Less than 3 Months to make Tax Investment to claim Deductions
These 3 months are crucial for salaried Taxpayers, specially who have opted for Old Tax Regime, as it is the time when they submit all the proofs of Deductions/exemptions u/s 80C, 80D, House Rent Allowance, Home Loan Claims etc. that they have made to get benefit of lower Taxes.
If investments are not made on time, i.e., before 31st March 2025, the taxpayers will not get benefit and same will lead to High Tax Deduction of Source by employer.
Therefore it is the time to make investments like in Mutual Fund, insurance, Public Provident Fund (PPF), NPS etc. to get Tax benefits.
In this article we have discussed various deductions available u/s 80C, 80D, 80G etc. to claim Tax Dedutions.
Deductions under Section 80C on Investments
Section 80C is one of the popular and favourite sections for deduction amongst taxpayers, as it allows them to reduce tax liability by making tax-saving investments or incurring eligible expenses.
Deduction under Section 80C can be claimed by individuals and HUFs. The maximum amount of Rs.150,000 can be claimed as a deduction every year. Companies, partnership firms, and LLPs are not eligible to avail the benefit of this deduction.
This section for deduction includes investments made in Equity Linked Saving Schemes (ELSS), Public Provident Fund (PPF)/SPF/RPF, payments made towards Life Insurance Premiums, the principal sum of a home loan, Sukanya Samriddhi Yojana (SSY), National Saving Certificate (NSC), Senior Citizen Savings Scheme (SCSS), etc.
Deductions under Section 80CC, 80CCD and 80CCD(1) on Investments
Sections 80CCC and 80CCD offer deductions for the investments made in the pension scheme either by yourself or by way of the contribution of the employer.
Sections 80CCC and 80CCD cover payments made towards pension funds, while 80CCD(1) covers the payments made towards the Atal Pension Yojana or other pension schemes launched by the government. The deduction calculation can be as follows – Employed: 10% of basic salary + DA; Self-employed: 20% of gross total income.
The maximum deduction can be availed of Rs.1.5 lakhs by putting together Sections 80C, 80CCC and 80CCD(1). However, an additional deduction of Rs.50,000 can be claimed, which is allowed u/s 80CCD(1B) for contributions made to NPS (National Pension Scheme). Therefore, the maximum deduction limit is Rs.2 lakhs under Section 80C, 80CCC, 80CCD(1) and Section 80CCD(1B) combined.
Deduction under Section 80D
Section 80D allows individuals to claim deductions on the premiums paid for their own Health Insurance and for their family members. The deduction limit under Section 80D is Rs.25,000 per year for individuals. For senior citizens who are aged above 60 years, the deduction limit to claim under Section 80D is Rs.50,000 per year.
It also allows you to claim deductions on preventive health check-ups. The costs incurred in preventive health check-ups are subject to deduction under Section 80D. This helps in encouraging individuals to get themselves a regular check-up and diagnose any potential health issues early on.
Deduction under 80G and 80GGC
Donations contributed towards charitable institutions can reduce taxable income and are eligible for deduction under Section 80G of the Income Tax Act.
Whereas, the Income Tax Act Section 80GGC allows individuals to claim a deduction on the amount used as donations or contributions made to any political party.
Others Exemptions Can be Availed under Old Tax Regime
House Rent Allowance: You can avail deduction for HRA at the filing of an ITR, in case if you are a salaried employee living in rented accommodation, you will get a house rent allowance (HRA) from the company.
Bank Fixed Deposits (FDs): Investments made in Bank Fixed Deposits (FDs) for a tenure of 5 years can be eligible for deduction of tax under Section 80C of the Income Tax Act. Although the amount of interest that is earned is taxable on these FDs.
Deferred Annuity Plans: Payment of premiums under the plan is eligible for deduction of tax under Section 80C.
Stamp Duty and Registration: The fees involved for the stamp duty for the home and the fee of registration at the time of transferring the property are subject to the deduction under Section 80C of the Income Tax Act.
Unit-Linked Insurance Plans: Investments made in ULIPs, either for yourself, your children, or your spouse, you can avail the deductions on tax on this investment.
Tuition Fees: Investment in the Education of children can become your tax-saving tool. Tuition fees of children paid for the full-time education of up to 2 children in any university, school, or college located anywhere in India are eligible for deductions under Section 80C under income tax.
Leave Travel Allowance: LTA exemption is also provided to salaried employees under income tax law; it is restricted to travel expenses incurred during leaves.
