Section 80C, 80D of the Income Tax Act
Budget 2023: The Income Tax Act, 1961 provides for several deductions for individuals. However, the present limit of these deductions is much less as compared to the increased cost of living over the years.
Budget 2023: Finance Minister Nirmala Sitharaman will present the Union Budget 2023 on Wednesday, February 1. The expectation of relief in personal taxation is inevitable. The Income Tax Act, 1961 provides for several deductions for individuals. However, the current limit for these deductions is much less as compared to the increased cost of living over the years. As of now, 80C and 80D are two important sections in the Income Tax Act which help taxpayers to save some tax.
What is section 80C of the Income Tax Act?
Section 80C is a popular tax saving option in the Income Tax Act. It allows individuals to reduce taxable income by making tax saving investments or by making eligible expenses. It allows deduction of a maximum of Rs 1.5 lakh every year from the total income of the taxpayers.
Taxpayers and Hindu Undivided Families (HUL) can avail of this deduction.
Companies, Partnership Firms, LLPs cannot avail this deduction.
Section 80C consists of subsections – 80CCC, 80CCD(1), 80CCD(1b) and 80CCD(2).
It is important to note that the overall limit including the sub-sections for claiming the deduction is Rs 1.5 lakh, excluding the additional deduction of Rs 50,000 allowed under section 80CCD(1b).
Some of the popular investments that are eligible for this tax deduction are mentioned below.
– Life insurance policy (for self, spouse or children)
– Provident Fund
Tuition fees to be paid for teaching a maximum of two children
– Construction or purchase of residential property
– Fixed Deposit with a minimum tenure of 5 years
This section provides for several additional deductions like investment in mutual funds, senior citizen savings schemes, purchase of NABARD bonds, etc.
What is section 80D of the Income Tax Act?
Section 80D allows deduction for money spent on maintaining health and health insurance of an individual and their family.
Individuals can claim deduction under section 80D against the premium paid on medical insurance policies. One can claim up to Rs 25,000 for the insurance premium paid on the policy in the name of self, spouse or dependent children.
Additionally, one can also claim a deduction for the insurance premium paid for the medical insurance of their parents. In that case, one can again claim a maximum of Rs. 25,000 if they are below 60 years of age, or Rs 50,000 if both are above 60 years of age.
An additional deduction brought into action from FY 2015-2016, individuals are allowed to claim Rs 5,000 for payment made for preventive health check-up.
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