Income Tax Deductions under Section 80C to 80U
Did you know that the government gives you a whole lot of options for you to reduce your income tax outgo?
As of 2020 however, as many of you might know, the deductions are applicable provided you opt for the old regime of income tax where you pay a higher tax slab but get a whole lot of relevant deductions. If a lot of the deductibles below are relevant to you, you may want to stick with the old tax regime. Alternatively, none (or hardly any) of the below deductions can be claimed by you, then maybe the new regime will mean a lower tax burden. Either way, do the math and make sure you choose the more beneficial option. If the government is giving you respite with regards to your tax burden, why not accept it?
Go through the following list of summarised income tax deductions that are applicable to individuals, families, housing societies and also to some small businesses or undertakings.
Section 80c of the income tax act is only the tip of the iceberg. You can save lakhs in taxes if you know your deductibles in advance and invest accordingly. Especially in these challenging times, where you might be making a lot of donations, you are also eligible for tax deduction against these.
- Section 80CCC offers a tax deduction of Rs 1.5 lakh on investment in pension funds. Deductions under section 80C are for individual taxpayers
- Section 80CCD incentivises contributions to government designated pension schemes. Contributions made by individuals and their employer can get deductions of less than 10% of the salary of the person.
- Section 80CCF allows for Rs 20,000 worth tax deduction against subscription to government specified long term infrastructure bonds.
- Section 80CCG offers a tax deduction of Rs 25,000 per year against goverment specified equity savings schemes to the extent of 50% of the invested capital.
- Section 80D offers a tax deduction against health insurance premiums of up to 15,000 against premium paid for spouse, dependent children, or self, and up to amount is Rs 30,000 for senior citizens that is persons over 60 years.
- Section 80D permits a total income tax deduction of up to Rs 50,000 for medical expenditure of senior citizens.
Individuals and Hindu Undivided Families may claim the above 2 80D deductions.
- Section 80DD offers tax deductions against treatments and insurance for disabled persons of up to Rs 75,000 for normal disability and Rs 1.25 for severe disability. Individuals and Hindu Undivided Families may claim these deductions for a disabled spouse, sibling, parent or child.
- Section 80DDB offers claimable deductions of up to Rs 1 lakh against the expense incurred by an individuals and HUFs towards medical treatment of certain diseases.
- Section 80E offers tax deductions agains educational loans from certain charitable institutions and lenders.
- Section 80EE allows taxpayers to claim up to Rs 3 lakh of tax deduction against residential property/ goal loan interest repayment.
- Section 80G offers varying slabs of 10%, 50% and 100% tax deduction against donation amounts made by tax payers up to a certain amount of their income.
- Section 80GG gives a tax deduction of 25% of their total income or Rs 2,000 a month (whichever is lower) against house rent paid.
- Section 80-IC gives tax relief to taxpayers registering profits specifically in the states of Assam, Manipur, Meghalaya, Himachal Pradesh, Uttaranchal, Arunachal Pradesh, Mizoram, Tripura and Nagaland.
- Section 80-ID gives tax relief to taxpayers registering profits hotels and convention centres located in certain specified areas.
- Section 80-IE gives tax relief to taxpayers with projects specifically in North-East India, but do read the fine print.
- Section 80P lets cooperative societies claim 100% deduction on income derived from through cottage industries, fishing, sale of agricultural harvest grown by members etc.
- Section 80QQB offers tax deductions of up to Rs 3 lakh on the royalty earned from specifuc types of books.
- Section 80TTA gives tax deductions Up Rs 10,000 on the interest earned on money on savings accounts. Only for HUFs.
- Section 80U is a tax deduction for persons with disabilities, with a Rs 75,000 celing limit, extendable up to Rs 1.25 lakh in cases of severe disability.
Conclusion: Go beyond 80C deductions and save a sizable chunk of income tax by availing of relevant deductions. Use this handy list and an online income tax calculator to find out how much you stand to save, and make investments accordingly.
Remember: if you have a lot of deductions to claim (as this lost will help you identify) the old tax regime might lower your tax burden, whereas if you don’t have many deductions to claim, you might pay less if you opt for the new tax regime. Be a smart tax payer, do your income tax calculations, and choose the option that calls for a lower tax outgo.