written by Khatabook | August 16, 2021

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

The income tax deduction is a reduction in taxable income that reduces a person's tax liability. Income tax is an important source of income for the government. It is also important to note that a significant portion of an individual's earnings falls into a tax bracket. Section 80 deductions are divided into numerous categories according to the type of investment. 

Different Types of Deductions According to Sections

The 80C deduction is the most well-known way to save up on paying Income Tax. Additional tax deductions can also help decrease the tax bill. Let's take a closer look at these deductions:

What are Section 80C Deductions?

We all expect a good return when we invest, but did you know that some of your investments provide you with more than just that and help you save on tax? 

One such investment is Section 80C. It is also considered one of the most favourite sections by the taxpayers because it reduces taxable income through tax-advantaged investments.

We all search for different ways to save money and lower our tax deductions as Indian taxpayers. A taxpayer who uses tax-saving investments and claims a deduction under Section 80C is entitled to a deduction of up to Rs 1,50,000 on their taxable income. The following are some of the different investing possibilities available:

1. Employee Provident Fund: Under this investment, both the employer and employee can make an equal contribution (12% of basic salary).

2. Premiums for Health Insurance: If you pay a premium for health insurance, you may be eligible for tax benefits.

3. Public Provident Fund (PPF): The Indian government offers a long-term investment in PPF. Any sum deposited in a PPF account in a year is eligible to be claimed for deductions, starting from Rs 500 to a maximum of Rs 1.5 lakhs. After 15 years, you can withdraw the invested money. A PPF account's interest is likewise tax-free. In the PPF programme, premature closure is allowed after 5 years and partial withdrawal is permitted after 6 years of investment.

4. Premiums for life insurance: If you pay a life insurance premium, you are eligible for a tax benefit.

5. Unit linked insurance plan: ULIPs are another tax-advantaged investment that not only saves money for investors but also allows them to earn substantial returns on their money over a lengthy period. ULIPs, which are frequently sold in combination with life insurance, are also eligible for tax deductions. It has a 5-year lock-in period and provides investors with flexibility by investing in a wide choice of fund options.

6. Equity Linked Savings Scheme (ELSS): Investments up to Rs 1.5 lakhs are eligible for tax exemption under the equity-linked saving scheme, which has a three-year lock-in term. However, the returns in this programme are not guaranteed and fluctuate depending on the fund's market performance. Investors can diversify their investments in multiple ELSS to reduce risk and increase long-term capital returns.

7. Sukanya Samridhi account investment: For a girl child in India, you can open a Sukanya Samriddhi Account with a minimum of Rs 1000 and a maximum of Rs 1.5 lakhs. This scheme currently has an interest rate of 8.1% and includes a tax exemption.

8. National savings certificate: It's a safe way to save. In addition, even though NSCs have a 5-year duration, you can claim a deduction for interest in the same year you purchased them. Because it is a government-sponsored programme, it protects the safety of your money. This plan is primarily for middle-income participants who want to invest while still benefiting from income taxation.

9. Children’s Tuition Fee: It covers the cost of attending a  university in India. This is a good option for up to two children.

10. Housing loan: Repayment of the principal of a home loan, as well as the costs of registration, may be eligible for tax advantages under Section 80C.

11. Infrastructure Bonds: Companies like India Infrastructure Finance and Development issue government-approved bonds.

12. Post Office Fixed Deposit: Fixed Deposit at the Post Office is like a bank fixed deposit, however, only the 5-year deposit is eligible for tax deductions.

What is Section 80CCC?

Individual contributions to pension plans are eligible for an income tax credit under Section 80CCC. Payments to annuity pension schemes can be deducted under Section 80CCC. Tax benefits on expenses incurred for purchasing or continuing retirement plans are defined under Section 80CCC, allowing qualifying investors to reap additional benefits. The annual pension received upon submission of the annuity is taxable every year, including any interest or bonus accrued.

