Income Tax Deductions under Section 80

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Taxes are an essential constituent in India. A major portion of the income incurred by the government is accounted for them. This income is the income that is used to offer certain basic provisions to the citizens. An individual is expected to make payment of taxes, according to the existing tax slabs, if he earns a certain amount. Though these taxes could be harsh on the taxpayer’s bank balance, the government also offers certain provisions through which one can save taxes. Tax deductions assist you in reducing the taxable income by lowering the overall tax liability and thus aiding them on saving taxes. The ones who are eligible for deductions depend on several factors, with different limits fixed for different purposes.

What is Tax Deduction?

Tax deduction assists in trimming down your income subject to tax. It reduces the overall tax liabilities and aids you save tax. However, the amount of deduction differs depending on the kind of tax deduction claimed by you. A tax deduction can be claimed for the amounts spent in medical expenses, tuition fees and charitable contributions. Also, you can make an investment in several schemes like retirement saving schemes, life insurance plans and national saving schemes etc. The Indian Government provides tax exemptions for several expenses that are incurred in various activities to stimulate commercial institutions and the individuals to participate in activities having social benefits.

 

 

Many of our day-to-day expenses qualify for deductions, along with the information about them being vital to assist us in saving money. You can claim the tax deduction on money spent for medical expenses, education, retirement schemes, investments in insurance, charitable contributions etc. These deductions are practised to stimulate society members to take part in certain helpful activities, aiding everyone drawn in the process.

Income Tax Deductions under Section 80C:

Income Tax Act’s Section 80C offers provisions for income tax rebate on several payments, with Hindu Undivided Families and individuals eligible for such deductions. The individuals who are eligible to pay taxes can claim deductions up to Rs. 1.5 lakh per year as per section 80C, with this sum being a combo of deductions applicable under Sections 80C, 80CCC and 80CCD.

A few of the prominent investments that are eligible for the tax rebate are:

  • Life Insurance Policies payments (for spouse, self or children)
  • Superannuation/provident fund payments
  • Payment made towards tuition fees to educate maximum two children
  • Payments for construction or buying of a residential property
  • Payments made towards a fixed deposit of minimum tenure of 5 years

The Section 80C of the IT Act 1961 offers several additional deductions such as mutual funds investment, buying NABARD bonds, senior citizens savings schemes etc.

Subsections under Section 80C:

There is an exhaustive list of deductions under Section 80C of the Income Tax Act, 1961.

Subsections under section 80C

Section 80 CCC:

This section of the IT Act, 1961 offers a purview for tax rebates on investments made in the pension funds. Any insurer can offer these pension funds and can claim a maximum deduction of Rs. 1.5 lakh under it. Only individual taxpayers can claim this deduction.

Section 80 CCD:

The Income Tax Act’s Section 80 CCD intends to boost the saving habits among people offering them an incentive for making an investment in pension plans that are declared by the Central Government of India. Both the contributions made by an individual and his employer are eligible for tax deduction, liable to be subjected to the deduction of less than 10% of the person’s salary.

Section 80 CCF:

Section 80 CCF of the Income Tax Act 1961 is open to both Individuals and Hindu Undivided Families. This section accommodates provisions for tax deductions on subscribing long-term infrastructure bonds that have been declared by the government. A maximum deduction of Rs. 20, 000 can be claimed under this section.

Section 80 CCG:

This section of the Income Tax Act allows you a maximum deduction of Rs. 25, 000 per year with specific particularised residents who are eligible for this deduction. The investments made in equity savings scheme declared by the government are allowed for deductions, depending on the limit is 50% of the investment amount.

Income Tax Rebate Under Section 80D:

Income Tax Act’s Section 80D allows deductions on the amounts spent towards the health insurance policy’s premiums by an individual. This takes payments made on behalf of parents, spouse, children or self to a health plan by Central Government. You can claim a sum of Rs. 15, 000 as a deduction when making a payment towards the insurance for your spouse, self or dependent children, while this sum is Rs. 20, 000 if an individual is over 60 years of age.

