Section 80C, 80D of the Income Tax Act
Budget 2023: Income Tax Act 1961 provides numerous deductions for individuals. However, the current limits of these deductions are quite low compared to the increased cost of living over the years
Budget 2023: Finance Minister Nirmala Sitharaman will present the Union’s budget for 2023 on Wednesday 1 February. The prospect of personal tax relief is inevitable. The Income-Tax Act, 1961 provides for numerous deductions for individuals. However, the current limits of these deductions are quite low compared to the increased cost of living over the years. As of now, 80C and 80D are the two important sections in the income tax law that help taxpayers save some tax.
What is Section 80C of the Income Tax Act?
Section 80C is a popular tax-saving option in the income tax law. It allows individuals to reduce taxable income by making tax-saving investments or qualifying expenses. It allows a maximum deduction of Rs 1.5 lakh per annum from the taxpayer’s total income.
The benefit of this deduction can be used by taxpayers and Hindu undivided families (HUL).
Corporations, general partnerships, LLPs cannot make use of this deduction.
Section 80C includes subsections – 80CCC, 80CCD (1), 80CCD (1b) and 80CCD (2).
It is important to note that the total limit including the sub-sections for claiming deductions is Rs 1.5 lakh except an additional deduction of Rs 50,000 allowed u/s 80CCD(1b).
Some of the popular investments that qualify for this tax deduction are listed below.
– Life insurance (for yourself, partner or children)
– Provident fund
– Tuition fees paid to educate up to two children
– Construction or purchase of a home
– Fixed down payment with a minimum term of 5 years
This section provides for a number of additional deductions such as mutual fund investments, senior savings programs, purchase of NABARD bonds, etc.
What is Section 80D of the Income Tax Act?
Section 80D allows a deduction for money spent on maintaining the health and medical insurance of an individual and their family.
Individuals can claim deductions from the premium payments they make on medical insurance policies under 80D. One can claim up to Rs 25,000 for insurance premiums paid on a policy in their name, spouse’s name or the name of their dependent children.
In addition, one can also claim a deduction of the insurance premium paid for the health insurance of his parents. In that case, one can again claim up to Rs. 25,000 if they are under 60 years old, or Rs 50,000 if they are both over 60 years old.
An additional deduction which came into effect from FY 2015-2016, individuals are allowed to claim Rs 5,000 towards the preventive health check payments.
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