Other deductions are beneficial for the taxpayers to reduce tax liability. The Income Tax Act has provided various deductions under Chapter VI A.
Section 80C can be divided into two parts:
Investment: You invest your earned money for some time and then get it back.
Spending: You spend your earned money on the Eligible spends listed under Section 80C.
Investments under 80C:
Taxpayers can save on taxes by making investments in fixed-income products under 80C. The Investments are as below
Provident fund (EPF/VPF):
Public Provident Fund (PPF):
National Saving Certificate (NSC):
Tax Saving 5 years FD from Banks:
5 years Post Office Time Deposit (POTD):
Senior Citizen Saving Scheme (SCSS):
NHB deposit scheme:
Taxpayers can also save on taxes by investing in market-linked products and avail of deductions under 80C.
National Pension Scheme (NPS) (under Section 80CCD)
Atal Pension Yojana:
Equity Linked Savings Scheme (ELSS):
Pension Plans from Insurance Companies (under Section 80CCC):
Unit Linked Insurance Plan (ULIP):
By spending in taxable income taxpayers are allowed to avail deductions under 80C.
Life Insurance Premium:
Tuition fee for 2 children:
Stamp duty and registration cost of the house:
Home loan principal payment:
Sukanya Samriddhi Yojana
A total of Rs. 150,000/- can be claimed by the taxpayer under Sections 80C, 80CCC and 80CCD(1)
There is an option to increase the total deduction by an additional sum under Section 80CCD.
*80CCD(1B) and 80CCD(2) can be applied for contributions by employee and employer.
- 80 CCD(1B): Taxpayers can additionally avail of a deduction of Rs. 50,000/- by investing in NPS
- 80 CCD (2): Employers’ contribution to a maximum of 10% of the basic salary + dearness allowance is deductible in yearly contributions for salaried employees. Whereas central government employees' maximum deduction availed can be 14% of the basic salary in addition to dearness allowance.
What is the time limit for taxpayers must follow to avoid reversal of the deduction?
There is an important thing ignored by taxpayers while investing under Sections 80C, 80CCC & 80CCD. Different investment instruments have different holding periods to follow to avoid reversal of the deduction.
The maturity benefits under the Life insurance policy are also exempt subject to the conditions of Section 10(10D) of the Income Tax Act, 1961.
80D: Chapter VI A of the income tax provisions allows for deductions on health insurance premiums, including premiums paid for the critical illness rider of life insurance policies. Under Section 80D, the maximum deduction limit is ₹1 lakh for senior citizens who pay health insurance premiums for themselves and their parents. If you fall under the category of a normal taxpayer, you can claim a deduction for premiums up to ₹25,000. However, for senior citizens, the deduction limit is increased to ₹50,000 for health insurance premiums covering themselves and their family members.
80DD: The 80D section deals with tax deductions on bills that include medical treatment of a physically disabled dependent. The limit under this deduction is set by Income Tax India up to ₹75,000 - ₹1,25,000.
80DDB: Under 80DDB the taxpayer can use the deductions made on medical treatment of a specified disease from a neurologist, urologist, hematologist, immunologist, oncologist, or any other specialist covered under 80DDB. The limit for Tax deduction under 80DDB is ₹40,000 (Rs ₹100,000 for senior citizens) *subject to actual expenses.
80E: Section 80E tax deductions have no upper limits. This Tax benefit applies to the interest payments made towards education loans taken for higher education.
80EE: 80EE applies to loans that are taken for purchasing residential house property and sanctioned between 1st April 2016 to 31st March 2017. The upper limit for 80EE under Chapter VI is ₹50,000. Only first-time home buyers can avail of this benefit.
80EEB: 80EEB is applicable on purchasing an electric vehicle with a loan. 80EEB tax deduction can be availed only on interest. The maximum limit for 80EEB is ₹1.5 lakh. (The loan should have been sanctioned before 31st March 2023)
80G: 80G applies to contributions made to funds or charitable institutions. The extent of the deduction limit depends on the donor's classification and can go as high as 100% of the donated sum.
80GG: For salaried individuals without a House Rent Allowance component in their salary, this Chapter VI A deduction allows a maximum limit of ₹5,000 per month or 25% of the total annual income, whichever amount is lower.
80GGA: Deductions under this section of Chapter VI A can be claimed for the entire amount donated towards scientific research or rural development.
80GGC: Non-cash Donations in kind to political parties are eligible for deductions under this section, with a full 100% deduction permitted.
80TTA: Deduction under Chapter VI A under this deduction is ₹10,000. This applies to the interest generated on savings banks. This ₹10,000 limit doesn't apply to senior citizens.
80TTB: Deductions under this section are available only to senior citizens, the maximum tax deduction claim under 80TTB is ₹50,000 per year. It is also applicable to accounts with all the banks or Indian Post Office.
80U: People with disabilities can avail of deductions from this 80U under Chapter VI A, where the deduction amount depends on the type of disability. The total limit for this Chapter VI A deduction stands at ₹1.25 lakh per year.