Tax sections 80C, 80D & others

Section 80C: - Investments

The max limit for Sec.80C is Rs.100000 which includes the following investments.

Apart from this, from FY 2010-11, additional Rs.20000 is allowed the investment is on Infrastructure Bonds.

Provident Fund (PF): The payments that you make to your PF are counted towards Sec 80C investments. For most of you who are salaried, this amount gets automatically deducted from your salary every month.

      Thus, it’s not just compulsory savings for your future, but also immediate tax savings!

Voluntary Provident Fund (VPF): If you increase your PF contribution over and above the statutory limit (as deducted compulsorily by your employer), even this amount qualifies for deduction under section 80C.

Public Provident Fund (PPF): If you have a PPF account, and invest in it, that amount can be included in Sec 80C deduction. The minimum and maximum allowed investments in PPF are Rs. 500 and Rs. 70,000 per year respectively.

Insurance Premiums: Any amount that you pay towards life insurance premium for yourself, your spouse or your children can also be included in Section 80C deduction.

      Please note that life insurance premium paid by you for your parents (father / mother / both) or your in-laws is not eligible for deduction under section 80C, but under 80D.

      If you are paying premium for more than one insurance policy, all the premiums can be included.

Equity Linked Savings Scheme (ELSS): There are some mutual fund (MF) schemes specially created for offering you tax savings, and these are called Equity Linked Savings Scheme, or ELSS. The investments that you make in ELSS are eligible for deduction under Sec 80C. Normally these investments will have a Lock-In period for certain years for tax benefit.

Home Loan Principal Repayment: The Equated Monthly Installment (EMI) that you pay every month to repay your home loan consists of two components – Principal and Interest.

      The principal component of the EMI qualifies for deduction under Sec 80C.

National Savings Certificate (NSC): The amount that you invest in National Savings Certificate (NSC) can be included in Sec 80C deductions

Pension Funds – Section 80CCC: This section – Sec 80CCC – stipulates that an investment in pension funds is eligible for deduction from your income. Section 80CCC investment limit is clubbed with the limit of Section 80C - it maeans that the total deduction available for 80CCC and 80C is Rs. 1 Lakh.

This also means that your investment in pension funds upto Rs. 1 Lakh can be claimed as deduction u/s 80CCC. However, as mentioned earlier, the total deduction u/s 80C and 80CCC can not exceed Rs. 1 Lakh.

Bank Fixed Deposits: This is a newly introduced investment class under Section 80C. Bank fixed deposits (also called term deposits) having a maturity of 5 years or more can be included in your Sec 80C investment.

Post Office Time Deposit Account: This is the fixed / term deposits offered by the Department of Posts (Government of India) through the post offices in India.

If the time deposit is opened for a duration of 5 years or more, the amount invested is qualified for deduction under section 80C.

Others: Apart form the major avenues listed above, there are some other things, like children’s education expense (for which you need receipts), that can be claimed as deductions under Sec 80C.

Section 80D: - Medical Insurance Premium

Premium paid for Insurance is deductible upto Rs.15000/year. If the person is senior citizen, the limit is extended upto Rs.20000 per year.

If you are paying the Insurance premium for your parents(Dependent), then additional Rs.15000 is allowed.

If the parents are senior citizen, then the limit is upto Rs.20000/year.

So, Insurance premium towards yourself, your spouse & children are Rs.15000.

For parents, it is Rs.15000 and if they are senior citizen, then it is Rs.20000.

Sec 80D and HUF:

If you are filing as an HUF, then premium paid towards any member of HUF can be claimed under 80D as per the above limit.

In this case, the deduction can be claimed only if the premium is paid by the HUF.

Mode of Payment

Any mode of payment, except cash, is acceptable for claiming this deduction.

Section 80DD: - Disabled Dependent

• Blindness
• Low vision
• Leprosy-cured
• Hearing impairment
• Locomotor disability
• Mental retardation
• Mental illness

Person with disability > 40% severe – Rs.50000

Person with severe disability > 80% severe – Rs.75000

This is fixed amount deduction irrespective of amount you spend on the disabled. You need to get a certificate of disability from relevant medical authorities.

