Section 80 Deduction: Income Tax Deductions under Section 80C, 80CCD, 80CCC, 80D

Last Updated at: May 19, 2020
1948
Section 80C
Section 80 Deduction Income Tax Deductions under Section 80C, 80CCD, 80CCC, 80D
To reduce your gross total income and thereby your tax liability, you have to enter details of deductions that you want to claim under sections 80C to 80U of the Act. You are required to fill in the details related to tax-saving deductions available under sections 80C to 80U of the Income Tax Act. These deductions can be claimed from income before levying of income tax.

 

The income tax deduction in India covers various sections. These sections define the tax deduction. Also, there are various sections for which a taxpayer can claim deductions from his/her total income. In this article, we will be discussing four prominent tax deductions. The Income Tax Act, 1961, prescribed a combined limit for deduction under the following sections. The Income Tax Act, 1960 provides us with Section 80C, 80CCC, 80CCD and 80D to help taxpayers in saving taxes by investing up to 1.5 lakhs in different alternatives depending on the needs of each person. Tax saving could be a difficult job for every taxpayer, especially for the newly recruited employees.

The maximum deduction amount under Section 80C stops until it reaches Rs. 1.5 lakh. 80C consists of two parts under it – 80CCC and 80CCD. It is worth noting that the deductions are not savings of the income tax but the reduction in the amount of total taxable income for the respective financial year.

What is a tax deduction?

It is the deduction that lessens a person’s tax liability by lowering the taxable income. Income tax forms an integral part of the revenue of the government, and it is also a fact that a major chunk of salary or earning of an individual may fall in that x slab. The sections defined by the Income Tax Act, 1961, ensure that it lowers the taxable income slab.

Tax Deduction under Different Sections

Section 80C Deduction

As per deduction under Section 80C, a taxpayer is eligible to claim for deduction of Section 80C limit amount up to Rs. 1,50,000 on his/her taxable income using tax-saving investments. The various investment options that one can opt for are:

  1. EPF:

    Both the employer and employee can contribute an equal amount (12% of basic salary) to this fund.

  2. Public Provident Fund (PPF):

    It’s a long-term investment offered by the Government of India. Any amount ranging from a minimum of Rs. 500 to a maximum of up to Rs. 1.5 Lakhs can be deposited in a PPF account (in one financial year) can be claimed for deductions. A PPF account matures in 15 years. And the invested amount could be withdrawn after 5 years. The interest of a PPF account is also tax-free. Deposits made under the name of the spouse or the child can also be claimed for tax deductions.

  3. Health Insurance Premiums:

    If you are paying a premium on health insurance, then you can get tax benefits.

  4. Equity Linked Savings Scheme (ELSS):

    Open-ended mutual funds invested into equities for higher returns can also give you tax benefits. It is a type of mutual fund investment that has a 3 year lock-in period.

  5. National Savings Certificate (NSC):

    It’s a secured saving scheme. Also, NSC can be claimed for deduction in the same year it was purchased even though their term is for 5 years. The interest rate is compounded annually. However, the interest earned is taxable.

  6. Life Insurance Premiums:

    If an individual is paying a premium of life insurance, then he can get the tax benefit.

  7. Children’s Tuition Fee:

    It includes tuition fees for college or a university in India. This is applicable for up to two kids.

  8. Home loan:

    If you are paying the home loan, then you can get tax benefits under Section 80C.

  9. Post Office Fixed Deposit:

    Similar to FD, but only a 5-year deposit qualifies for this.

  10. Infrastructure Bonds:

    These are government-approved bonds that are issued by companies like India Infrastructure Finance Company and Infrastructure Development Finance Company.

  11. Investment in Sukanya Samridhi account:

    A minimum of Rs. 1000 to a maximum of Rs. 1.5 Lakhs can be invested in the Sukanya Samridhi account for a girl child. The interest is exempted from taxes and interest rates are calculated annually. The account matures after a period of 14 years and the amount received thereafter is also tax-free.

  12. ULIPS:

    Unit Linked Insurance Plan or ULIPS that is usually sold along with life insurance is also eligible for deductions. The claimed deductions will be withdrawn if the policy terminates before 5 years because of not paying the premium. ULIP under the name of the spouse or child can also be claimed for deductions and the proceeds after its maturity is tax-free.

E-file Your Income Tax Returns

Section 80CCC Tax Deduction

It is tax deduction from the perspective of contributions towards pension plans. Section 80C of the Income Tax Act was curated to offer exhaustive content, thus making tax planning difficult. To overcome this problem, Section 80C is sub-divided into different sub-sections like Section 80CCC. The tax benefits of Section 80CCC is on expenses incurred for buying retirement plans and annuity plans.

