The government provides certain exemptions under various sections of the Income Tax Act, to encourage investors to save and hence reduce their tax liability. The tax benefits under section 80C allow one a maximum investment of Rs 1 lakh.
Therefore, if you are in the 30% tax bracket, if you invest a maximum of Rs 1,00,000 you save Rs 30,000. Similarly, if you are in the 20% tax bracket and if you invest a maximum of 1,00,000 you save Rs 20,000. GoodReturns.in has explained the various sections with the instruments available for exemption.
* The maximum amount of deduction which can be claimed in aggregate of 80C ,80CCD & 80CCD is Rs 1,00,0000/-.
Gross total income means total income computed in accordance with the provisions of the Act before making any deduction under sections 80C to 80U.
The income of a person is computed under the following heads:
2. Income from house property.
3. Profits and gains of business or profession.
4. Capital gains.
5. Income from other sources.
Here is quick chart of deduction from total income available under section 80C to 80U of the Income Tax Act. This chart will give you a fair idea of deduction which will help you while planning your tax.
|Deduction from total income u/s 80c to 80u|
|Sec||Eligible assessee||Nature of Deduction||Amount|
|80C||Indl/HUF||General deduction for investment in PPF,PF,Life Insurance, ULIP, Stamp duty on house, Fixed deposits for 5 years , bonds etc||Amount deductible: Rs. 1,00,000/-|
|80CCC||Indl||Contibution to Pension funds||Amount deductible: Rs. 1,00,000/-|
|80CCD(1)||Indl||Contibution by an employee or any other individual towards notified pension scheme||Amount deductible: Rs. 1,00,000/-|
Contibution by an employee towards notified pension scheme
|Amount deductible: maximum of 10 % of salary.|
Subscription to long-term infra bonds
|Amount deductible: maximum Rs 20000.|
Investment made under equity scheme if gross total income does not exceed Rs 10 lakh.
|Amount deductible: 50% of amount invested in equity shares, restricted to Rs 25,000.|
Medical insurance premia
|Amount deductible: Max upto Rs 30,000- 40,000 incase of senior citizen|
|80DD||Resident Indl/ Resident HUF||
For maintenance including treatment or insurance the lives of physical disable dependent relatives.
|Amount deductible: Rs 50,000. In case disability is severe , the amount is Rs 1,00,000|
|80DDB||Resident Indl/ Resident HUF||
Medical treatment expenses
|Amount deductible: Rs 40,000|
For interest payment on loan taken for higher studies for self or education of spouse or children
|Amount deductible: Entire amount of interest is deducatble for max of 8 years.|
Donations to charitable institution
|Amount deductible: 100% or 50% of amount of donation made to 19 entities (National defense fund , Prime minister relief fund etc.)|
For rent paid
|Amount deducatble: 1). Rs 2000/- p.m
2).25% of total income
|80GGA||All assessees not having any income chargeable u/hPGBP||
For donation to entities in scientific research or rural development
|Amount deducatable: Sum paid as donations|
|80GGB||Indian companies||Contribution give to political parties||Amount deducatable: Sum contibuted to political parties|
|80GGB||Assessee||Contribution give to political parties||Amount deducatable: Sum contibuted to political parties|
Interest in savings account
|Amount deductible: Max is Rs 10,000/-|
Income of person with disability
|Amount deductible: RS 50,000 which goes to Rs 1,00,000 in case taxpayer is suffering from severe disability.|