This article is applicable for FY 2014-2015 and is updated as per the Budget announcements on July 10, 2014.It explains the inclusions of this Section in detail, however if you want to know the tax benefits of 80C, 80D and 80CCC specifically with respect to Life Insurance and Pensions, you could also read the article 80C, 80D & 80CCC – Save Tax with Life Insurance, Health Insurance and Pension plans.
Tax Benefits under Section 80C
Section 80C was introduced by the Finance Act 2005.
It provides deduction from total income in respect of various investments/expenditure/payments explained below. The total deduction under this section (along with section 80CCC and 80CCD) is limited to Rs. 1.50 lakhs maximum.
Instruments that can give you Section 80C benefits are as follows.
- Life Insurance Premium
- for an individual, policy must be in self or spouse’s or any child’s name.
- For HUF, it may be on life of any member of HUF
- Sum paid under contract for Deferred Annuity/Pension Plan
- for an individual, on life of self, spouse or any child
- Sum deducted from salary payable to Govt. Servant for securing deferred annuity
- for self or spouse or child
- payment is limited to 20% of salary
- Employee’s Provident Fund Scheme contribution
- PPF Contribution
- Contribution by employee to a Recognized Provident Fund.
- Sum deposited in 10 year/15 year account of Post Office Saving Bank
- Subscription to any Notified Securities/Notified Deposits scheme. e.g. NSS
- Subscription to any Notified Savings Certificate, Unit Linked Savings Certificates e.g. NSC VIII issue.
- Contribution to Unit Linked Insurance Plan of LIC Mutual Fund e.g. Dhanrakhsa 1989
- Contribution to notified deposit scheme/Pension fund set up by the National Housing Scheme.
- Certain payment made by way of installment or part payment of loan taken for purchase/construction of residential house property.
- Condition has been laid that in case the property is transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year.
- Contribution to Notified Annuity Plan of LIC (e.g. Jeevan Dhara) or Units of UTI or a Notified Mutual Fund.
- Subscription to units of a Mutual Fund notified u/s 10(23D).
- Subscription to Deposit Scheme of a PSU engaged in providing Housing Finance.
- Subscription to Equity Shares/Debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions.
- Tuition fees paid at the time of admission or otherwise to any school, college, university or other educational institution situated within India for the purpose of full time education of any two children.
- available in respect of any two children maximum
To avail of 80C benefit, do note that
- Investment should be in your, your spouse’s or children’s name and you should be the owner (also called proposer) of the policy to get tax benefits for yourself.
- Renewal premium for life insurance paid for a policy bought in an earlier year can also get the same tax benefit.
- In the case of Pensions & Annuities, if deduction under section 80CCC has been availed of, then rebate under section 80C would not be allowable.
- You should be present in India when you apply for the life insurance policy.
- Any such life insurance policy should have been payable as well as paid in the said period. i.e. you cannot pay next year’s due premium this year, or last year’s overdue premium this year to claim the benefit.
- Ensure that the Life Insurance cover (Sum Assured) of the policy is at least 10 times that of your Annual Premium in the year of premium payment.
The best way to avail of this benefit is to compare and buy life insurance online.
Tax Benefits under Section 80CCC
This tax benefit is available for premium payments made towards a pension/deferred annuity plan. The benefit under this section, along with all other investments of 80C, is limited to the 80C limit of Rs. 1.50 lakhs per annum.
Tax Benefits under Section 80D
This tax benefit is available for premium payments made to cover a medical/health insurance policy including individual, family floater, critical illness, etc. which are non-investment products. Unlike 80CCC above, the 80D limit is exclusive, i.e. over and above the Rs. 1.50 lakhs limit of Section 80C. You can claim both of them.
- Deduction under Section 80D is now available up to Rs. 15,000 in a financial year for insurance of self, spouse and dependent children. For senior citizens the limit is Rs, 20,000.
- In addition to that, a deduction for insurance of parents (either father or mother, or even both) is available to the extent of Rs. 20,000 in a financial year if parents are senior citizens and Rs. 15,000 in other cases.
Therefore, the maximum deduction available under this section is to the extent of Rs. 40,000 in a financial year.
- From FY 2012-2013 (i.e. AY 2013-14) within the existing limit a deduction of up to Rs. 5,000 for preventive health check-up is available.
