Introduction: Understanding deductions under Section 80 is crucial for optimizing Income Tax Returns (ITR) filing. Explore various deductions like 80C for investments, 80D for health insurance, 80E for education loans, and more. Learn about eligibility, limits, and documentation requirements to maximize tax benefits effectively.
Deduction under Section 80 from ITR filing perspective:
Section 80C
1. Maximum Deduction: The maximum deduction allowed under Section 80C is ₹1.5 lakh per financial year (FY). This deduction limit is applicable for individuals, Hindu Undivided Families (HUFs), and taxpayers under the age of 60 years.
2. Eligible Investments: Various investments and expenditures qualify for deduction under Section 80C. Some of the common ones include:
- Contributions to Employee Provident Fund (EPF).
- Public Provident Fund (PPF) contributions.
- Equity Linked Saving Scheme (ELSS) investments.
- National Savings Certificate (NSC) purchases.
- Tax-saving Fixed Deposits (FDs) with a tenure of 5 years or more.
- Sukanya Samriddhi Account deposits.
- Payment of life insurance premiums for self, spouse, and children.
- Repayment of the principal amount of a home loan (subject to certain conditions).
3. Cumulative Limit: The cumulative limit of ₹1.5 lakh includes the total amount invested or spent on eligible investments and expenditures under Section 80C. Taxpayers can mix and match investments within this limit to maximize tax benefits.
4. Lock-in Period: Some investments under Section 80C come with a lock-in period, during which the invested amount cannot be withdrawn. For example, PPF has a lock-in period of 15 years, ELSS has a lock-in period of 3 years, and tax-saving FDs typically have a lock-in period of 5 years.
Section 80D
1) Eligible Taxpayers: Section 80D benefits are available to individuals and Hindu Undivided Families (HUFs).
2) Types of Health Insurance: The deduction under Section 80D is available for premiums paid towards health insurance policies for:
- Self
- Spouse
- Dependent Children
- Parents
3) Maximum Deduction: The maximum deduction allowed under Section 80D depends on the category of insured individuals:
a. For premiums paid for self, spouse, and dependent children: ₹25,000 per annum.
b. An additional deduction of up to ₹25,000 is available for premiums paid towards health insurance for parents. If either of the parents is a senior citizen (aged 60 years or above), the maximum deduction limit increases to ₹50,000.
4) Preventive Health Check-up: Taxpayers can also claim a deduction of up to ₹5,000 per annum for expenses incurred on preventive health check-ups for themselves, their spouse, dependent children, and parents. However, this amount is within the overall limit mentioned above.
5) Mode of Payment: The premiums must be paid through any mode other than cash to claim the deduction under Section 80D.
6) Tax Benefits: The deduction under Section 80D helps in reducing the taxable income of the taxpayer, thereby lowering the tax liability.
Section 80E
Interest paid on education loans for higher studies qualifies for deduction under this section. There is no upper limit on the amount of deduction. However a taxpayer can claim deductions under Section 80E for up to eight years
Section 80G
Donations made to specified funds and charitable institutions are eligible for deduction under this section. The amount of deduction varies based on the fund or institution and is subject to certain limits.
Section 80TTA and 80TTB
These sections allow deductions for interest income earned from savings accounts (80TTA) and for interest income earned by senior citizens (80TTB), respectively. The maximum deduction under 80TTA is ₹10,000, while limit under 80TTB is ₹50,000
Section 80CCD:
The maximum limit of deductions from under 80CCD(1) is capped at Rs 1.5 lakhs for a given financial year. Section 80CCD(1B) provides a deduction of up to Rs 50,000 for contributions made to NPS over and above the deductions available under Section 80CCD(1), provided if they opt for the old tax regime..
These are some of the major deductions under Section 80 of the Income Tax Act, 1961. It’s important to note that the availability and extent of deductions may vary based on individual circumstances and the specific provisions of the Income Tax Act. It’s advisable to consult a tax advisor or refer to the latest tax laws for accurate and up-to-date information.
Documents Required: Taxpayers need to maintain proper documentation, including premium payment receipts and health check-up receipts, to claim the deduction at the time of filing their income tax returns.
Conclusion: Section 80 offers a range of deductions to minimize tax liabilities, covering investments, health insurance, education loans, and charitable donations. Taxpayers must understand the eligibility criteria, limits, and documentation requirements to claim deductions accurately while filing their Income Tax Returns (ITR). Consulting a tax advisor for personalized guidance ensures compliance with the latest tax laws and maximizes tax savings.
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