Both Hindu Undivided Families and individuals are eligible for the deduction under this section, depending on the mode of payment other than cash.

Subsections under Section 80D:

Section 80D of the Income Tax Act has subdivisions that offer clarity on the benefits that are available for the tax payers.

 

 Subsection under section 80D

Section 80DD:

Section 80DD of the Income Tax Act offers provisions for tax deductions in two situations, with the deduction of Rs. 1.5 lakh in case of a severe disability and Rs. 75, 000 in the case of normal disability. You can claim the deduction under this section in the case of the expenditures below:

  • On making payments for the treatment of the dependents with disability
  • Payment of amount made as a premium to maintain or buy an insurance policy for these dependants.

A deduction of Rs. 1.25 lakh for a critical disability and Rs. 75, 000 for normal disability is allowed. Both resident individuals and Hindu Undivided Families are eligible for such deduction. In this case, the dependant can either be parents, spouse, children or siblings.

Section 80DDB:

Section 80DDB of The Income Tax Act can be used by resident individuals and HUFs and offers provisions for deductions on the expenditure incurred by family/an individual towards medical treatment of a particular disease. A deduction of Rs. 40, 000 that can be increased up to Rs. 60, 000, is allowed if treatment for senior citizens.

Tax Deductions Under Section 80 E:

Section 80 E of the IT Act 1961 is designed to make sure that educating an individual does not become an added tax burden. Tax payers are qualified for tax deductions to pursue higher education on the interest repayment of a loan. You can avail this loan either by the taxpayer himself or to fund his child/ward’s education. Only individuals, who have taken loans from any approved financial institutions and charitable organisations, are allowed for tax benefits.

Subsections of Section 80 E:

Section 80EE:

Only individual taxpayers qualify for deductions under this section, with the interest repayment of a loan, which the individual has taken to purchase a residential property being eligible for deductions. Under this section, you can avail a maximum deduction of Rs. 3 lakh.

Tax Deductions under Section 80 G:

Section 80G of the Income Tax Act allows the taxpayers to contribute funds to charitable institutions, providing them with tax benefits on fiscal donations. This deduction can be availed by all assessee, subject to them offering a proof of payment, with the deductions’ limit decided depending on some factors.

 

Tax deductions under section 80G

  1. 100% deductions without any limit:

100% deductions are provided on the donations to funds such as Prime Minister’s Relief Fund, National Defence Fund, and National Illness Assistance Fund etc.

  1. 100% deduction with qualifying limit:

Contributions made towards local associations, authorities or institutes to endorse the growth of sports and family planning are eligible for 100% deductions, contingent to a certain qualifying limit.

  1. 50% deduction without qualifying limits:

Monetary contributions made towards funds such as the Rajiv Gandhi Foundation, PMs Drought Relief fund, etc qualify for 50% deduction.

  1. 50% deduction with qualifying limits:

Donations made towards the religious organisation and local authorities for reasons except family planning institutes and other charitable institutes qualify for 50% deductions, subject to a certain qualifying limit.

The qualifying limit is referred to 10% of tax payer’s gross total income.

Subsections of Section 80G:

Section 80G of the Income Tax Act, 1961 has been further subdivided into the following four categories to simplify understanding:

 

 Subsections of section 80G

Section 80GG:

Those individual taxpayers, by whom the house rent allowance is not received, qualify for this deduction on the rent they pay, subject to the highest deduction equal to 25% of the total income incurred or Rs. 2, 000 per month. You can claim the lower one out of these options as a deduction.

Section 80GGA:

All assessee can avail tax deductions under this section, contingent to all of them not having any earnings through gain or profit from a profession or business. Donations made by such members towards the National Poverty Eradication Fund or to augment statistical/social/scientific research qualify for tax benefits.

Section 80GGB:

Under this section, only Indian Companies can avail tax deductions, with the sum they donate to an electoral trust or a political party qualify for deductions.