Please note
- Both individuals and HUF are allowed to claim this benefit.
- Premiums cannot be paid in cash.
- In case you are buying the health insurance policy for a period of more than one year, the renewal premiums you pay will also be eligible for the tax benefit.
The best way to avail of this benefit is to compare and buy health insurance online.
If you or we look hard, we will surely find one, Uttam.
But we get worried when someone asks a question like this. Are you buying a financial product only for tax benefit? That’s just not recommended. Instead Uttam, check what your needs are – for life insurance, investment in equity, health insurance, fixed deposits, bonds, retirement planning, etc. Most of these products have benefit on 80C and 80D. Let that benefit be something that you also get when you invest, rather than being the main benefit.
Uttam, we hope you are not disappointed with our response, but we believe that is what the approach should be.
If you or we look hard, we will surely find one, Uttam.
But we get worried when someone asks a question like this. Are you buying a financial product only for tax benefit? That’s just not recommended. Instead Uttam, check what your needs are – for life insurance, investment in equity, health insurance, fixed deposits, bonds, retirement planning, etc. Most of these products have benefit on 80C and 80D. Let that benefit be something that you also get when you invest, rather than being the main benefit.
Uttam, we hope you are not disappointed with our response, but we believe that is what the approach should be.
Is thr any Combo policy which covers under 80C and 80D ?
Is thr any Combo policy which covers under 80C and 80D ?
Please use a tax calculator – there are many that you can google and find on the internet.
Please use a tax calculator – there are many that you can google and find on the internet.
bank interest +salary received is more than 5 lakhs=634498 .savings is 84000. Can you tell me the tax amount i have to pay?
bank interest +salary received is more than 5 lakhs=634498 .savings is 84000. Can you tell me the tax amount i have to pay?
First, ignore TDS. Add interest to salary and compute tax depending on the total value. Then check TDS. Pay tax or get tax return depending on whether value is positive or negative.
First, ignore TDS. Add interest to salary and compute tax depending on the total value. Then check TDS. Pay tax or get tax return depending on whether value is positive or negative.
Should interest received from bank fixed
deposits be added to the total salary when computing taxes. Banks have already
taken 10% TDS for interest received.
Salary alone is less than 5 lakhs and TDS has been already deducted. But
when bank interest + salary is more than 5 lakhs, then how to calculate tax.Will
i have to pay extra tax for the amount after 5 lakhs?
Should interest received from bank fixed
deposits be added to the total salary when computing taxes. Banks have already
taken 10% TDS for interest received.
Salary alone is less than 5 lakhs and TDS has been already deducted. But
when bank interest + salary is more than 5 lakhs, then how to calculate tax.Will
i have to pay extra tax for the amount after 5 lakhs?
Yes. They will not keep your money.
Yes.
If we forget to ask for the refund , will the IT department still calculate the refund that is due to us and send it.
If we forget to ask for the refund , will the IT department still calculate the refund that is due to us and send it.
Send the bills to your employer. After scrutiny they will allow you reimbursement if the expenses are relevant.
Send the bills to your employer. After scrutiny they will allow you reimbursement if the expenses are relevant.
A family member had root canal and crown which cost 15000 in a pvt dental clinic. should i get bills from this clinic and what is the procedure?
A family member had root canal and crown which cost 15000 in a pvt dental clinic. should i get bills from this clinic and what is the procedure?
Expenses incurred for availing dental services can be reimbursed by your employer and are also exempt from Income Tax up to the limit of Rs.15,000 against medical procedures / treatment during the year. The bills should clearly be for treatment, consultation, hospitalization or medicines. It cannot be for aesthetic enhancements. Submit all bills to your employer for claiming the benefit.
Expenses incurred for availing dental services can be reimbursed by your employer and are also exempt from Income Tax up to the limit of Rs.15,000 against medical procedures / treatment during the year. The bills should clearly be for treatment, consultation, hospitalization or medicines. It cannot be for aesthetic enhancements. Submit all bills to your employer for claiming the benefit.
The IT department will go with 26AS only and rightly so.
If there is TDS deducted from you but not deposited by your employer (or any institution which has done the deduction), get in touch with them for a clarification and settle it before you file your IT.
The IT department will go with 26AS only and rightly so.
If there is TDS deducted from you but not deposited by your employer (or any institution which has done the deduction), get in touch with them for a clarification and settle it before you file your IT.
