Read All About the Deductions U/S 80C, 80CCC, 80CCD & 80D

THE DEDUCTIONS U/S 80CCC, 80CCD & 80D

BRIEF INTRODUCTION

Section 80 Deductions For financial year 2019-20 (Including Budget 2020 amendments).

Income tax department, in order to encourage savings and investments amongst the taxpayers, introduced and provided various deductions under chapter VI A, in order to reduce their taxable income and would thereby reduce their tax payment. 80C being the foremost famous, there are other deductions which are beneficial for the taxpayers to scale back their liabilities. allow us to understand these deductions in detail:

SECTION 80C – DEDUCTIONS ON INVESTMENTS

• Section 80C of the income tax Act of India may be a clause that points to numerous expenditures and investments that are exempted from taxation. It allows for a maximum deduction of up to Rs.1.5 lakh per annum from an investor’s total taxable income.
• Section 80C is applicable just for individual taxpayers and Hindu Undivided Families. Corporate bodies, partnership firms, and other businesses don’t seem to be qualified to avail tax exemptions under Section 80C.
• Section 80C is one in all the foremost popular and famous sections amongst the taxpayers because it allows to scale back taxable income by making tax saving investments or incurring eligible expenses. It allows a maximum deduction of Rs 1.5 lakh once a year from the taxpayer’s total income.
• The advantage of this deduction will be availed by Individuals and HUFs. Companies, partnership firms, LLPs cannot avail the good thing about this deduction.
• Section 80C consists of various section, including 80CCC, 80CCD (1), 80CCD (1b) and 80CCD (2). It is important to notice that overall limit including the subsections for claiming deduction is Rs 1.5 lakh except a further deduction of Rs 50,000 allowed u/s 80CCD(1b)

SUBSECTIONS OF SECTION 80C

Under the income tax Act of India, deductions under Section 80C are divided into certain sub-sections. These are –

TAX SAVING SECTIONS	ELIGIBLE INVESTMENTS FOR TAX EXEMPTIONS
SECTION 80C	INVESTMENTS MADE IN PROVIDENT FUNDS, LIFE INSURANCE PREMIUMS, EQUITY LINKED SAVING SCHEMES, PAYMENT MADE TOWARDS THE PRINCIPAL SUM OF A HOME LOAN, SSY, NSC, SCSS, ETC.
SECTION 80CCC	PAYMENT MADE TOWARDS PENSION PLANS, AS WELL AS MUTUAL FUNDS.
SECTION 80CCD (1)	PAYMENT MADE TOWARDS CERTAIN GOVERNMENT-BACKED SCHEMES SUCH AS NATIONAL PENSION SYSTEM, ATAL PENSION YOJANA, ETC.
SECTION 80CCD(1B)	INVESTMENTS OF UP TO RS.50,000 IN NPS IS CONSIDERED FOR EXEMPTION UNDER THIS SECTION.
SECTION 80CCD (2)	EMPLOYER’S CONTRIBUTION TOWARDS NPS (UP TO 10%, COMPRISING BASIC SALARY AND DEARNESS ALLOWANCE, IF ANY) IS EXEMPTED UNDER THIS CATEGORY.

 

INVESTMENTS ELIGIBLE FOR DEDUCTION UNDER SECTION 80C

INVESTMENT OPTIONS	INTEREST	MINIMUM LOCK-IN PERIOD	ASSURED RETURN	ASSOCIATED RISK
ELSS	12% TO 15% (DEPENDING ON MARKET FLUCTUATION)	3 YEARS	NO	HIGH
NPS	8% TO 10%	TILL THE INVESTOR REACHES 60 YEARS OF AGE (RETIREMENT)	NO	HIGH
SCSS	8.60%	5 YEARS	YES	LOW
PPF	7.90%	15 YEARS	YES	LOW
NSC	7.9%	5 YEARS	YES	LOW
ULIP	8% TO 10% (DEPENDING ON MARKET FLUCTUATION)	5 YEARS	NO	MODERATE
FIXED DEPOSIT	UP TO 8.40%	5 YEARS	YES	LOW
SUKANYA SAMRIDDHI YOJANA	8.50%	8 YEARS	YES	LOW

LIFE INSURANCE PREMIUMS

Premiums paid towards insurance policies are eligible to receive tax benefits as per 80C limit. These exemptions are available against policies held by self, spouse, dependent children, etc. Hindu Undivided members of the family may also get pleasure from the identical exemptions.

