Section 80 C at a Glance
As per the New Central Finance Budget 2014-15, the Maximum limit of Income Tax Section 80 C has increase up to Rs. 1,50,000/- and One new deduction can be available as K.V.P. in this Section.
This section has been introduced by the Finance Act 2005. Broadly speaking, this section provides deduction from total income in respect of various investments / expenditures / payments.
Remember: The limit for maximum deduction available under Sections 80C, 80CCC and 80CCD (combined together) is Rs. 1,50,000/- (Rs. one lac Fifty Thousand only).
An additional deduction will be bade Under Section 80CCD(2) Employer’s Contribution to the employees Pension Fund Since 01/04/2004 [Excluding the Max limit of Rs. 1,50,000/-]
1. Life Insurance Premium for individuals. The policy must be in the assesse’s or spouse’s or any child’s name. For a HUF, it may be on life of any member of HUF. The 80C deduction is valid on insurance policies purchased after 1st April, 2012 only if the premium is less than 10% of sum assured. Benefits for existing purchased policies continue.
2. Sum paid under contract for deferred annuity for an individual on the life of the assesse, spouse or any child.
3. Sum deducted from salary payable to Govt. Servant for securing deferred annuity for self-spouse or child Payment limited to 20% of salary.
4. Contribution made under Employee’s Provident Fund Scheme.
5. Contribution to PPF for individual can be in the name of the assesse, the spouse or any child. For a HUF, it can be in the name of any member of the family.[Max Rs.1,50,000/-]
6. Contribution by employee to a Recognized Provident Fund.
7. Sum deposited in 10/15 year account of Post Office Saving Bank
8. Subscription to any notified securities/notified deposits scheme. e.g. NSS
9. Subscription to any notified savings certificate, Unit Linked Savings certificates. e.g. NSC VIII issue.
10. Contribution to Unit Linked Insurance Plan of LIC Mutual Fund
11. Contribution to notified deposit scheme/Pension fund set up by the National Housing Scheme.
12. Payments of installments or part payments of loan taken for buying or constructing residential house property. However, if the property is transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year.
13. Contribution to notified annuity Plan of LIC (e.g. Jeevan Dhara) or Units of UTI / notified Mutual Funds.
Note if in case of such contributions the deduction under Section 80CCC has already been availed, the rebate under Section 88 would not be allowable.
14. Subscription to units of a Mutual Fund notified u/s 10(23D).
15. Subscription to deposit scheme of a public sector, company engaged in providing housing finance.
16. Subscription to equity shares/ debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions.
17. Tuition fees paid to any school, college, university or other educational institution situated within India for the purpose of full time education of any two children.
18. Kissan Vikas Patra (K.V.P.)
Section 80CCC: Deduction in respect of Premium Paid for Annuity Plan of LIC or Other Insurer
Payment of premium for annuity plan of LIC or any other insurer Deduction is available upto a maximum of Rs. 150,000/-. (This limit has been increased from Rs. 10,000/- to Rs. 1,50,000/- w.e.f. 01.04.2007).
The premium must be deposited to keep in force a contract for an annuity plan of the LIC or any other insurer for receiving pension from the fund.
Section 80CCD: Deduction in respect of Contribution to Pension Account
Deductions to the extent of 10% of one’s salary are available on deposits made by a Central government servant in one’s pension account. If the Central Government makes any contribution to the pension account, deduction of such contribution to the extent of 10% of salary shall be allowed. Further, in any year where any amount is received from the pension account such amount shall be charged to tax as income of that previous year.
Section 80CCD(2) : Employer’s Contribution to the Employee’s New Pension fund ( Excluding the Max Limit of Rs. 1.5 Lakh of U/S 80C,80CC,80CCD)
Section 80GG: Deduction in respect of House Rent Paid
Deduction available is the least of
1. Rent paid minus 10% of total income
2. Rs. 2000/- per month
3. 25% of total income, provided
o Assessee or his spouse or minor child should not own residential accommodation at the place of employment.
o He should not be in receipt of house rent allowance.
o He should not have self occupied residential premises in any other place.
Section 80E: Deduction in respect of Interest on Loan for Higher Studies
Deduction in respect of interest on loan taken for pursuing higher education. The deduction is also available for the purpose of higher education of a relative w.e.f. A.Y. 2008-09.
