Understand Tax saving options:(80C deduction Guide) Download excel sheet

By | 05/07/2018

Filling of Income Tax return for the salaried, individual or a small businessman is a project to execute in time and as per norms. During filling the return most of the applicant either are not aware or unable to apply or understand tax saving options 80C.

Income Tax Department provides benefits through the different section to save tax up to ₹ 1.5 Lakhs.

The Income Tax Act, 1960 has provided Section 80C, 80CCD, 80CCC, 80CCCE  which holds different criteria of benefits which you will avail during filling your Income Tax.

In this article we will discuss the tax saving options under section 80C, Section 80CCC, Section 80CCD, Section 80U, and some other deduction like Medical insurance under section 80D, Education Loan Section 80E, Interest on Home Loan Section 24, Disability and Disease Section 80U.

Tax saving options 80C, 80CCC, 80CCD, 80D, 80U, 80E, 24

Although this expenditure is natural for every citizen of India and also to promote the uses of Insurance, Loans, Education Loan Government of India provides the benefits to the citizen of India under this section.

Below is the Details of Deduction section provide by the Income-tax department which we have to fill according to the amount we spend.

Also Read: Received Income Tax Notice? (Learn about It)

This calculation sheet automatically takes the amount according to the limit sanction for the section, which we will discuss further in the article.

section 80C

Best tax saving options

During Filling of the Tax return, you must aware of the expenses you have already made, which help you save your Tax Liability –

Sr. No. Section Description Max Amount Exempted ()
1 Section 80C Investment in PPF
Employee’s share of PF contribution
NSCs
Life Insurance Premium payment
Children’s Tuition Fee
Principal Repayment of a home loan
Investment in Sukanya Samridhi Account
ULIPS
ELSS
Sum paid to purchase a deferred annuity
Five-year deposit scheme
Senior Citizens savings scheme
Subscription to notified securities/notified deposits scheme
Contribution to notified Pension Fund set up by Mutual Fund or UTI.
Subscription to Home Loan Account Scheme of the National Housing Bank
Subscription to deposit scheme of a public sector or company engaged in providing housing finance
Contribution to notified annuity Plan of LIC
Subscription to equity shares/ debentures of an approved eligible issue
Subscription to notified bonds of NABARD
 1,50,000
2 80CCD(2) Employer’s contribution to NPS account Maximum up to 10% of salary
3 80CCD(1B) Additional contribution to NPS 50,000
4 80TTA Interest Income from Savings account 10,000
5 80GG For rent paid when HRA is not received from employer Least of rent paid minus 10% of total income 5000/- per month 25% of total income
6 80E Interest on education loan No Limit
7 80D Medical Insurance – Self, spouse, children
Medical Insurance – Parents more than 60 years old or (from FY 2015-16) uninsured parents more than 80 years old
25,000 – 30,000
8 80DD Medical treatment for handicapped dependant or payment to specified scheme for maintenance of handicapped dependent
Disability is 40% or more but less than 80% – 75,000
Disability is 80% or more – 1,25,000
75,000- 1,25,000
9 80GGB Contribution by companies to political parties Amount contributed (not allowed in cash)
10 80GGC Contribution by individuals to political parties Amount contributed (not allowed in cash)
11 80RRB Deductions on Income by way of Royalty of a Patent Lower of 3,00,000 or income received
12 24 Interest Paid to Self Occupied House 2,00,000

Tax saving Tips on 80C

how to save tax under 80c?

Here are some Tax saving Options which are useful for tax return filing-

Employee Provident Fund (EPF)

Employer Provident Fund is deducted from Your Salary according to the norms 12% of basics salary and deposited in your account of EPF and the same contribution is made from the employer side too.

The amount is fully exempted from Income Tax u/s 80C. The amount received after 5 years or retirement is fully exempted from the hand of the investor.

Also Read: Tax liability on Car Allowances

Public Provident Fund (PPF)

Public Provident Fund (PPF) also work for the investor as Tax exempted toll, the investor not only enjoys the amount invested as tax exempted but also enjoy the interest amount as tax exempt.

The Government of India will decide the rate of interest in the scheme, It is mandatory to invest for 15 years and the Lock-in period is 5 years.