Certain points to remember about this section are:

  1. If you earn interest or bonus from this plan, do not qualify for the deduction
  2. The amount that one receives after surrendering the plan is taxable
  3. The received pension amount is taxable

Section 80CCD Tax Deductions

It deals with the contributions made to the following schemes by the Government:

  1. National Pension Scheme
  2. Atal Pension Yojana

Section 80CCD consists the following sub-sections:

Section 80CCD (1):

This deals with a tax deduction for Central/State/Employed/Self-employed/Employer individuals. A salaried individual can get a maximum deduction of 10% of salary. Self-employed can get deduction 10% on their gross income.

Section 80CCD (2):

It takes into account the employer’s contribution to the National Pension Scheme. An employee can claim for the contribution made by their employer towards the NPS. The limit is 10% of the salary.

Section 80CCD (1B):

An individual can get an additional tax benefit of Rs. 50,000 if the investment is made in the NPS.

Deduction under Section 80D

Section 80D of the Income Tax Act provides deductions on Medical Insurance. An individual or HUF can claim a deduction of the amount up to Rs. 25,000 as per this section on the insurance of self-, spouse, or dependent children. Besides, one can also get an additional deduction for the insurance of parents. This amount is up to Rs. 25,000, but is applicable only if parents are less than 60 years of age. If the parents are above the age of 60, then the deduction amount is Rs. 50,000. One can also claim deductions of up to Rs. 5,000 in health check-ups of parents. However, it is a part of the Rs. 50,000 maximum limit set in this section.

There are other sections of the Income Tax Act, 1961 that allows tax deductions like Section 80E, Section 80 J, etc. You can use these sections to reduce your annual taxable income and prevent from paying the income tax.

Covered Persons

Exemption Limit Exemption for Health Check Up

Total

Self and Family Rs.25,000 Rs.5000 Rs.30,000
Self + Family + Parents Rs.25,000 + Rs.25,000 Rs.5000 Rs.55,000
Self + Family + Senior Citizen Parents Rs.25,000 + Rs.30,000 Rs.5000 Rs.60,000
Self (Senior Citizen) + Family + Senior Citizen Parents Rs.30,000 + Rs.30,000 Rs.5000 Rs.65,000

 

Intricacies of Section 80C, 80CCC, 80CCD and 80D:

    • Section 80C:

As per this Section, you can claim up to Rs. 1.5 Lakh deduction from your total income i.e., you can save yourself from paying tax for Rs. 1.5 Lakhs out of the total taxable amount. Individuals and Hindu Undivided Families can claim for it. By filing for income tax returns, the Income Tax Department will refund the excess money to your bank account.

    • Section 80CCC:

The section provides for deductions for any amount paid or deposited in any annuity insurance plan of LIC or any other insurer. It is applicable for any individual who has paid or deposited in an annuity plan however the plan must a one that helps to receive pension funds as referred under Section 10(23AAB). The pension so received or the amount received after surrendering the annuity (including the interest or bonus) is taxable in the same year.

    • Section 80CCD:

This section deals with the eligibility for deductions for contributions made towards New Pension Scheme. Section 80CCD(1), it says that deductions are to be made for the contribution made by the employee and Section 80CCD(2) explains deductions with respect to the contribution of the employer towards National Pension System (NPS). A new section 80CCD(1B) explains the additional deduction for the amount deposited to the Atal Pension Yojana by the taxpayer.

    • Section 80D:

According to this section, any individual or Hindu Undivided Family can claim deductions up to Rs. 25,000 in case of insurance for self, spouse and dependent children. If the parents are above the age of 60 years, an additional deduction of up to Rs. 25000 can be claimed.  In cases where both the taxpayer and their parent(s) are above the age of 60 years, a maximum of up to Rs. 1 Lakh can be claimed as a deduction.

E-file Your Income Tax Returns

Deductions on Expenses: 

  1. EPF or Employee’s share of PF Contribution (12% of basic + DA is deducted)
  2. Life Insurance Premium Payment (Deduction valid on all insurance policies purchased after 1st April 2012 with premium less than 10% of sum assured)
  3. Children’s Tuition fee payment
  4. Principal repayments on loan for the purchase of house property (deduction includes stamp duty, registration fees and any other expenses for the transfer of such property  to the taxpayer)
  5. Sum paid for securing deferred annuity (the considered payment is limited to 20% of the salary or actual contribution, whichever is lesser)

Tax saving could be a pretty hectic work for salaried employees. However, with the various options on the blog, it can help taxpayers to understand the different alternatives they have for saving on taxes and claiming deductions accordingly.

