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Deductions on Income Tax as per Sections 80C through 80U
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Introduction
The income tax department aims to improve taxation within the country while offering tax benefits to improve the country's economy. Savings and investments are helpful for individuals to build wealth. They also support the economy of the nation with improved cash flow.
Chapter VIA of the Income Tax Act offers various deductions you can claim to reduce your tax bill. The popular 80C deduction lets you save on investments like PPF and life insurance premiums." But beyond 80C, don't miss out on other deductions like those for medical expenses under Section 80D, which can further lighten your tax burden.
Let’s explore the different types of income tax deductions available in this blog.
Tax Deductions Overview
Certain investments and expenses yield tax deductions, reducing an individual's taxable income for financial advantages. After calculating the gross total income, you can subtract the deductions from multiple sections. As a result, your total taxable income will go down. These deductions are available for saving schemes, investment avenues, insurance policies, and investment funds and schemes.
The list of available deductions includes:
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Before investing your money to generate wealth, ensure you understand the policy and associated tax benefits. Some of the benefits of tax deductions are:
Reduced tax liability
Eligible deductions are deducted from the total taxable income, thus reducing the income used for calculating the tax.
Encouraging charitable contributions
Donations to several charitable institutions will benefit society and offer tax benefits for the taxpayer.
Boosting investment
Deductions are available for capital expenses, R&D, and other business-related expenses that can help in growth.
Promote homeownership
Many real estate investments, such as property taxes, mortgage interest, and home improvements, can be counted towards deductions, increasing home ownership within the country.
Enhance skill development
Tax deductions are also available for certain types of expenses related to higher education, such as student loans and tuition fees.
Section 80 Deduction List
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Section 80 of the Income Tax Act contains multiple subsections that provide deductions, encouraging taxpayers to invest in eligible avenues. You will get these incentives if you contribute to charities, invest, and save money in schemes that indirectly benefit the government. You can subtract all the deductions from the overall taxable income. The most common types of deductions claimed by taxpayers:
Section 80 C
It is one of the most common deductions individuals and taxpayers use for specific investments and expenses. The maximum limit is Rs. 1,50,000. An additional deduction of Rs. 50,000 is allowed as per 80CCD (1B). Both individuals and HUFs can claim this deduction. However, partnership firms, companies, and LLPs cannot claim this deduction.
Section 80D
Expenses towards health insurance for oneself, dependents, and parents can be claimed as a deduction. The limit is Rs. 25,000 for taxpayer, spouse, and dependent children insurance premiums. If the taxpayer pays for insurance for their parents, they can claim an additional Rs. 25,000. The maximum deduction limit for senior citizen insurance payments is Rs. 50,000.
Section 80G
Donations to charitable organisations and certain government funds are also eligible for deductions. In some cases, you may even get a 100% tax deduction for the donated amount. The donations for which you can get a 100% deduction are:
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National Defence Fund
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Prime Minister's Armenia Earthquake Relief Fund
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Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND)
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Indian Naval Benevolent Fund and Air Force Central Welfare Fund
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Prime Minister's National Relief Fund
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Africa (Public Contributions - India) Fund
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Government or approved association for promoting family planning
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National Children's Fund (from 1-4-2014)
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Universities and approved educational institutions of national eminence
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Chief Minister's Earthquake Relief Fund (Maharashtra)
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National Foundation for Communal Harmony
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Zila Saksharta Samitis
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Fund set up by State Government to provide medical relief to the poor
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National or State Blood Transfusion Council
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Army Central Welfare Fund
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Chief Minister's Relief Fund or the Lt. Governor's Relief Fund in respect of any State or Union Territory
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Andhra Pradesh Chief Minister's Cyclone Relief Fund
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National Illness Assistance Fund
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National Cultural Fund
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National Sports Fund
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Indian Olympic Association, etc.
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Fund for Technology Development and Application
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National Trust for Welfare of Persons with Autism, Cerebral palsy, Mental retardation and Multiple Disabilities
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Swachh Bharat Kosh and the Clean Ganga Fund (from the assessment year 2015-16)
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Fund set up by the State Government of Gujarat exclusively for providing relief to victims of the earthquake in Gujarat
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National Fund for Control of Drug Abuse (from assessment year 2016-17)
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Sums paid between 26-1-2001 and 30-9-2001 to any eligible trust, institution or fund for providing relief to Gujarat earthquake victims
Section 80E
Interest paid on education loans until fully paid or a maximum of 8 years, can be included in deductions. This includes higher education loans taken for self, spouse, or children. There is no upper limit on the amount of deductions and it covers loans for education in India or abroad. However, the deduction only covers the interest on the loan repayment.