Individuals are the only ones who can claim deductions under Section 80CCC. Here are some things to remember:             

  • This plan's interest or bonuses will not be eligible for tax deductions.

  • The sum received after the plan is surrendered is taxed.

  • The amount of the pension you get is taxable.

  • Section 80CCC allows for a maximum deduction of Rs 1,50,000.

Also Read: Understanding Income Tax Allowances and Allowed Deductions for Salaried Individuals

What is Section 80CCD?

It deals with the individual’s contributions to the following schemes:

  • National Pension System (NPS)

  • Atal Pension Yojana is a government-sponsored pension scheme.

Section 80CCD (1):  It is concerned with tax deductions for self-employed/ Central Government/ Other Employer. Salaried employees are entitled to a maximum deduction of 10% of their pay, whereas self-employed taxpayers can deduct 10% of their gross income.

Section 80CCD (2): This section discusses the employer's NPS contribution. Individuals who make deposits to their pension account are eligible for a deduction under Section 80CCD. If an employer contributes to the employee's NPS account, the employee can claim a tax deduction. The threshold is 10% of the employee's pay. 

Section 80CCD (1B): For the capital invested in the NPS, the entire tax savings might be as high as Rs 2,00,000, with an additional tax benefit of Rs 50,000 attainable under Section 80CCD (1B).

What is 80D?

A tax deduction is available under Section 80D for the premium paid for health insurance coverage. A taxpayer can deduct up to Rs 25,000 for insurance for themselves, their spouse, and their dependent children under section 80D. If your parents are under 60 years old, you can get an additional deduction for their insurance up to Rs 25,000. However, if they are beyond the age of 60, they can deduct Rs 50,000 under this section. The maximum deduction permitted under this clause is Rs 1 lakh if both the taxpayer and the parent(s) are above 60 years old.

Category

Age Limit

Exemption Limit

Self spouse children

Below 60yrs

Rs 25,000

Parents

Below 60yrs

Rs 25,000

Self parents

Above 60yrs

Rs 50,000

Summary of deductions

Section

Deduction specifics

Allowed Limit

80C

 PPF Investment

Rs 1,50,000

 

Employees' contribution to the Provident fund (PF)

 
 

National savings certificate (NSC)

 
 

Unit linked insurance plan (ULIPS)

 
 

Children’s Tuition Fee

 
 

Housing loan

 
 

Sukanya Samridhi account investment

 
 

Subscription to a programme of notified securities or notified deposits

 
 

Equity Linked Savings Scheme  (ELSS)

 
 

Amount spent to buy a deferred annuity.

 
 

Deposit scheme for five years

 
 

Children’s Tuition Fee

 
 

Contribution to a registered pension fund established by a mutual fund or a unit trust.

 
 

Savings plan for senior citizens

 
 

Subscription to the National Housing Bank's Home Loan Account plan

 
 

Membership to a deposit scheme run by a government or a private enterprise that provides housing finance.

 
 

Contribution to the LIC's notified annual plan

 
 

subscription to approved eligible issue equity shares/debentures

 
 

Subscription to NABARD's notified bonds

 
 

Life Insurance Premium payment

 

80CCC

For money deposited in a LIC or another insurer's annuity plan for a pension 

-

80CCD (1)

Contribution to the NPS account by employees

Rs 1,50,000

80CCD (2)

Contribution of employees to the National Pension System (NPS)

Max 10%

80CCD (1B)

Any additional contribution to the NPS

Rs 50,000

What is Section 80DD?

The Rehabilitation of Handicapped Dependent Relatives deduction is covered in Section 80DD. An individual or a HUF can take advantage of the Section 80DD deduction on:

  • Expenses for medical care, training, and rehab of a disabled dependent relative.
  • Payment or contribution to a designated plan for the support of a disabled dependent relative. There is a set deduction of Rs 75,000 if the disability is 40% or higher but less than 80%., There is a set deduction of Rs 1,25,000 in cases of severe disability of 80% or higher.

Note that a certificate of disability from an authorized medical authority is required to claim the deduction.