Currently, an annual premium of up to 10% (of the insurance policy’s total sum assured) is tax exempted under this scheme. This clause has been revised on 1st April 2012, before which premiums of up to twenty (of the sum assured) was answerable for tax exemption under Section 80C deduction.

PUBLIC PROVIDENT FUND

Any contribution towards Public Provident Fund (PPF) may be filed for write-down under Section 80C. Public Provident Funds include a maximum deposit limit of Rs.1,50,000, allowing an investor to say the complete deposited amount as an exemption under this taxation act.

Any voluntary contribution made by the worker towards the provided fund is additionally eligible for deduction under Section 80C of the taxation Act.

NABARD RURAL BONDS

NABARD is the short form for National Bank for Agriculture and Rural Development. Rural Bonds offered by NABARD are eligible for tax exemption under the taxation Act of India. the utmost deductible amount is capped at Rs.1.5 lakh under Section 80C.

UNIT LINKED INSURANCE PLANS (ULIPS)

Unit Linked Insurance Plans offer more returns within the long run compared to standard insurance policies. they need become especially popular in recent years because of the tax benefits offered under Section 80C of the revenue enhancement Act, 1961. Investors can avail tax exemptions up to Rs. 1.5 lakh on the invested amount u/s 80C tax provisions.

NATIONAL SAVINGS CERTIFICATE

NSC or National Savings Certificate is one amongst the foremost popular tax-saving instruments for risk-avert individuals. Interest earned on NSC is compounded semi-annually, and therefore the maximum maturity period ranges from 5 to 10 years.
Investors don’t need to follow any limitation on the entire sum invested towards NSC during a financial year; however, only a maximum of Rs.1.5 lakh is subject to exemption every year under Section 80C.

TAX SAVING FD

Tax Saving FDs are fixed deposit schemes offered by both banks and post offices that allow write-off under Section 80C. These FDs generally have a lock-in period of 5 years and the maximum amount of exemption under this is subject to Rs.1.5 lakh only (on the principal amount). However, the returns of such instruments are chargeable for taxation.

EPF

The return earned from Employee Provident Fund (EPF), including the interest, is eligible for tax exemption under Section 80C of the taxation Act, 1961. it’s only eligible for workers who have continued his or her service for a minimum of 5 years. If individuals make voluntary contributions to their EPF accounts, such amount is eligible for tax exemptions under Section 80C.

INFRASTRUCTURE BONDS

Section 80C of the revenue enhancement Act allows tax exemptions on infrastructure bonds, provided the investment is up to or on top of Rs.20,000. The limit of Rs.1.5 lakh stays applicable for these long-term secured bonds additionally.

EQUITY-LINKED SAVING SCHEME

Equity Linked Saving Schemes, or ELSS, falls under Section 80C’s exemption category for up to its maximum limit (Rs.1.5 lakh). These investment schemes include a compulsory 3-year lock-in period.

SENIOR CITIZENS SAVINGS SCHEME

Any investments made towards Senior Citizens Saving Scheme, (or SCSS) is eligible for tax exemption up to the utmost allocated 80C limit, i.e., Rs. 1.5 lakh. Individuals above the age of 60 (people choosing voluntary retirement scheme is eligible to participate in SCSS after the age of 55 years) years are eligible to induce get pleasure from SCSS, which features a minimum lock-in tenure of 5 years.