Section 80TTA And Section 80TTB
Individuals and HUFs can claim interest from savings accounts as deductions under 80TTA for a maximum of Rs. 10,000 per financial year. Senior citizens can claim under Section 80TTB to get tax deduction relief of Rs. 50,000 on interest from different types of deposits and savings schemes.
The overall summary of available deductions under Section 80, including 80C, 80CCC, 80CCD & 80D, are:
Conclusion
At the end of the financial year, you can include deductions to calculate your taxable income while filing your tax returns. You must maintain proof of investments for the financial year and ensure you don't miss the deadline. Certain types of deductions are only available for individuals and not for HUF or companies. Knowing this distinction is crucial to file tax returns correctly and pay the right amount. To learn more about Section 80C deductions and get help from tax experts, visit the TaxBuddy portal.
TaxBuddy is your one-stop solution for hassle-free online filing of income tax. Enjoy effortless e-filing with assistance from tax experts to minimise tax liability and maximise benefits. Save time and avoid penalties by always filing your returns on time.
Frequently asked questions
Q
How can income tax deductions benefit me?
A
Certain types of investments and expenses can be claimed as tax deductions under Section 80 and its sub-sections. It depends on the scheme and type of expenses. These deductions reduce your taxable income, thereby lowering your tax liability. You will pay less tax when you claim deductions.
Q
What are the most commonly used deduction sections?
A
Most taxpayers claim deductions under Sections - 80C, 80CCC, 80CCD, and 80D. 80C covers investment schemes like ELSS, PPF, ULIPs, while 80CCD is for contributions towards pension funds. 80D is exclusively for medical insurance and preventive health checkups.
Q
Is there a maximum limit for total deductions?
A
Yes, under each section, there is a maximum limit for each deduction. For example, the combined maximum deductions allowed under Section 80C, 80CCC, and 80CCD(1) is Rs. 1,50,000. You must refer to each section to understand the maximum allowable limit.
Q
Do all investments qualify for deductions under Section 80C?
A
No, only certain types of investments can be claimed under Section 80C. Contributions to PPF, NPS, ELSS, ULIPs, Sukanya Samriddi Yojana, etc can be claimed as deductions. You can refer to the complete list to know more.
Q
Can I claim deductions for self and family medical insurance?
A
Yes, under Section 80D, you can claim deductions for insurance premiums paid for insurance policies for yourself, your spouse, children, and dependent parents.
Q
Does 80D cover medical expenditure?
A
80D covers medical insurance for taxpayer and their family. It also covers preventive health checkups. Certain types of medical expenditure is also covered. You must refer to the detailed list to know more.
Q
Is there a maximum limit for deductions under 80E?
A
No, there is no maximum limit for deductions under 80E and you can get deductions for the entire interest paid towards education loan. The loan must be towards higher education for yourself, your spouse, or your children. You can take a loan for courses pursued after class 12 in India or abroad. The deductions allowed is for a maximum of eight years or until the interest is paid fully, whichever is earlier.
Q
Do I need documents to claim deductions?
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Yes, you need to submit proof of investments, insurance premium receipts, medical bills, loan repayment premiums, etc based on the deductions you claim. You can upload the documents at the time of filing returns.
Q
Can I claim all deductions?
A
If you are eligible for deductions under multiple sections in a financial year, you can claim all deductions. The maximum limit is set for each section, but a taxpayer is not restricted based on the number of deductions.
Q
Are 80C deductions available under the new tax regime?
A
No, according to the new tax regime, 80C deductions are not allowed. However, certain types of deductions like standard deductions, contributions to NPS, health insurance premiums, transport allowances for disabled individuals, gratuity under Section 10 (10) and leave encashment under Section 10(10AA) are allowed.
Prachi Jain
Chartered Accountant
Prachi Jain is a Chartered Accountant with a passion for simplifying finance and tax-related matters through her insightful and informative blogs. With a background in finance and a deep understanding of tax regulations, Prachi has established herself as a trusted source of financial wisdom. Prachi is committed to empowering her readers with the knowledge they need to make informed financial decisions. Her expertise and dedication shine through in every blog post, helping her audience navigate the intricacies of finance and taxes with confidence. Follow Prachi Jain's blog for practical insights and guidance on managing your finances effectively.
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