You can claim deduction u/s 80DD if:

1. You spent on the medical treatment, training and rehabilitation of a disabled dependent (Amount spent for nursing is considered as expenditure on medical treatment)

Or,

2. You paid an amount for a scheme (offered by Unit Trust of India (UTI), Life Insurance Corporation (LIC) or any other insurer) meant to take care of the maintenance of your disabled dependent in case of your untimely death.

Section 80U: Self Disabled

Similar to Sec. 80DD, except here you yourself is disabled.

Person with disability > 40% severe – Rs.50000

Person with severe disability > 80% severe – Rs.75000.

This is fixed amount deduction irrespective of amount you spend on the disabled.

Section 80DDB: - Medical Expenses for certain diseases

Expenses towards medical treatment for particular diseases can be shown under this section.

• Neurological Diseases (where the disability level has been certified as 40% or more)
  - Dementia
  - Dystonia Musculorum Deformans
  - Motor Neuron Disease
  - Ataxia
  - Chorea
  - Hemiballismus
  - Aphasia
  - Parkinsons Disease
• Malignant Cancers
• Full Blown Acquired Immuno Deficiency Syndrome (AIDS)
• Chronic Renal failure
• Hematological disorders
  - Hemophilia
  - Thalassaemia

Limit is Rs.40000 & for senior citizen, the limit is Rs.60000 and it includes yourself, spouse, children, dependent parents & dependent siblings.

If the partial amount is reimbursed from any insurance company, then only the balance amount can be shown here. Also you need to get a  certificate from specialist in Govt. hospital in format as Form 10-I.

Section 80E: - Interest on Education Loan

You will get tax benefit for the amount paid towards the interest for the Education Loan. This is not applicable for the Principal of Loan. This is valid only for 8 years, ie., from the year of repayment + 7 years after that.

Also the loan can be availed only for Full time courses. There is no limit to this amount.

Also this can be availed for Spouse as well the children.

Section 80G: - Donations

Donations made to institutions are allowed for deduction upto 50% or 100% based on the charity Institutions. You need to get a receipt from charity on the donation made.

Limit is up to 10% of Adjusted GTI.

Adjusted Gross Total Income (GTI) = Gross total income – Long term Capital Gain – All deductions under 80C to 80U, except 80G – any other income like agricultural income – certain income of NRIs.

Section 80GG: House Rent, if No HRA

Any individual can claim under this section even if they are salaried, businessman.

Restrictions:

You cannot claim if,

·         You are getting HRA from your employer

·         You, spouse or children owns a house in the place where you stay

The amount allowed as deduction is the minimum of the following:

• Rent / lease amount paid less 10% of your total income
• Rs. 2,000 per month
• 25% of your total income

Housing Loan:

1.            For Principal

2.            For Interest

For Principal:

Under section 80C, the amount paid towards the Housing Loan - Principal amount is tax free.

Limit: Overall limit for 80C is Rs.100000, which includes Housing Loan - Principal also.

Condition: If you are working in same city, then it should be self occupied.

Exception: If you are working in different city, then even the house is on rent, we can claim this tax benefit.

For Interest:

Under Section 24, the amount paid towards the Housing Loan - Interest amount is tax free.

This can be shown as negative value under the title "Income from House Property"

Limit: Overall limit is Rs.150000

Condition: No (no restriction of "self occupied property")

Interest Paid minus Rent received < 150000

Income tax (IT) slabs / brackets for Financial Year 2010-11, Assessment Year 2011-12

Rate	Income
	Men	Women	Senior Citizens
0%	Less than 1,60,000	Less than 1,90,000	Less than 2,40,000
10%	1,60,001 to 5,00,000	1,90,001 to 5,00,000	2,40,001 to 5,00,000
20%	5,00,001 to 8,00,000	5,00,001 to 8,00,000	5,00,001 to 8,00,000
30%	8,00,001 and above	8,00,001 and above	8,00,001 and above

Notes:

An education cess of 3% is applicable on income tax payable for every income tax assessee.