PRINCIPAL REPAYMENT MADE TOWARDS CONSUMER CREDIT

Only the repayments made towards the principal component of equity credit line EMIs are eligible for deduction under Section 80C. However, the borrower has got to fulfil certain clauses to avail of this benefit; these are –

• Exemptions can only be claimed if the development of the property is completed.
• Transference of the property within 5 years of possession will exclude it from the tax exemptions provided under Section 80C of the taxation Act, 1961.
• Any amount claimed as a write-down should be taxable within the transfer year if a handover is formed after 5 years of the property’s possession. Failing to satisfy this clause also will render it excluded from Section 80C’s guidelines.

STAMP DUTY AND REGISTRATION CHARGES

Stamp duty and registration charges is considered because the two largest expenses made towards taking ownership of a property. the govt of India allows a deduction of liabilities till the 80C limit on the taxation and registration charges paid towards house procurement. However, exemptions can only be claimed within the year that these duties are paid; otherwise, it’ll not be eligible for consideration under Section 80C deduction.

SUKANYA SAMRIDDHI YOJANA

Sukanya Samriddhi Yojana could be a saving scheme specially designed to fulfill the financial requirements for a girl’s education and marriage. Parents or legal guardians of a woman child (not older than 10 years of age) can open this account and oldsters of two or more (only just in case of twins) girls may invest during this plan. Thus, the interest income on such investment scheme shall be eligible for exemption under Section 80C.

Thus, we have seen that Section 80C provides for multiple investments for exemption, a rough idea about which every investor should have. The advantages offered by this act can help save a considerable amount from one’s liabilities.

SECTION 80CCC – INSURANCE PREMIUM /SECTION 80CCD – PENSION CONTRIBUTION

	ELIGIBLE INVESTMENTS FOR TAX DEDUCTIONS
80 C	80C ALLOWS DEDUCTION FOR INVESTMENT MADE IN PPF, EPF, LIC PREMIUM, EQUITY LINKED SAVING SCHEME, PRINCIPAL AMOUNT PAYMENT TOWARDS HOME LOAN, STAMP DUTY AND REGISTRATION CHARGES FOR PURCHASE OF PROPERTY, SUKANYA SMRIDDHI YOJANA (SSY), NATIONAL SAVING CERTIFICATE (NSC), SENIOR CITIZEN SAVINGS SCHEME (SCSS), ULIP, TAX SAVING FD FOR 5 YEARS, INFRASTRUCTURE BONDS ETC
80CCC DEDUCTION FOR LIFE INSURANCE ANNUITY PLAN.	80CCC ALLOWS DEDUCTION FOR PAYMENT TOWARDS ANNUITY PENSION PLANS PENSION RECEIVED FROM THE ANNUITY OR AMOUNT RECEIVED UPON SURRENDER OF THE ANNUITY, INCLUDING INTEREST OR BONUS ACCRUED ON THE ANNUITY, IS TAXABLE IN THE YEAR OF RECEIPT.
80CCD (1) DEDUCTION FOR INVESTMENT IN NPS	EMPLOYEE’S CONTRIBUTION, SUBJECT TO MAXIMUM OF LEAST OF THE FOLLOWING – 10% OF SALARY (IN CASE TAXPAYER IS EMPLOYEE) 20& OF GROSS TOTAL INCOME (IN CASE OF SELF EMPLOYED) RS 1.5 LAKH (LIMIT ALLOWED U/S 80C)
80CCD (1B) DEDUCTION FOR NPS	ADDITIONAL DEDUCTION OF RS 50,000 IS ALLOWED FOR AMOUNT DEPOSITED TO NPS ACCOUNT CONTRIBUTIONS TO ATAL PENSION YOJANA IS ALSO ELIGIBLE FOR DEDUCTION.
80CCD (2) DEDUCTION FOR NPS	EMPLOYERS CONTRIBUTION IS ALLOWED FOR DEDUCTION UPTO 10% OF BASIC SALARY PLUS DEARNESS ALLOWANCE UNDER THIS SECTION. BENEFIT IN THIS SECTION IS ALLOWED ONLY TO SALARIED INDIVIDUALS AND NOT SELF EMPLOYED.