Section 80GGC:

Tax deductions under this section can be availed by an assessee, by donating or contributing to an electoral trust or political party. Artificial juridical persons and local authorities are not allowed to avail the tax deductions under this section.

Tax Deductions under Section 80IA:

An avenue for all the assessee paying taxes is provided under Section 80 IA to claim a tax deduction on the gains produced via industrial activities. These industrial enterprises can be related to power generation, telecommunication, SEZs, industrial parks etc.

There are several subsections under Section 80 IA:

 

 Tax deductionunder section 80IA

Section 80 IAB:

Special Economic Zone (SEZ) developers can use Section 80 IAB to claim a tax deduction on the profits generated by them via the development of SEZs. These SEZs must be notified after April 1, 2005, to be eligible to fall under the tax deduction slab.

Section 80-IB:

All assessee can use the provisions u/s 80-IB, who generates profits from ships, hotels, theatres, multiplex, housing projects, cold storage plants, convention centres, scientific research and development etc.

Section 80-IC:

All assessee, who have gained from states falling under special category, can make use of Section 80 IC. These states include Manipur, Himachal Pradesh, Arunachal Pradesh, Tripura, Mizoram, Nagaland, Assam, Meghalaya and Uttaranchal.

Section 80-ID:

Section 80-ID can be used by all assessee generating gain or profits from convention centres and hotels. They can avail tax deduction, subject to the location of the business in certain specific areas.

Section 80-IE:

Section 80-IE can be used b y all assessee who have projects in the North-Eastern India, subject to specific conditions.

Tax Deductions under Section 80 J:

The Income Tax Act’s Section 80 J was revised to consist of two subsections:

Tax deduction under section 80J

Section 80 JJA:

Section 80 JJA of the Income Tax Act 1961 is related to deductions allowed on gains and profits from all assessee who have a business related to treating/processing and collection of bio-degradable wastes for producing biological products such as bio-pesticides, bio-fertilizers, bio-gas etc. All assessee dealing in all these businesses can avail tax deductions under this section. Also, a deduction equivalent to 100 per cent of the profit generated for 5 consecutive years since the establishment of the business can be availed by such assessee.

Section 80 JJAA:

Indian companies that have generated profits from the goods manufactured in factories can claim tax deductions under this section. Such companies can claim a deduction equivalent to 30 per cent of the salary drawn of new full-time employees for the tenure of 3 assessment years. The accounts of these companies must be audited by a chartered accountant and submission of a report illustrating returns. Employees who are employed for a period of fewer than 300 days on a contract basis in the previous year or the ones who work in administrative or managerial posts are not qualified for tax deductions.

Tax Deduction under Section 80LA:

Entities of International Financial Services Centres, Scheduled Banks that have off-shore banking units in SEZs, and banks set up abroad, can avail deductions under Section 80 LA, in correspondence with the laws of a foreign country. Deductions equivalent to 100 per cent of the income for first five years, and 50 percent of the income incurred via such transactions for the coming five years, depending on the rules of the land, can be claimed by all the assessee.

These bodies must have relevant permission, either under the Banking Regulation Act, or registration under another relevant law or the SEBI Act.

Tax Deduction under Section 80P:

Section 80 P, under certain conditions, offers tax deductions to cooperative societies in their income. Deduction equivalent to 100 percent is allowed to cooperative societies that earn income from fishing, cottage industries, the sale of agricultural harvest, cottage industries and milk supplied by the members to milk cooperative societies.

Cooperative Societies that are involved in various other forms of business qualify for deductions varying from Rs. 50, 000 to Rs. 1 lakh, subject to the kind of work they carry out.

All cooperative societies can claim the following deductions:

  • Income generated by a cooperative society through renting the warehouses
  • Income that a cooperative society makes from interest on money provided on loan to other societies
  • Income incurred from interest from properties or securities

Tax Deduction under Section 80 QQB:

Section 80 QQB of the Income Tax Act, 1961 allows tax deductions on royalty received from the sale of books. Under this section, only local Indian authors qualify to claim deductions with a maximum limit of Rs. 3 lakhs. Royalty on scientific, artistic and literary books are exempted from taxes, however royalties from diaries, journals, textbooks, etc. are not eligible for tax benefits. If an author receives royalties from a foreign country, the amount decided must be brought into the nation within a certain period of time to avail tax benefits.

