Tax benefits under Sec 80C, 80CCF, 80D, 80G and 80E

This article explains how the deductions under various sections of the Income Tax (IT) Act can help reduce your income tax liability. It also helps you decide where to invest to claim deductions under the sections. The income we earn is subject to income tax by the government and the tax we pay depends on our income, and thus, the income tax that you pay depends on your total earnings in a given year.

This article provides you an understanding of the benefits available under Sec 80C, 80CCF, 80D, 80G and 80E.

Sec 80C

Section 80C allows you to claim deductions in respect of life insurance premium, contribution to PPF, principal repayment on home loan, etc. The tax benefit is provided for the investments in certain instruments which are eligible for deduction under Sec 80C of the Income Tax Act, 1961, with the maximum total exemption being Rs 1, 00,000.

Sec 80CCF

This section provides tax benefit in the form of deduction in respect of subscription to long-term infrastructure bonds. Any investments made in long-term infrastructure bonds as notified by the central government shall be allowed as deduction to the extent of Rs 20,000. The advantage here this deduction is in addition to the limit of Rs 100,000 allowed under Sec 80C of the Income Tax Act, 1961.

Sec 80D

This provision is for the Medical insurance premium. Premium paid for medical insurance up to Rs 15,000 is eligible for deduction under Sec 80D; in case of senior citizens the limit is extended to Rs 20,000. The  deduction for Self+ spouse + dependent children and for parents(dependent or not) can be availed separetly.

Sec 80E

This is the deduction in respect of interest on loan for higher education

The amount of interest paid on loan borrowed from any financial institution or any approved charitable institution is eligible for deduction under Sec 80E of the Income Tax Act, 1961, the loan being taken for the purpose of higher education. There is no limit on the interest amount. The deduction is allowed only for the first 8 years of the payment of the interest of the end of the tenure of the loan, which ever comes early.

Sec 80G

Donations to certain funds/ charitable institutions

Donations, charity need not necessarily be one-way traffic but could result in a win-win situation for both parties. To simplify it further, donations made to certain funds or charitable institutions are eligible for deduction under Sec 80G of the Income Tax Act, 1961.

So while the receiving party benefits with the donation, you receive tax benefits arising from the deduction.

Institutions eligible for deduction under this section are categorised in three segments based on the amount of deduction allowed. The three segments have:

100 per cent deduction allowed without any limit

50 per cent deduction allowed without any limit

a. 100 per cent deduction allowed of restricted amount

b. 50 per cent deduction allowed of restricted amount

Where restricted amount is 10 per cent of the adjusted total income