 

0

Section 80 Deduction: Income Tax Deductions under Section 80C, 80CCD, 80CCC, 80D

1948
To reduce your gross total income and thereby your tax liability, you have to enter details of deductions that you want to claim under sections 80C to 80U of the Act. You are required to fill in the details related to tax-saving deductions available under sections 80C to 80U of the Income Tax Act. These deductions can be claimed from income before levying of income tax.

 

The income tax deduction in India covers various sections. These sections define the tax deduction. Also, there are various sections for which a taxpayer can claim deductions from his/her total income. In this article, we will be discussing four prominent tax deductions. The Income Tax Act, 1961, prescribed a combined limit for deduction under the following sections. The Income Tax Act, 1960 provides us with Section 80C, 80CCC, 80CCD and 80D to help taxpayers in saving taxes by investing up to 1.5 lakhs in different alternatives depending on the needs of each person. Tax saving could be a difficult job for every taxpayer, especially for the newly recruited employees.

The maximum deduction amount under Section 80C stops until it reaches Rs. 1.5 lakh. 80C consists of two parts under it – 80CCC and 80CCD. It is worth noting that the deductions are not savings of the income tax but the reduction in the amount of total taxable income for the respective financial year.

What is a tax deduction?

It is the deduction that lessens a person’s tax liability by lowering the taxable income. Income tax forms an integral part of the revenue of the government, and it is also a fact that a major chunk of salary or earning of an individual may fall in that x slab. The sections defined by the Income Tax Act, 1961, ensure that it lowers the taxable income slab.

Tax Deduction under Different Sections

Section 80C Deduction

As per deduction under Section 80C, a taxpayer is eligible to claim for deduction of Section 80C limit amount up to Rs. 1,50,000 on his/her taxable income using tax-saving investments. The various investment options that one can opt for are:

  1. EPF:

    Both the employer and employee can contribute an equal amount (12% of basic salary) to this fund.

  2. Public Provident Fund (PPF):

    It’s a long-term investment offered by the Government of India. Any amount ranging from a minimum of Rs. 500 to a maximum of up to Rs. 1.5 Lakhs can be deposited in a PPF account (in one financial year) can be claimed for deductions. A PPF account matures in 15 years. And the invested amount could be withdrawn after 5 years. The interest of a PPF account is also tax-free. Deposits made under the name of the spouse or the child can also be claimed for tax deductions.

  3. Health Insurance Premiums:

    If you are paying a premium on health insurance, then you can get tax benefits.

  4. Equity Linked Savings Scheme (ELSS):

    Open-ended mutual funds invested into equities for higher returns can also give you tax benefits. It is a type of mutual fund investment that has a 3 year lock-in period.

  5. National Savings Certificate (NSC):

    It’s a secured saving scheme. Also, NSC can be claimed for deduction in the same year it was purchased even though their term is for 5 years. The interest rate is compounded annually. However, the interest earned is taxable.

  6. Life Insurance Premiums:

    If an individual is paying a premium of life insurance, then he can get the tax benefit.

  7. Children’s Tuition Fee:

    It includes tuition fees for college or a university in India. This is applicable for up to two kids.

  8. Home loan:

    If you are paying the home loan, then you can get tax benefits under Section 80C.

  9. Post Office Fixed Deposit:

    Similar to FD, but only a 5-year deposit qualifies for this.

  10. Infrastructure Bonds:

    These are government-approved bonds that are issued by companies like India Infrastructure Finance Company and Infrastructure Development Finance Company.

  11. Investment in Sukanya Samridhi account:

    A minimum of Rs. 1000 to a maximum of Rs. 1.5 Lakhs can be invested in the Sukanya Samridhi account for a girl child. The interest is exempted from taxes and interest rates are calculated annually. The account matures after a period of 14 years and the amount received thereafter is also tax-free.

  12. ULIPS:

    Unit Linked Insurance Plan or ULIPS that is usually sold along with life insurance is also eligible for deductions. The claimed deductions will be withdrawn if the policy terminates before 5 years because of not paying the premium. ULIP under the name of the spouse or child can also be claimed for deductions and the proceeds after its maturity is tax-free.

E-file Your Income Tax Returns

Section 80CCC Tax Deduction

It is tax deduction from the perspective of contributions towards pension plans. Section 80C of the Income Tax Act was curated to offer exhaustive content, thus making tax planning difficult. To overcome this problem, Section 80C is sub-divided into different sub-sections like Section 80CCC. The tax benefits of Section 80CCC is on expenses incurred for buying retirement plans and annuity plans.

