A Guide On Section 80C And Section 80D Deduction

Taxes are an inevitable part and parcel of adult life. Once you begin earning, it’s essential to understand your tax liability, how much you have to pay as taxes, and how much you can save on taxes. It might sound a whole lot complicated and overwhelming, but it doesn’t have to be. The government has provided several tax exemptions under the various sections of the Income Tax Act, 1961 that you can avail to your advantage. But to do that, you need to recognise what the multiple sections of the Income Tax Act have in their store offer. One of these sections is Section 80 of the Income Tax Act, 1961. Deduction under Section 80 includes numerous options like loan repayment, premiums paid, investments, etc. These options have the potential to reduce your tax liability considerably if you properly optimise them.

Section 80 is designed to encourage taxpayers to save for their future and further invest in their insurance and retirement plans. It is a way to aid tax paying citizens to withstand the vagaries of time. The advantages of Section 80 are not limited to just paying lower income tax for a financial year, but also to make long-term investments that prove useful in the hour of need. This article will focus on Section 80C and Section 80D investments.

Section 80C
Investments under Section 80C are eligible for deductions of up to Rs1.5 lakh from your total taxable income per financial year. This deduction is eligible for individuals and Hindu Undivided Family (HUF). The deductions are available in some of the major forms of investments, like:

  • Unit Linked Investment Plans (ULIPs)
  • Investment in PPF
  • Employee’s share of PF contribution
  • Senior Citizens savings scheme
  • Employee’s share of PF contribution
  • National Saving Certificates
  • Principal Repayment of home loan
  • Life Insurance Premium payment
  • Employee’s share of PF contribution
  • Equity Linked Savings Schemes (ELSS)

Public Provident Fund (PPF), National Savings Certificate (NSC), National Pension Scheme (NPS), Tax saver FDs (Fixed Deposits), Post Office Term Deposit, ELSS (Equity-Linked Savings Scheme), ULIP (Unit-Linked Insurance Plans), Senior Citizens Savings Scheme, Sukanya Samridhi Account are some of the tax saving investments under Section 80C. Note that Section 80C include Section 80CCC and Section 80CCD

Section 80D
Section 80 D of the Income Tax Act,1961 offers deduction on premium paid for medical insurance. Under this section, you can claim up to Rs25,000 in a financial year. These insurance policies can be for yourself, your partner, your children, or your parents. In case, one of the insured people is 60 years or above, the tax deducted can be claimed for up to Rs30,000.

Section 80D has further subdivisions such as Section 80DD and Section 80 DDB which if applicable to you, can be used to claim deductions.

Next time you file your taxes, do not forget to consider Section 80C and Section 80D of the Income Tax Act, 1961. Happy investing!