Section 80 of the Income Tax Act

Section 80 of the Income Tax Act, including various provisions that grant taxpayers deductions and exemptions, plays an important role in shaping the taxation system in India. It offers opportunities for taxpayers to reduce taxable income, covering contributions, premiums, and specified expenses. This section encourages beneficial activities and helps taxpayers manage their tax burdens efficiently.

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Deduction List Under 80C

  • Section 80C Investments

  • Section 80CCC Insurance Premium

  • Section 80CCD Pension Contribution

  • Section 80TTA Interest on Savings Account

  • Section 80GG House Rent Paid

  • Section 80E Interest on Education Loan

  • Section 80EE Interest on Home Loan

  • Section 80D Medical Insurance

  • Section 80DD Disabled Dependent

  • Section 80DDB Medical Expenditure

  • Section 80U Physical Disability

  • Section 80G Donations

  • Section 80GGB Company Contribution

  • Section 80GGC Contribution to Political Parties

  • Section 80RRB Royalty of a Patent

  • Section 80TTB Interest Income

Section 80C – Deductions on Investments

Section 80C of the Income Tax Act, 1961, is one of the most popular sections among taxpayers in India. It allows individuals and Hindu Undivided Families (HUFs) to reduce their taxable income by making investments or incurring expenses in specific categories.

Who is eligible?

  • Only individual taxpayers and HUFs are eligible to claim deductions under Section 80C. Companies, partnership firms, and LLPs cannot avail of this benefit.

  • The maximum deduction you can claim under Section 80C is Rs. 1.5 lakh per financial year.

Deduction Limits Amounts Under Section 80C, 80CCC, 80CCD(1), 80CCE, 80CCD(1B)

Sections Eligible investments for tax deductions Maximum Deduction
80C Investments in ELSS, PPF/SPF/RPF, life insurance premiums, home loan principal, SSY, NSC, SCSS, etc. ₹1,50,000
80CCC ₹1,50,000
80CCD(1)  Contributions to pension funds, including Atal Pension Yojana or other government-notified pension schemes. Employed: 10% of basic salary + DA
Self-employed: 20% of gross total income
80CCE Total deduction under Section 80C, 80CCC, 80CCD(1) ₹1,50,000
80CCD(1B)  NPS investments beyond Rs 1,50,000 limit (Section 80CCE). ₹50,000
80CCD(2)  Employer's NPS contribution beyond Rs 1,50,000 limit (Section 80CCE). Central government employer: 14% of basic salary +DA
Others: 10% of basic salary +DA

Deductions Under Section 80C

Investment options Average Interest Lock-in period for Risk factor
ULIP 8% – 10% 5 years Medium
ELSS funds 12% – 15% 3 years High
PPF 7.90% 15 years Low
Tax saving FD Up to 8.40% 5 years Low
Senior citizen savings scheme 8.60% 5 years (can be extended for other 3 years) Low
National Savings Certificate 7.9% 5 years Low
Sukanya Samriddhi Yojana 8.50% Till girl child reaches 21 years of age
(partial withdrawal allowed when she reached 18 years)
Low
NPS Scheme 8% – 10% Till 60 years of age High

Section 80TTA

What is Section 80TTA?

Section 80TTA allows you to deduct up to Rs. 10,000 from your taxable income for the interest earned on your savings accounts held with banks, cooperative societies, or post offices. 

Who can claim this deduction?

  • Any Indian resident individual, regardless of their age or income level, can claim this deduction.

  • Hindu Undivided Families can also claim the deduction/

What are the key points to remember?

  • The deduction applies only to interest earned on savings accounts, not fixed deposits or any other type of investment.

  • The maximum deduction is Rs. 10,000, even if your total interest income from savings accounts is higher.

  • You can claim the deduction for all your savings accounts combined, irrespective of the number of accounts you hold.

  • Senior citizens (aged 60 years and above) are not eligible for this deduction as they have a separate deduction under Section 80TTB for all bank deposits, including savings accounts.

Section 80TTB

Section 80TTB, introduced in the 2018 Union Budget, provides a deduction for senior citizens on their interest income. They can claim up to Rs. 50,000 or the total interest income, whichever is lower, reducing their taxable income and tax liability.