What is Section 80DDB?

80DDB allows deductions with respect to medical expenses for an individual or anyone dependent on the individual.

  • An individual or a HUF can claim a deduction of up to Rs 40,000. It is accessible for any medical expenses paid for by self or any dependents to treat designated medical disorders or ailments.
  • A deduction of up to Rs 1 lakh can be claimed by the Individual or HUF taxpayers or on whose behalf the expenses are made is a senior citizen.
  • The reimbursement of medical expenditures by insurance will be subtracted from the deduction the taxpayer can claim under section 80DDB.

What is Section 80G?

Under section 80G, donations to social causes are eligible for a tax deduction. If you have made donations under section 80G, they are eligible for a tax deduction of up to 100% or 50%, depending on whether they are restricted or not.

Please find a list of donations and their eligibility below:








 

Donations that are eligible for a 100% tax deduction without any restrictions

  1. The National Foundation for Communal Harmony is a non-profit organisation dedicated to bringing communities together.
  2. The Central Government set-up Défense Fund.
  3. The National Relief Fund of the Prime Minister
  4. Under the presidency of Zila Saksharta Samiti's constitution
  5. A notable national university or educational institution that has been approved.
  6. A state government-created fund for poor people's medical care.
  7. The (NIAF) National Illness Assistance Fund
  8. The National Blood Transfusion Council
  9. The National Trust for the Welfare of People is a non-profit organisation dedicated to improving people's lives with mental retardation, autism, cerebral palsy, & multiple disabilities.
  10. National Sports & cultural Fund
  11. The Technology Development & Application Fund
  12. Chief Minister’s Relief Fund
  13. The Maharashtra Chief Minister’s Relief Fund
  14. Maharashtra's Chief Minister's Earthquake Relief Fund
  15. Any fund established by the Gujarat State Government solely to provide relief to earthquake victims in Gujarat.
  16. Armenia Earthquake Relief Fund of Prime Minister Serzh Sargsyan
  17. Fund for Africa (Public Contributions — India)
  18. Swachh Bharat Abhiyan
  19. Clean Ganga Fund
  20. National Institute on Drug Abuse

Donations that are eligible for a 50% tax deduction without any restrictions

  1. The Jawaharlal Nehru Memorial Fund
  2. Drought Relief Fund of the Prime Minister
  3. Indira Gandhi Memorial Trust is a charitable organisation dedicated to the memory of Indira.
  4. The Rajiv Gandhi Foundation

Donations that are qualified for a 100% deduction up to 10% of modified gross total income

  1. Government or any other certified local entity encouraging family planning.
  2. Donate to the Indian Olympic Association, develop infrastructure or sponsorship of sports and games in India by a company.

Donations that are qualified for a 50% deduction up to 10% of modified gross total income

  1. Any institution or fund that meets the requirements of Section 80G. (5)
  2. To be used for a charitable purpose other than promoting family planning by the government or any local authority.
  3. Any organisation referred to in Section 10(26BB) to advance the minority community's interests.

Also Read: Claiming Deduction on Interest under Section 80TTA of Income Tax Act

Conclusion

As an investor, having the correct information can help you save a lot of money on taxes. Now that you're aware of all tax-saving options such as 80C, 80D, 80CCD and others, you make sure you use them correctly to save money while also earning returns.

FAQs

On April 27, 2021, I made an 80C investment. Can I claim deductions on this investment?

If you invested on April 27, 2021, you would be able to claim it as a deduction in the fiscal year 2021-2022.

Can a firm or company benefit from Section 80C?

No, because Section 80C only applies to individuals or Hindu Undivided Families (HUF)

Under Section 80G, can a firm be eligible to claim tax deductions made for donations?

Yes, any taxpayer that contributes towards donation is eligible for deduction.

What is section 80GGB?

Section 80GGB is a deduction on contributions towards Political Parties by the companies

What is section 80GGC?

Section 80GGC is a deduction on contributions towards Political Parties by the people

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