Tax Saving Bank Fixed Deposit

One of the Tax saving options is Bank FD (Tax Saving), this FD is an investment in the banks Private as well as Public with the Lock-in period of 5 years, Investment up to 1 Lakh is fully exempted.

The money invested will not be withdrawn before 5 years even if you want to withdraw after paying the penalty amount.

80c FD interest rates are as similar to normal fixed deposit, the only difference is lock-in period of 5 years.

Life Insurance Premium

The amount paid towards Life Insurance premium for yourself, your spouse or for your children are included in 80C and exempted.

The income from the policy is also Tax-free if it is covered the Policyholder for 10 years or more.

You can also go for more than one policy, the premium is exempted in totality.

Child Tuition Fee

Tuition fee paid for your child is also exempted u/s 80 C. Only two children tuition fee is allowed for the particular scheme.

It can only be claimed in respect of two dependent children and for fees paid to an educational institution, college or school.

The maximum deduction on payments made towards tuition fee can be claimed up to 1.50 lakh together with the deduction in respect of insurance, provident fund, pension etc. in a financial year.

ELSS Funds (Equity Linked Savings Scheme)

Elss Tax saving scheme helps the investor to get the higher return and, elss investment is tax-free u/s 80c.

The Elss is having a lock-in period of 3 years.

In simple words:

The investor how invested in elss funds, unable to square off the investment till 3 years, you can invest in elss plan from lump sum or SIP mode.

All elss Plans are directly linked with equity market and the elss returns are depending upon the performance of the fund in the equity market.

how to reduce income tax

Ways to save tax other than 80c:

Tax saving Investment Option on 80D

Medical Health insurance and Medical Checkup

Premium Paid for the health insurance for yourself and family members (Spouse and Children) is exempted from the limit of  25000 (revised in Budget 2018) and for senior citizen  30000 (revised in Budget 2018).

The Insurance taken from any insurance company is acceptable. You also claim exemption on Health Checkup up to 5000 in FY.

Also Read: What is management efficiency ratio & its importance

Tax saving Investment Option on 80TTA

Interest received from saving account balance up to 10000 is fully exempted under section 80 TTA.

This deduction is allowed for individual and HUF. Section 80TTA deduction is not available on interest income from fixed deposits, recurring deposits, or any other Interest Income.

Tax saving Investment Option on 80CCC

This section 80CCC deals with the deduction and income in respect of Pension fund by an individual and payment premium maximum to 1,00,000.

If you surrender or in maturity the amount received is taxable as income.

This amount is also considered in whole under section 80C.

Tax saving Investment Option on 80E

This section deal with the Interest paid on the Loan taken on Higher Education for himself for your spouse and for your Child is fully exempted.

Higher Education is defined as full-time education.

The education Loan account not only include tuition and college fee, it includes the full amount of hostel fee, books expenses etc.

Loan taken from Financial institutes are allowed not from the family members.

Tax saving Investment Option on 80U

A disable or physically challenged a person can take the benefit of Tax saving options in the form of 80U.

The deduction of 50000 in normal disability and 1,00,000 in several disabilities can avail the benefit.

The applicant has to furnish the document from medical authority in proper form as prescribed.

Tax saving Investment Option u/s 24

The total amount allowed towards this deduction is 2,00,000 against interest on Housing Loan.

In case you take a home loan for purchase, construction, repair, renewal or reconstruction of your house property – the interest is allowed as a deduction.

Also Read: Income Tax Exemption for Salaried Employee 2018-19

Bottom Line

Above we Have learned the Tax saving options we can avail during filling your Income Tax return.

Filling your return not only keep you safe from Income tax department but also you can show your money in white form.

After filling your return you also get back your TDS deducted from Bank and your employer, if you are not in the Tax brackets.

Some of the Related Post:-

For more information, you can visit – https://www.incometaxindiaefiling.gov.in/home

Download Tax exempted excel sheet:- It will just help you to get the amount you are liable to pay tax.

Click here

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Amit Bansal
Amit Bansal
Hey, Amit Kumar Bansal, the man behind this blog. I always passionate about Taxes, Stock Market. This was one of the reasons why I have chosen the field of account. Blogging was not the coincidence it was a proper decision. The main aim of this blog is to help readers to take an informed financial decision. If you like my efforts kindly subscribe to this blog and also let your friends know about this website by sharing.

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