Who is eligible for the deduction under Section 80TTB?

  • Any resident senior citizen aged 60 years or more at any time during the relevant financial year is eligible for the deduction.

  • This deduction is available to individuals, Hindu Undivided Families (HUFs), and Association of Persons (AOPs).

What kind of income is covered under Section 80TTB?

  • Interest on savings account deposits and fixed deposits with banks.

  • Interest on deposits with cooperative societies engaged in the banking business, including cooperative land mortgage banks and cooperative land development banks.

  • Interest on post office deposits.

Section 80GG

It's a provision under the Income Tax Act that allows individuals and Hindu Undivided Families (HUFs) to claim a deduction for the rent paid towards their accommodation, provided they don't receive House Rent Allowance (HRA) from their employer.

Who is eligible?

  • You must be residing in a rented property, not owning any residential property in the city where you work or operate your business.

  • You shouldn't claim HRA deduction under any other section.

  • Your spouse or minor child also shouldn't own any residential property anywhere.

How much can you claim?

The least of the following is available as a deduction:

  • Actual rent paid minus 10% of your total income (before claiming any deductions under Section 80GG)

  • 25% of your total income (before claiming any deductions under Section 80GG)

  • Rs 5,000/- per month

Invest & Save upto ₹46,800 per annum in taxInvest & Save upto ₹46,800 per annum in tax

Section 80E – Interest on Education Loan

What is Section 80E?

Section 80E allows taxpayers to claim a deduction on the interest paid on education loans taken for higher studies. This deduction applies to loans availed for oneself, spouse, children, or any other individual for whom the taxpayer is the legal guardian.

Who is Eligible?

  • The loan must be availed from a recognized financial institution or a government-approved charitable institution.

  • The loan must be used solely for financing full-time higher education (e.g., graduation, post-graduation, professional courses).

  • The deduction is available for a maximum of 8 years or until the entire loan interest is repaid, whichever comes first.

Section 80EEA – Interest on Home Loan For First-Time Home Owners

What is Section 80EEA?

Section 80EEA provides an additional deduction of up to Rs 1.5 lakh per financial year on the interest paid on a home loan taken for purchasing an affordable house. This deduction is in addition to the existing deduction of Rs 2 lakh available under Section 24(b) of the Income Tax Act for interest paid on home loans.

Who is eligible for Section 80EEA deduction?

  • You must be a first-time homebuyer. This means you should not own any residential property (self-occupied or let-out) at the time of sanctioning the home loan.

  • The loan amount should be used for purchasing a residential house with a carpet area of up to 40 sq m in non-metropolitan cities and up to 60 sq m in metropolitan cities.

  • The loan amount should not exceed Rs 45 lakh.

  • The loan must have been sanctioned between April 1, 2019, and March 31, 2022.

How much can you claim under Section 80EEA?

You can claim a deduction of up to Rs 1.5 lakh per financial year on the interest paid on your home loan under Section 80EEA. This deduction is available until the entire loan amount is repaid.

Section 80D – Deduction on Medical Insurance Premium

Section 80D of the Income Tax Act, 1961, allows individuals and Hindu Undivided Families (HUFs) to claim deductions on the amount paid towards health insurance premiums for themselves, their spouses, dependent children, and parents.

Deduction Limits under Section 80D:

The deduction limit under Section 80D varies depending on the age of the insured individual:

  • For individuals below 60 years:

    • Up to Rs. 25,000 for self, spouse, and dependent children.

    • An additional Rs. 5,000 for preventive health check-ups incurred for self, spouse, or dependent parents.

  • For senior citizens (aged 60 years and above):

    • Up to Rs. 50,000 for self, spouse, and dependent children.

    • An additional Rs. 5,000 for preventive health check-ups incurred for self, spouse, or dependent parents.

Important Points to Remember:

  • The deduction is available only for health insurance premiums paid through recognized modes of payment, such as bank transfers, cheques, or credit cards. Cash payments are not eligible for deduction.

