack user-friendly interfaces. Platforms like TaxBuddy combine official compliance with a seamless experience, offering guided filing, expert support, and error checks, making them an excellent choice for hassle-free tax returns.
Where to file an income tax return?
Income Tax Returns can be filed online through the official Income Tax Department e-filing portal at incometax.gov.in. Alternatively, taxpayers can use authorized intermediaries such as TaxBuddy, which offer simplified filing interfaces, expert assistance, and real-time support while ensuring compliance with government standards.
Can I claim both 80C and 80D deductions if I am salaried and my employer deducts TDS?
Yes, salaried individuals can claim deductions under both Sections 80C and 80D irrespective of TDS deducted by the employer. While TDS covers your estimated tax, claiming these deductions at filing helps reduce your taxable income further and may result in a tax refund if excess tax is paid.
What documents are required to claim deductions under Sections 80C and 80D?
For Section 80C, documents include investment proofs such as life insurance premium receipts, PPF passbooks, ELSS statements, and tuition fee receipts. For Section 80D, documents include health insurance premium payment receipts and bills for preventive health check-ups. Maintaining these proofs is essential for verifying claims if requested by the tax department.
Is preventive health check-up covered under Section 80D?
Yes, preventive health check-ups are covered under Section 80D with a maximum deduction limit of ₹5,000 within the overall Section 80D limit. This allows taxpayers to claim expenses incurred for routine health check-ups of themselves and their family.
Can health insurance premiums paid for parents be claimed under Section 80D?
Yes, health insurance premiums paid for parents can be claimed under Section 80D. If the parents are senior citizens, a higher deduction limit applies, enabling taxpayers to maximize their tax benefits.
What happens if I miss claiming these deductions while filing my ITR?
If deductions under Sections 80C or 80D are missed during filing, the taxable income will be higher, leading to increased tax liability. However, missed deductions can be claimed later by filing a revised return within the prescribed time frame.
Can I revise my ITR to include missed deductions under 80C or 80D?
Yes, taxpayers can file a revised return under Section 139(5) to include any missed deductions before the end of the relevant assessment year. This helps correct errors and claim eligible benefits without penalties.
Are there limits on the amount claimed under Section 80D for senior citizens?
Yes, the deduction limit under Section 80D is higher for senior citizens. They can claim up to ₹50,000 for health insurance premiums and medical expenses, compared to ₹25,000 for others.
Does TaxBuddy provide alerts to help maximize tax deductions?
TaxBuddy offers smart alerts and reminders to help taxpayers keep track of deadlines, eligible deductions, and document submissions, ensuring no tax-saving opportunity is missed.
How soon can I expect a refund after claiming deductions with TaxBuddy assistance?
Refund timelines depend on the Income Tax Department’s processing but using TaxBuddy can expedite filing accuracy and documentation, potentially speeding up refund issuance. Typically, refunds are processed within a few weeks after verification of the return.
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