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Individual Income Tax Deductions Under Section 80

Taxpayers can lower their taxable income by taking deductions under Section 80 of the Income Tax Act. These deductions are only available if you make tax-saving investments or incur qualified costs.

Individuals’ most common deduction is Section 80C

Section 80C is the most commonly used deduction by salaried persons (a part of Section 80). This clause allows for a deduction advantage of up to Rs 1.5 lakh from taxable income. 

Individuals and HUFs are the only ones who are covered by Section 80C. This clause does not apply to corporations, partnership businesses, or LLPs.

Investing that qualifies for the Section 80C deduction 

Investment options

Interest

Minimum lock-in period

Guaranteed return

Equity Linked Saving Scheme (ELSS)

12% to 15% (depending on market)

3 years

No

National Pension Scheme (NPS)

8% to 10%

Until the investor reaches 60 years of age (retirement)

No

Senior Citizen Savings Scheme (SCSS)

8.60%

5 years

Yes

Public Provident Fund (PPF)

7.90%

15 years

Yes

National Saving Certificates (NSCs)

7.90%

5 years

Yes

ULIP

8% to 10% (depending on market)

5 years

No

5 year Fixed deposit

Up to 8.40%

5 years

Yes

Sukanya Samriddhi Yojana (SSY)

8.50%

8 years

Yes


Certain costs qualify for a deduction under section 80C

Life insurance premiums – Premiums paid for life insurance plans are deductible under Section 80C. The benefit is available for self-, spouse-, and dependent-child insurance plans.

Tuition expenses – Tuition fees for two children can be claimed as a tax deduction under Section 80C. The costs should be paid to any school, college, university, or educational facility in India for a full-time study.

Repayment of principal on a house loan – Repayments of principal on a home loan can be deducted under section 80C. Only if the building of the dwelling is complete may this deduction be claimed. Additionally, the property should not be transferred or sold within the first five years of ownership. The whole deduction will otherwise be taxed in the year of transfer or sale.

Stamp duty and registration fees – The Income Tax Act permits persons to deduct stamp duty and registration fees paid in connection with the purchase of a home. Only after the payment has been paid may these amounts be claimed. Otherwise, you won’t be able to deduct it under Section 80C.


Section 80CCD – Pension contribution deduction

Section 80CCD, which is broken into three subsections, is another component of Section 80.

Section 80CCD(1) – Contribution of the employee

For self-contributions to pension funds, a salaried individual can claim a deduction of 10% of his or her salary. The maximum benefit, however, would not exceed Rs 1.5 lakh.

Self-contribution to an NPS under Section 80CCD(1B)

Assume someone has put money into their NPS (National Pension Scheme) account. In that instance, they can use section 80CCD to claim an extra deduction of up to Rs 50,000 in a single financial year (1B).

On and above the Rs 1.5 lakh limit under Section 80C & Section 80CCD, the deduction under Section 80CCD(1B) can be claimed (1). Individuals who contribute to pension systems can claim a maximum deduction of Rs 2 lakh.

Employer contribution to NPS (section 80CCD(2))

When an employer contributes to an employee’s NPS, the amount is tax-deductible under section 80CCD (2). There is no limit on the amount of money that can be contributed. This deduction is in addition to the Section 80CCD deduction (1).

Employees can claim deductions up to ten percent of their salaries (including basic pay and dearness allowance) or equal to the employer’s NPS payments under Section 80CCD(2).

Employees must produce evidence of payment to their employer to claim these deductions. Employees can claim these advantages while submitting income tax returns if investment statements are not made to the employer.

Section 80D – Medical insurance premiums paid are deductible

Individuals can deduct their health insurance premiums under this clause.

An individual can deduct Rs 25,000 for insurance premiums paid on behalf of themselves, their spouse, and their dependent children.

If their parents are under the age of 60, they can claim an extra deduction of up to Rs 25,000 for their parents’ health insurance. The deduction advantage increases to Rs 50,000 for parents above the age of 60.


The maximum deduction allowable under this clause is Rs 1 lakh if both the person and the parents are 60 years old or older.


Any expenses for preventative health exams are also eligible for a deduction of up to Rs 5,000. This sum is part of the overall limit of Rs 25,000/Rs 50,000, depending on the circumstance.


Deduction for rehabilitation of a disabled dependent relative under Section 80DD


A resident individual or a Hindu Undivided Family (HUF) can deduct expenses for medical treatments (including nursing), training, and rehabilitation of a disabled dependent member under this clause.


The sum deducted under section 80DD is


When a person’s disability is 40% or more but less than 80%, they are eligible for Rs 75,000.


If there is a significant handicap, the amount is Rs 1,25,000. (disability is 80 percent or more)


Employees claiming this deduction must supply their employers with a certificate of incapacity from a medical authority.


Employees should present the appropriate documentation to their employers after making investments or incurring costs under Section 80. This permits companies to deduct income tax (TDS) from employees’ salaries as needed.


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