INVESTMENT OPTIONS UNDER SECTION 80 C

INVESTMENT OPTIONS	AVERAGE INTEREST	LOCK IN PERIOD FOR	RISK FACTOR
ELSS FUNDS	12% – 15%	3 YEARS	HIGH
NPS SCHEME	8% – 10%	TILL 60 YEARS OF AGE	HIGH
ULIP	8% – 10%	5 YEARS	MEDIUM
TAX SAVING FD	7% – 8%	5 YEARS	LOW
PPF	7.10%	5 YEARS	LOW
SENIOR CITIZEN SAVINGS SCHEME	7.4%	5YEARS (CAN BE EXTENDED FOR OTHER 3 YEARS)	LOW
NATIONAL	6.8%	5 YEARS	LOW
SUKANYA SAMRIDDHI YOJANA	8.4%	TILL GIRL CHILD REACHES 21 YEARS OF AGE. HOWEVER, PARTIAL WITHDRAWALS CAN BE MADE AFTER SHE REACHES 18 YEARS.	LOW

Sometimes, you’ll have deductions or investments eligible for 80C, but haven’t submitted the proofs to your employer. this could cause to additional TDS deductions. you’ll be able to still claim these deductions while e-filing, as long as you’ve got the proofs with you.
Section 80 TTA – Interest on bank account

DEDUCTION FOR INTEREST ON SAVINGS CHECKING ACCOUNT

If you’re an individual or an HUF, you will claim a deduction of maximum Rs 10,000 against interest income from your bank account with a bank, co-operative society, or post office. Do include the interest from savings checking account in other income.

Section 80TTA deduction isn’t available on interest income from fixed deposits, recurring deposits, or interest income from corporate bonds.

SECTION 80GG – HOUSE RENT PAID

Deduction for House Rent Paid Where HRA isn’t Received

• Section 80GG deduction is accessible for rent paid when HRA isn’t received. The taxpayer, spouse or minor child shouldn’t own residential accommodation at the place of employment
• The taxpayer mustn’t have self-occupied residential property in the other place
• The taxpayer must be living on rent and paying rent
• The deduction is out there to any or all individuals

Deduction available is that the least of the following:

• Rent paid minus 10% of adjusted total income
• Rs 5,000/- per month
• 25% of adjusted total income*

*Adjusted Gross Total Income is fell upon after adjusting the Gross Total Income sure deductions, exempt income, long-term capital gains and income associated with non-residents and foreign companies.

An online e-filing software like that of Clear Tax will be extremely easy because the limits are auto-calculated. So, you are doing not must worry about making complex calculations. From FY 2016-17 available deduction has been raised to Rs 5,000 a month from Rs 2,000 per month.

SECTION 80E – INTEREST ON EDUCATION LOAN

Deduction for Interest on Education Loan for Higher Studies. A deduction is allowed to a personal for interest on loans taken for pursuing educational activity. This loan may be taken for the taxpayer, spouse or children or for a student for whom the taxpayer may be a trustee.

80E deduction is offered for a maximum of 8 years (beginning the year during which the interest starts getting repaid) or till the whole interest is repaid, whichever is earlier. there’s no restriction on the number that may be claimed.

SECTION 80EE – INTEREST ON HOME EQUITY LOAN

Deductions on home equity credit Interest for First Time Home Owners. FY 2017-18 and FY 2016-17 This deduction is offered in FY 2017-18 if the loan has been taken in FY 2016-17. The deduction under section 80EE is accessible only to home-owners (individuals) having just one house property on the date of sanction of the loan. the worth of the property must be but Rs 50 lakh and therefore the equity credit line must be but Rs 35 lakh.

The loan taken from an establishment must are sanctioned between 1 April 2016 and 31 March 2017. there’s an extra deduction of Rs 50,000 available on your home equity credit interest on top of deduction of Rs 2 lakh (on interest component of equity credit line EMI) allowed under section 24.