Tax Deduction under Section 80RRB:

Tax incentives are provided to patent holders under section 80 RRB, offering tax relief to local individuals receiving income through a royalty on their patent. They can claim royalty up to a limit of Rs. 3 lakhs as a deduction, depending on the registered patent after March 31, 2003. Individuals receiving a royalty from overseas shores need to bring the decided amount to the nation within a certain period of time to be eligible for tax deductions on this kind of royalty.

Tax Deduction under Section 80TTA:

Individual taxpayers and Hindu Undivided Families can claim deductions u/s 80 TTA of the Income Tax Act. Under this section, they are allowed deductions up to Rs. 10, 000 every year on the interest incurred on the investment made in bank savings accounts in the nation.

Tax Deduction under Section 80 U:

Local individual taxpayers with disabilities can claim tax deductions under Section 80 U. A maximum deduction to the tune of Rs. 75, 000 per year can claimed by the individuals having a certificate of Person with Disability (PwD) from a relevant medical authority. People with severe disabilities are allowed a maximum deduction to the tune of Rs. 1.25 lakhs, depending on certain criteria met by them. A few examples of disabilities that classify for tax benefits include cerebral palsy, mental retardation, autism, etc.

Synopsis of Tax Deductions U/S 80 C to 80 U:

Section

Allowed Limit (Maximum)

Eligible Petitioner (Claimant)

80 C

Rs 1.5 lakh (cumulative of 80C, 80CCC and 80CCD)

Hindu Undivided Families/Individuals

80 CCC

Rs 1.5 lakh (cumulative of 80C, 80CCC and 80CCD)

Individuals

80 CCD

Rs 1.5 lakh (cumulative of 80C, 80CCC and 80CCD)

Individuals

80 CCF

Rs. 20, 000

Hindu Undivided Families/Resident Individuals

80 CCG

Rs. 25, 000

Resident Individuals

80 D

Rs. 20, 000

Hindu Undivided Families/Resident Individuals

80 DD

Rs. 75, 000 (general disability)

Rs. 1. 25 lakhs (critical disability)

Hindu Undivided Families/Resident Individuals

80 DDB

Rs. 60, 000  (senior citizens)

Rs. 40, 000 (others)

Hindu Undivided Families/Resident Individuals

80 E

No limit specified

Individuals

80 EE

Rs. 3 lakhs

Individuals

80 G

Different limits depending on donation

All assessee

80 GG

Rs. 2, 000 per month

Individuals who do not receive HRA

80 GGA

Depending on quantum of donation

All assessee without any income gain or profit from a property or business

80 GGB

Depending on quantum of donation

Indian Companies

80 GGC

Depending on quantum of donation

All assessee except local or artificial judicial authorities funded by Government

80 IA

No maximum limit defined

All assessee

80 IAB

No maximum limit defined

All assessee (SEZ developers)

80 IB

No maximum limit defined

All assessee

80 IC

No maximum limit defined

All assessee

80 ID

No maximum limit defined

All assessee

80 IE

No maximum limit defined

All assessee

80 JJA

All gains earned for the first five years

All assessee

80 JJAA

30% of augmented wages

Indian companies incurring income from gains and profits

80 LA

Fraction of their income

Scheduled Banks, Banks set up abroad, IFSCs

80 P

Fraction of their income

Cooperative Societies

80 QQB

Rs. 3 lakhs

Authors- resident individuals

80 RRB

Rs. 3 lakhs

Resident Individuals

80 TTA

Rs. 10, 000 per year

Hindu Undivided Families/ Individuals

80 U

Rs. 75, 000 (People with disabilities)

Rs. 1.25 lakhs (people with critical disabilities)

Resident Individuals

 

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