  • The preventive health check-up expenses must be incurred from a doctor or a diagnostic center authorized by the Income Tax Department.

  • The deduction for parents' health insurance can be claimed only if they are dependent on the taxpayer for financial support.

  • If you have purchased multiple health insurance policies, the total premium paid can be claimed up to the respective limit (Rs. 25,000 or Rs. 50,000).

Deduction on Medical Insurance Premium

Policy Bought For Deduction for  self & family Deduction for parents Preventive Health check-up Maximum Deduction
Self & Family
(below 60 years)
25,000 - 5,000 25,000
Self & Family + Parents
(all of them below 60 years)
25,000 25,000 5,000 50,000
Self & Family (below 60 years)
+ Parents (above 60 years)
25,000 50,000 5,000 75,000
Self & Family + Parents
(above 60 years)
50,000 50,000 5,000 1,00,000

Section 80DD – Deduction for Medical Treatment of a Dependent with Disability

Section 80DD allows taxpayers to claim a deduction for their medical treatment expenses.

Who is eligible?

  • This deduction is available to resident individuals and Hindu Undivided Families (HUFs) in India.

  • You can claim the deduction for medical expenses incurred for a dependent suffering from a disability. Dependents include:

    • Parents

    • Spouse

    • Children

    • Siblings

    • Any other member of the HUF

What kind of disability qualifies?

The disability must be certified by a designated medical authority and considered at least 40% severe. Depending on the severity, the deduction amount varies:

  • 40% to 80% disability: Rs. 75,000 deduction

  • More than 80% disability or severe disability: Rs. 1,25,000 deduction

What expenses are covered?

The deduction covers expenses related to the dependent's medical treatment, including:

  • Hospitalization charges

  • Doctor's consultation fees

  • Diagnostic tests

  • Surgery costs

  • Medications

  • Assistive devices (wheelchairs, prosthetics)

  • Nursing care

  • Rehabilitation or training expenses

Section 80DDB – Deduction for Medical Treatment

Section 80DDB provides a deduction for expenses incurred on the medical treatment of specified diseases or ailments for yourself, your spouse, children, parents, and siblings. This deduction is available to both individual taxpayers and Hindu Undivided Families (HUFs).

  1. List of Specified Diseases

    The list of specified diseases for which you can claim deduction under Section 80DDB is provided in Rule 11DD of the Income Tax Rules. Some of the common diseases covered include:

    • Neurological diseases (including Parkinson's disease, dementia, and multiple sclerosis)

    • Malignant cancers

    • Kidney diseases

    • Chronic autoimmune diseases (like rheumatoid arthritis)

    • Blood disorders (like hemophilia)

    • HIV/AIDS

  2. Deduction Limits

    The maximum deduction you can claim under Section 80DDB depends on the age of the patient and the relationship to the taxpayer:

    Age Amount of Deduction
    < 60 years Amount paid or 40,000, whichever is less
    60 and above Amount paid or 1,00,000, whichever is less
  3. Conditions for Claiming Deduction

    To claim the deduction under Section 80DDB, you must fulfill the following conditions:

    • The medical expenses must be incurred for the treatment of a specified disease listed in Rule 11DD.

    • The payment must be made to a doctor, hospital, clinic, or nursing home registered under the Indian Medical Council Act, 1956.

    • You must have a prescription from a qualified doctor specifying the disease or ailment being treated.

Section 80U – Deduction for Disabled Individuals

Who qualifies?

Individuals with at least 40% disability are eligible for this deduction under section 80U. Additionally, a higher deduction is available for those with severe disability (80% or more).

How much can I claim?

  • 40% to 79% disability: Rs. 75,000

  • 80% and above (severe disability): Rs. 1,25,000

A resident individual experiencing a physical disability, including blindness, or mental retardation is eligible for a deduction of Rs. 75,000. In cases of severe disability, the deduction amount increases to Rs. 1,25,000.

Section 80G – Income Tax Benefits Towards Donations for Social Causes

The Income Tax Act, through Section 80G, encourages charitable donations by offering tax deductions to taxpayers. This section allows you to reduce your taxable income by a significant amount, depending on the nature of the donation and the recipient organization.