Section 80 TTA: Deduction from gross total income in respect of any Income by way of Interest on Savings account
Deduction from gross total income of an individual or HUF, upto a maximum of Rs. 10,000/-, in respect of interest on deposits in savings account ( not time deposits ) with a bank, co-operative society or post office, is allowable w.e.f. 1st April 2012 (Assessment Year 2013-14).
Section 80CCG: Rajiv Gandhi Equity Saving Scheme (RGESS)
The Rajiv Gandhi Equity Saving Scheme (RGESS) was launched after the 2012 Budget. Investors whose annual income is less than Rs. 10 lakhs can invest in this scheme (up to Rs. 50,000) and get a deduction of 50% of the investment.
So, if you invest Rs. 50,000 (maximum amount eligible for income tax rebate is Rs. 50,000), you can claim a tax deduction of Rs. 25,000 (50% of Rs. 50,000).
Section 80D: Deduction in respect of Medical Insurance
Deduction is available up to Rs. 20,000/- for senior citizens and upto Rs. 15,000/ in other cases for insurance of self, spouse and dependent children. Additionally, a deduction for insurance of parents (father or mother or both) is available to the extent of Rs. 20,000/- if parents are senior Citizen and Rs. 15,000/- in other cases. Therefore, the maximum deduction available under this section is to the extent of Rs. 40,000/-. From AY 2013-14, within the existing limit a deduction of upto Rs. 5,000 for preventive health check-up is available.
Section 80DD: Deduction in respect of Rehabilitation of Handicapped Dependent Relative
Deduction of Rs. 50,000/- is available on:
1. expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent relative.
2. Payment or deposit to specified scheme for maintenance of dependent handicapped relative.
Further, if the dependant is a person with severe disability, a deduction of Rs. 100,000/- is also available under this section. The handicapped dependent should be a dependent relative suffering from a permanent disability (including blindness) or mentally retarded, as certified by a specified physician or psychiatrist.
Note: A person with ‘severe disability’ means a person with 80% or more of one or more disabilities as outlined in section 56(4) of the ‘Persons with disabilities (Equal opportunities, protection of rights and full participation)’ Act.
Section 80DDB: Deduction in respect of Medical Expenditure on Self or Dependent Relative
A deduction to the extent of Rs. 40,000/- or the amount actually paid, whichever is less is available for expenditure actually incurred by resident assessee on himself or dependent relative for medical treatment of specified disease or ailment. The diseases have been specified in Rule 11DD. A certificate in form 10 I is to be furnished by the assessee from any Registered Doctor.
Section 80G: Deduction for donations towards Social Causes
The various donations specified in Sec. 80G are eligible for deduction upto either 100% or 50% with or without restriction as provided in Sec. 80G. 80G deduction not applicable in case donation is done in form of cash for amount over Rs 10,000.
Donations with 100% deduction without any qualifying limit:
• Prime Minister’s National Relief Fund
• National Defence Fund
• Prime Minister’s Armenia Earthquake Relief Fund
• The Africa (Public Contribution – India) Fund
• The National Foundation for Communal Harmony
• Approved university or educational institution of national eminence
• The Chief Minister’s Earthquake Relief Fund, Maharashtra
• Donations made to Zila Saksharta Samitis.
• The National Blood Transfusion Council or a State Blood Transfusion Council.
• The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund.
Donations with 50% deduction without any qualifying limit.
• Jawaharlal Nehru Memorial Fund
• Prime Minister’s Drought Relief Fund
• National Children’s Fund
• Indira Gandhi Memorial Trust
• The Rajiv Gandhi Foundation
Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income
Donations to the Government or a local authority for the purpose of promoting family planning.
Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income
Donation to the Government or any local authority to be utilized by them for any charitable purposes other than the purpose of promoting family planning.
Section 80U: Deduction in respect of Person suffering from Physical Disability
Deduction of Rs. 50,000/- to an individual who suffers from a physical disability (including blindness) or mental retardation. Further, if the individual is a person with severe disability, deduction of Rs. 100,000/- shall be available u/s 80U. Certificate should be obtained from a Govt. Doctor. The relevant rule is Rule 11D.