80C and 80D Deductions

Don’t allow tax to stress you! Lower your tax burden considerably by filing 80 C & 80 D deductions

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What is the difference between 80C and 80D deduction?

Section 80C and 80D of Income Tax Act, 1961, focus on tax deductions. 80C came into effect on April 1, 2006, for reducing the tax burden of the individuals. In order to promote savings, the government has provided a set of tax saving schemes by investing in certain financial products. The investment made on these schemes is called 80C investments.

80D provides tax deduction from the total taxable income of an individual and Hindu Undivided Family (HUFs) related to medical insurance premium paid for your family members. It can be said that section 80D was connected only to Medical Expenditure Reduction.

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What are the benefits of 80C and 80D deductions?

Under section 80C and the 80D here are the following benefits,

  • 80C provides the maximum amount of tax deduction one can avail, up to Rs 1.5 Lakhs.
  • Investing in various schemes like
    Public Provident Fund (PPF).
  • Equity linked saving schemes (ELSS).
  • Sukanya Samriddhi Schemes
  • Investment on infrastructure bonds.
  • Life insurance schemes. Under section 80CCD(1B), a deduction of Rs 50,000 can be claimed for a contribution made to the National Pension Scheme.
  • Under section 80CCD(2), a deduction of upto 10% could be claimed from the salary amount of an employer for contributing to the National Pension Scheme.
  • Under section 80D

  • Notably, section 80D extends health insurance benefits up to parents, but not parents in law.
  • Generally, up to Rs 25,000 can be claimed from health insurance policies, including preliminary health care checkup costs, for a family.
  • If your parents fall under the category of a senior citizen, then an additional benefit of Rs 50,000 can be availed. So the total tax saving benefit would be upto Rs 75,000.
  • If your parents are below 60 years, then an additional benefit of Rs 25,000 can be claimed. Under this, you can avail a benefit up to Rs 50,000.
  • What are checklist provisions of 80C and 80D?

  • Under section 80C, the maximum benefit extends up to Rs 1.5 lakhs.
  • Be cautious about returns% and the guarantee of returns, the lock-in period of the corresponding schemes which you have entered.
  • Section 80D prescribes a maximum benefit of upto 65,000.
  • Only the taxpayers should pay the health insurance premium i.e. no third party can avail tax benefits under section 80D.
  • The difference between 80C and 80D deduction is that section 80C gives the opportunity to save tax through investing in schemes. Section 80D only provides tax exemptions for health insurance premiums.
  • To claim deduction under section 80D, the mode of payment should be non-cash transactions.
  • How to file 80C and 80D deductions?

  • Visit the Govt e-filing website
  • Fill the income details required for ITR-1
  • After filing the income details, you are required to fill details about tax-saving deductions based on section 80C to 80U.
  • Once the above procedures have been completed, all your deductions will be claimed in the third tab of part C named, “Computation of income and tax”.
  • What are the documents required for filing 80C and 80D?

    For 80C

  • Life insurance premium receipts.
  • Contribution receipts of provident fund.
  • Deposit receipt of senior citizen saving schemes.
  • Mutual fund subscription receipts.
  • Other relevant receipts.
  • For 80D

  • Income tax act does not specify any particular document for deductions.
  • As a suggestion, one must hold doctor prescription, medicine bills, receipt of consultation fees, diagnostic test bills.
  • FAQs on 80C and 80D Deductions

    Do recurring deposits come under section 80C tax deductions?

    No. Both recurring deposits and their interests are taxable and do not fall under section 80C.

    Is term insurance included in both section 80C and 80D?

    Yes, term insurance is covered in both section 80C and 80D.

    Is the premium paid for non-dependent children, claimable under sec 80D?

    No. Only the premium paid for dependent children is deductible.

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