SECTION 80D – MEDICAL INSURANCE

Deduction for the premium bought Medical Insurance. You (as an individual or HUF) can claim a deduction of Rs.25,000 under section 80D on insurance for self, spouse and dependent children. an extra deduction for insurance of fogeys is out there up to Rs 25,000, if they’re but 60 years old. If the fogeys are aged above 60, the deduction amount is Rs 50,000, which has been increased in Budget 2018 from Rs 30,000.

In case, both taxpayer and parent(s) are 60 years or above, the utmost deduction available under this section is up to Rs.1 lakh.

EXAMPLE

Rohan’s age is 65 and his father’s age is 90. during this case, the most deduction Rohan can claim under section 80D is Rs. 100,000, however, with effect from FY 2015-16, an additional deduction of Rs. 5,000 shall be allowed for preventive checkup, but the same will be provided cumulatively.

SECTION 80DD – DISABLED DEPENDENT

Deduction for Rehabilitation of Handicapped Dependent Relative. Section 80DD deduction is offered to a resident individual or a HUF and is obtainable on:

• Expenditure incurred on medical treatment (including nursing), training and rehabilitation of handicapped dependent relative
• Payment or deposit to specified scheme for maintenance of handicapped dependent relative.
• Where disability is 40% or more but but 80% – fixed deduction of Rs 75,000.
• Where there’s severe disability (disability is 80% or more) – fixed deduction of Rs 1,25,000.

To claim this deduction a certificate of disability is required from prescribed medical authority. With effect from FY 2015-16, the amount of deduction under this section has been raised from Rs 50,000 to Rs 75,000 and the amount of Rs 1,00,000 has been raised to Rs 1,25,000.

SECTION 80DDB – MEDICAL EXPENDITURE

Deduction for Medical Expenditure on Self or Dependent Relative

1. For people and HUFs below age 60

A deduction up to Rs.40,000 is offered to a resident individual or a HUF. it’s available with relevance any expense incurred towards treatment of specified medical diseases or ailments for himself or any of his dependents. For an HUF, such a deduction is offered with regard to medical expenses incurred towards these prescribed ailments for any of the HUF members.

2. For senior citizens and super senior citizens

In case the individual on behalf of whom such expenses are incurred could be an adult, the individual or HUF taxpayer can claim a deduction up to Rs 1 lakh. Until FY 2017-18, the deduction that might be claimed for an adult and an excellent grownup was Rs 60,000 and Rs 80,000 respectively. This has now become a typical deduction available up to Rs 1 lakh for all senior citizens (including super senior citizens) unlike earlier.

3. For reimbursement claims

Any reimbursement of medical expenses by an insurer or employer shall be reduced from the quantum of deduction the taxpayer can claim under this section.
Also remember that you just have to get a prescription for such medical treatment from the concerned specialist so as to assert such deduction. Read our detailed article on Section 80DDB.

SECTION 80U – PHYSICAL DISABILITY

Deduction for Person laid low with Physical Disability. A deduction of Rs.75,000 is accessible to a resident individual who suffers from a physical disability (including blindness) or sub normality. just in case of severe disability, one can claim a deduction of Rs 1,25,000.
From FY 2015-16 – Section 80U deduction limit of Rs 50,000 has been raised to Rs 75,000 and Rs 1,00,000 has been raised to Rs 1,25,000.

SECTION 80G – DONATIONS

Deduction for donations towards Social Causes. The various donations laid out in u/s 80G are eligible for deduction up to either 100% or 50% with or without restriction.

From FY 2017-18 any donations made in cash exceeding Rs 2,000 won’t be allowed as deduction. The donations above Rs 2000 should be made in any mode aside from cash to qualify for 80G deduction.