  • Eligible Donations: Donations made to certain institutions or funds approved by the Income Tax Department qualify for deductions under Section 80G. These include:

    • Charitable institutions working towards poverty alleviation, education, healthcare, rural development, environmental protection, and animal welfare.

    • Scientific research institutions or organizations engaged in activities related to public welfare.

    • National funds like the Prime Minister's Relief Fund or any other fund notified by the Central Government.

    • Certain religious trusts or institutions.

  • Deduction Percentage: The deduction percentage varies depending on the recipient organization and the type of donation:

    • 100% deduction: Available for donations made to certain specified institutions like the National Fund for Children, Indira Gandhi National Centre for the Arts, etc.

    • 50% deduction (without any limit): Applicable to donations made to institutions like the National Trust for the Welfare of Persons with Autism, Artificial Limbs Manufacturing Corporation of India, etc.

    • 50% deduction (subject to a limit of 10% of your adjusted gross total income): Applies to most other eligible institutions under Section 80G.

Important Points to Remember:

  • To claim the deduction, you must obtain a receipt from the done institution acknowledging the donation.

  • Donations exceeding Rs. 2,000 must be made through cheque, credit card, or online transfer to be eligible for deduction.

  • You can claim deductions under Section 80G for donations made to multiple institutions. However, the total deduction cannot exceed the specified limits.

Section 80GGB – Company Donation to Political Parties

An Indian company is eligible for a Section 80GGB deduction for contributions made to a political party or an electoral trust. The deduction is applicable for donations made through any payment method except cash.

Section 80GGC – Deduction on Donations By a Person to Political Parties

Section 80GGC of the Income Tax Act, 1961, allows individuals to claim tax deductions for donations made to registered political parties or electoral trusts. This provision encourages citizens to participate in the democratic process by financially supporting the parties they align with.

Key Highlights of Section 80GGC:

  • 100% Deduction: The entire amount donated to a political party or electoral trust is eligible for deduction under Section 80GGC. This means that if you donate Rs. 10,000, you can reduce your taxable income by Rs. 10,000.

  • Eligibility of Political Parties: Only donations made to political parties registered under Section 29A of the Representation of the People Act, 1951, are eligible for deduction.

  • Electoral Trusts: Donations to electoral trusts set up under the Electoral Trust Act, 2013, are also eligible for deduction under Section 80GGC. These trusts receive donations from various sources and then distribute them to registered political parties.

  • Mode of Donation: Cash donations are not eligible for deduction under Section 80GGC. Donations must be made through traceable means such as cheques, credit cards, debit cards, online banking, or demand drafts.

Section 80RRB – Deduction on Income via Royalty of a Patent

Deduction under Section 80RRB is applicable for income received as royalty for a patent registered on or after April 1, 2003, according to the Patents Act 1970. The deduction is limited to Rs. 3 lakh or the actual income received, whichever is lower. Eligibility requires the taxpayer to be an individual patentee and an Indian resident. A duly signed certificate in the prescribed form from the authorized authority is necessary.

Conclusion 

Section 80 of the Income Tax Act helps you save money on taxes by rewarding certain investments and expenses. As a dynamic component of the tax framework, Section 80 plays an important role in balancing fiscal responsibilities and promoting economic activities that contribute to the overall welfare of the nation.

FAQ's

  • Can I claim 80C deductions if I haven't submitted proof to my employer during the year?

    You should provide proof of your investments to your employer by the end of the financial year. If you forget, you can still claim these investments when filing your tax return, as long as they were made before March 31, 2023.
  • Can I claim interest paid on an employer-provided education loan under Section 80E?

    No, you can only claim the interest deduction under Section 80E for education loans obtained from a bank or financial institution, not from your employer.
  • Is there a maximum limit for Section 80E deductions?

    No, there is no specified upper limit for the deduction under Section 80E. You can claim the actual interest paid during the year.
  • Can a company or firm benefit from Section 80C?

    No, Section 80C benefits apply only to individuals or Hindu Undivided Families (HUFs). Companies or firms cannot avail of Section 80C deductions.

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