Common and Itemised Income Tax deductions Section 80C, 80CCC, 80CCD, 80CCD 1, 80CCD 1B, 80CCD 2, 80CCF, 80CCG, 80D, 80DD, 80DDB, 80E, 80EE, 80GG, 80TTA, 80G must be known by every individual or employee to adjust the gross income and to claim the expenses as standard deduction in ITR, find all the tax deduction sources available as per the Income Tax Act indicated and present the exemptions..
Taxes are an important constituent of any country which helps the country make progress and do essential development in the country, and the tax system was basically introduced to bring some sort of equality to the society, since the person earning more income is asked to pay a higher tax and similarly the person earning lesser income is asked to pay lesser tax.
Though for a person, taxes act as a liability to any person, where to reduce the burden of taxes to an individual the government has also provided various tax saving schemes which can help a person to save tax and also help in saving for his future.
There are various tax deductions available under the income tax laws of India in the name income tax sections with various forms of tax saving instruments available in the country. Similarly, the tax saving depends on the instrument which a person is using, where the different saving schemes and the rebate provided under these vary and is bifurcated into various income tax sections. Let us look at details on the various sub sections on income tax in India under section 80.
The Indian families and the individuals are eligible for various income tax rebates under Income Tax Section 80C, where the individuals can make a tax deduction of up to 1 lakh 50 thousand on the yearly earnings. This 1.5 lakh of savings under section 80C can be further divided into sub sections such as section 80C, section 80CC, and Section 80CCD and other as mentioned, where the below are some of the savings included under section 80C
- Life insurance payment which could be made for self, spouse or any or children.
- Payments made towards the provident fund
- Payments made towards the tuition fee to educate the children (this is applicable to a maximum of 2 children)
- Payments made for the buying or building of the home.
- Payments made towards the fixed deposits for a tenure of 5 years.
Other than this, there are various other saving schemes which offer tax deductions such as mutual funds (ELSS), Specific bonds which are ‘tax saving’, senior citizen saving schemes, etc.
Other than this, knowledge of various sub sections under section 80C can help every one (employees, business persons and self employed) to manage his/her incomes in a better way, let’s have a look at all the income tax sub sections under 80C and their facilities
As per the Income tax Act, the section 80CCC provides an individual to invest in any LIC or any other insurance plan allowing the deduction for the amount invested should be an annuity plan and must be from receiving a pension from that plan, but where the pension fund allowance under 80CCC received from the person on surrender of the plan is taxable at the time of receipt of the accrued amount, and in this Section, one can invest a premium limit as high as 1.5 lakh under 80CCC which is the total allowable deduction range of income tax act.
The Income Tax Act Section 80CCD is the sections which talk about the deduction about the contribution made towards the pension account and this 80CCD is divided in two parts as 80CCD 1 and 80CCD 1B.
Section 80CCD 1
This sub section 80CCD 1 of Income Tax act talks about the employee’s contribution, under this, an individual can make a contribution towards his pension account only, where the maximum deduction limit than a person can make is 10% of the net income in case of an employee and 20% of the gross income in case of a self employed or a maximum saving of 1.5 lakhs whichever is lesser.
Section 80CCD 1B
This 80CCD 1B sub section refers to an additional deduction to which an employee can make for up to 50,000 towards the NPS (National Pension Scheme) account and this is the amount which is over and above the normal deductions which a person can do and under this Section 80CCD 1B of Income Tax, one can also make a contribution towards ‘Atal Pension Yojana’.
Section 80CCD 2
As per the Income Tax Act Section 80CCD 2, there is another provision for deduction of income tax, wherein an employer can make an additional contribution towards the employee’s pension account and the employer can make a contribution of up to 10% of the salary of the employee and does not have any cap on the monetary amount that can be contributed.
This section can be used by both the individuals as well as the undivided families, and this Income Tax Section 80CCF gives the provision of tax deduction on subscribing long term infrastructure bonds which have been declared by the government, where an individual can make a maximum deduction of up to 20,000 under this 80CCF.
The section 80CCG is not eligible for all the individuals, but for specific individuals, the section allow for a deduction amount of up to 25,000, where the act allow for saving made into certain equity schemes as declared by the Government of India and however, the income tax saving that can be used is 50% of the amount invested in the equity schemes to a maximum of Rs. 12,500 in a financial year.
Apart from 80C sections of Income Tax, many times 80 C sections is not enough to achieve desired deductions using the tax saving instruments, for this Section D talks about the expenditures done on the healthcare both directly and indirectly, So, we will discuss all about the section and sub sections of Income Tax Act 80D.
The Income Tax section 80D talks about the deductions made under the health insurance schemes, where an individual can take a deduction exemption of up to Rs 25,000 for the insurance plan taken for self, spouse or dependent children, and additionally under this section 80d of income tax act, a person can also avail the deduction for the insurance plan taken on the name of his parents for a maximum limit amount of 25,000, but to cover this condition, the parents should be lesser than the age of 60 years. However, under the case, both the taxpayer and the parents are above 60 years, in such cases, Section 80D allows the individual to avail the income tax deduction of up to 1,00,000 rupees as a limit.