1. Donations with 100% deduction with none qualifying limit

• • National Defense Fund founded by the Central Government
  • Prime Minister’s National Relief Fund
  • National Foundation for Communal Harmony
  • An approved university/educational institution of National eminence
  • Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
  • Fund founded by a regime for the medical relief to the poor
  • National Illness Assistance Fund
  • National introduction Council or to any State transfusion Council
  • National Trust for Welfare of Persons with Autism, brain disorder, stupidity and Multiple Disabilities
  • National Sports Fund
  • National Cultural Fund
  • Fund for Technology Development and Application.
  • National Children’s Fund
  • Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund maintained by any State or Union Territory
  • The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
  • The Maharashtra Chief Minister’s Relief Fund during October 1, 1993 and October 6,1993
  • Chief Minister’s Earthquake Relief Fund, Maharashtra
  • Any fund founded by the authorities of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat
  • Any trust, institution or fund, charged under Section 80G(5C) in respect of providing relief to the victims of earthquake in Gujarat or
  • Prime Minister’s Armenia Earthquake Relief Fund
  • Africa (Public Contributions — India) Fund
  • Swachh Bharat Kosh (applicable from year 2014-15)
  • Clean Ganga Fund (applicable from year 2014-15)
  • National Fund for Control of habit (applicable from twelvemonth 2015-16)

2. Donations with 50% deduction with none qualifying limit

• • Jawaharlal Nehru Memorial Fund
  • Prime Minister’s Drought Relief Fund
  • Indira Gandhi Memorial Trust
  • The Rajiv Gandhi Foundation

3. Donations to the subsequent are eligible for 100% deduction subject to 10% of adjusted gross total income

• • Government or any approved agency, institution or association to be utilized for the aim of promoting birth control
  • Donation by an organization to the Indian Olympic Association or to the other notified association or institution established in India for the event of infrastructure for sports and games in India or the sponsorship of sports and games in India

4. Donations to the subsequent are eligible for 50% deduction subject to 10% of adjusted gross total income

• • Any other fund or any institution which satisfies conditions mentioned in Section 80G (5)
  • Government or any authority to be utilized for any charitable purpose aside from the aim of promoting planning
  • Any authority constituted in India for the aim of coping with and satisfying the requirement for housing accommodation or for the aim of coming up with, development or improvement of cities, towns, villages or both
  • Any corporation, as provided under Section 10(26BB), in order to promote interest of minority community
  • Amount spend on repairs or renovation of any notified temple, mosque, gurudwara, church or other places.

SECTION 80GGB – COMPANY CONTRIBUTION

• Deduction in respect of contributions made by companies to Political Parties.
• Section 80GGB deduction is allowed to an Indian company for the quantity contributed by it to any organization or an electoral trust.
• Deduction is allowed for contribution done by any way apart from cash.

SECTION 80GGC – CONTRIBUTION TO POLITICAL PARTIES

Deduction on contributions given by a person to Political Parties. Deduction under section 80GGC is allowed to an individual taxpayer for any amount contributed to a party or an electoral trust. it’s not available for companies, local authorities and a man-made juridical person wholly or partly funded by the govt. you’ll be able to avail this deduction given that you pay by any way apart from cash.

SECTION 80RRB – ROYALTY OF A PATENT

Deduction with relation to any Income by way of Royalty of a Patent. This section provides deduction in respect of income received in the form of royalty for a patent, registered on or after 1 April 2003 under the Patents Act 1970, and the same shall be subject to a maximum of Rs.3 lakh or the income received, whichever is a less. The taxpayer must be a personal patentee and an Indian resident. The taxpayer must furnish a certificate within the prescribed form duly signed by the prescribed authority.

SECTION 80 TTB – INTEREST INCOME

Deduction of Interest on Deposits for Senior Citizens. A new section 80TTB has been inserted vide Budget 2018 within which deductions with reference to interest income from deposits held by senior citizens are allowed. The limit for this deduction is Rs.50,000.
No further deduction under section 80TTA shall be allowed. additionally, to section 80 TTB, section 194A of the Act also will be amended so on increase the brink limit for TDS on interest income payable to senior citizens. the sooner limit was Rs 10,000, which was increased to Rs 50,000 as per the newest Budget.

 

What is Capital Gain Exemption ?

Term of Capital gains exemption is referred to as benefit provided by the government to taxpayers, easing the burden of paying tax on capital gains,  The requirement to pay capital gains tax arises when a taxpayer sells an asset (other than stock used in the business & personal property) for a profit.

Tax planning on capital Gain

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