Certain points to remember about this section are:

  1. If you earn interest or bonus from this plan, do not qualify for the deduction
  2. The amount that one receives after surrendering the plan is taxable
  3. The received pension amount is taxable

Section 80CCD Tax Deductions

It deals with the contributions made to the following schemes by the Government:

  1. National Pension Scheme
  2. Atal Pension Yojana

Section 80CCD consists the following sub-sections:

Section 80CCD (1):

This deals with a tax deduction for Central/State/Employed/Self-employed/Employer individuals. A salaried individual can get a maximum deduction of 10% of salary. Self-employed can get deduction 10% on their gross income.

Section 80CCD (2):

It takes into account the employer’s contribution to the National Pension Scheme. An employee can claim for the contribution made by their employer towards the NPS. The limit is 10% of the salary.

Section 80CCD (1B):

An individual can get an additional tax benefit of Rs. 50,000 if the investment is made in the NPS.

Deduction under Section 80D

Section 80D of the Income Tax Act provides deductions on Medical Insurance. An individual or HUF can claim a deduction of the amount up to Rs. 25,000 as per this section on the insurance of self-, spouse, or dependent children. Besides, one can also get an additional deduction for the insurance of parents. This amount is up to Rs. 25,000, but is applicable only if parents are less than 60 years of age. If the parents are above the age of 60, then the deduction amount is Rs. 50,000. One can also claim deductions of up to Rs. 5,000 in health check-ups of parents. However, it is a part of the Rs. 50,000 maximum limit set in this section.

There are other sections of the Income Tax Act, 1961 that allows tax deductions like Section 80E, Section 80 J, etc. You can use these sections to reduce your annual taxable income and prevent from paying the income tax.

Covered Persons

Exemption Limit Exemption for Health Check Up

Total

Self and Family Rs.25,000 Rs.5000 Rs.30,000
Self + Family + Parents Rs.25,000 + Rs.25,000 Rs.5000 Rs.55,000
Self + Family + Senior Citizen Parents Rs.25,000 + Rs.30,000 Rs.5000 Rs.60,000
Self (Senior Citizen) + Family + Senior Citizen Parents Rs.30,000 + Rs.30,000 Rs.5000 Rs.65,000

 

Intricacies of Section 80C, 80CCC, 80CCD and 80D:

    • Section 80C:

As per this Section, you can claim up to Rs. 1.5 Lakh deduction from your total income i.e., you can save yourself from paying tax for Rs. 1.5 Lakhs out of the total taxable amount. Individuals and Hindu Undivided Families can claim for it. By filing for income tax returns, the Income Tax Department will refund the excess money to your bank account.

    • Section 80CCC:

The section provides for deductions for any amount paid or deposited in any annuity insurance plan of LIC or any other insurer. It is applicable for any individual who has paid or deposited in an annuity plan however the plan must a one that helps to receive pension funds as referred under Section 10(23AAB). The pension so received or the amount received after surrendering the annuity (including the interest or bonus) is taxable in the same year.

    • Section 80CCD:

This section deals with the eligibility for deductions for contributions made towards New Pension Scheme. Section 80CCD(1), it says that deductions are to be made for the contribution made by the employee and Section 80CCD(2) explains deductions with respect to the contribution of the employer towards National Pension System (NPS). A new section 80CCD(1B) explains the additional deduction for the amount deposited to the Atal Pension Yojana by the taxpayer.

    • Section 80D:

According to this section, any individual or Hindu Undivided Family can claim deductions up to Rs. 25,000 in case of insurance for self, spouse and dependent children. If the parents are above the age of 60 years, an additional deduction of up to Rs. 25000 can be claimed.  In cases where both the taxpayer and their parent(s) are above the age of 60 years, a maximum of up to Rs. 1 Lakh can be claimed as a deduction.

E-file Your Income Tax Returns

Deductions on Expenses: 

  1. EPF or Employee’s share of PF Contribution (12% of basic + DA is deducted)
  2. Life Insurance Premium Payment (Deduction valid on all insurance policies purchased after 1st April 2012 with premium less than 10% of sum assured)
  3. Children’s Tuition fee payment
  4. Principal repayments on loan for the purchase of house property (deduction includes stamp duty, registration fees and any other expenses for the transfer of such property  to the taxpayer)
  5. Sum paid for securing deferred annuity (the considered payment is limited to 20% of the salary or actual contribution, whichever is lesser)

Tax saving could be a pretty hectic work for salaried employees. However, with the various options on the blog, it can help taxpayers to understand the different alternatives they have for saving on taxes and claiming deductions accordingly.

 

0

FAQs

No FAQs found

Add a Question


No Record Found
SHARE
A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.