The exemption limit for the individual.
For Individuals below 60 years age (including Women): Rs. 2 lakhs
For Individuals aged 60 years and above but below 80 years (Senior Citizen): Rs. 2.50 lakhs
For Individuals aged 80 years and above (Very Senior Citizen): Rs. 5 lakhs.
The exemption limit for the individual.
For Individuals below 60 years age (including Women): Rs. 2 lakhs
For Individuals aged 60 years and above but below 80 years (Senior Citizen): Rs. 2.50 lakhs
For Individuals aged 80 years and above (Very Senior Citizen): Rs. 5 lakhs.
How do we deduct for dental treatment to family member costing 13000 rs.What documents are necessary?
Any information regarding slab limit for women in Modi’s govt budget
How do we deduct for dental treatment to family member costing 13000 rs.What documents are necessary?
Any information regarding slab limit for women in Modi’s govt budget
Do we file returns as per 26As statement which appears in in the Income Tax site even if there is small differences
Do we file returns as per 26As statement which appears in in the Income Tax site even if there is small differences
What is the upper limit of interest after which tds happens even after submitting form 15h
What is the upper limit of interest after which tds happens even after submitting form 15h
Yes, TDS is deducted on interest unless Form 15H/15G is submitted.
Yes, TDS is deducted on interest unless Form 15H/15G is submitted.
Do private banks deduct tax from earned interest. ?
Do nationalised banks upload interest earned from fd’s?
Do private banks deduct tax from earned interest. ?
Do nationalised banks upload interest earned from fd’s?
No. The interest gets added to the income for the year.
No. The interest gets added to the income for the year.
thank you. I would also like to know if interest earned on post office 5 year time deposit scheme can also be reinvested and avail benefit under sec. 80C
thank you. I would also like to know if interest earned on post office 5 year time deposit scheme can also be reinvested and avail benefit under sec. 80C
1. Income Tax Slab Rates for women in India is same as that of men from last financial year i.e. FY 2012-2013 (AY 2013-2014) onwards.
2. Tax on interest earned on NSC can be calculated in either of the following ways.
a. Recommended way : Show the interest every year as re-invested and avail that benefit under Sec 80C. i.e. if invested amount is say Rs. 1000, and interest earned in a year is say Rs. 84 (@8.4%) then show Rs. 84 as reinvested within the overall cap of Rs. 1,00,000 under 80C for that year. Similarly in the next year, interest @ 8.4% on Rs. 1084 can be shown as re-invested, and so on. The final year’s interest gain will be added to “Other income” in your Form 16 and taxable at the rate applicable to you in that year.
b. Another way : Show all the interest in the final year as “Other Income” which is taxable at the rate applicable for you in that year.
Dear SRP, I hope this helps you.
1. Income Tax Slab Rates for women in India is same as that of men from last financial year i.e. FY 2012-2013 (AY 2013-2014) onwards.
2. Tax on interest earned on NSC can be calculated in either of the following ways.
a. Recommended way : Show the interest every year as re-invested and avail that benefit under Sec 80C. i.e. if invested amount is say Rs. 1000, and interest earned in a year is say Rs. 84 (@8.4%) then show Rs. 84 as reinvested within the overall cap of Rs. 1,00,000 under 80C for that year. Similarly in the next year, interest @ 8.4% on Rs. 1084 can be shown as re-invested, and so on. The final year’s interest gain will be added to “Other income” in your Form 16 and taxable at the rate applicable to you in that year.
b. Another way : Show all the interest in the final year as “Other Income” which is taxable at the rate applicable for you in that year.
Dear SRP, I hope this helps you.
yes. i would like to know the tax slab for women fy2013-2014. would also like to know if you have to pay tax for NSC interest received and how much. thank you.
yes. i would like to know the tax slab for women fy2013-2014. would also like to know if you have to pay tax for NSC interest received and how much. thank you.
Dominique, you can buy as many pension plans as you want – tax benefits are based on value and not no. of plans.
– all contribution for pension gets 80C benefit with a cap of Rs. 1 lakh as explained in the article
– any commutation (allowed up to 1/3rd of accumulated pension fund) is fully tax exempt under section 10 (10a)(iii)
– all pension you get is added to the pensioner’s annual income and is taxable as per applicable slabs
– any amount that the nominee gets back on death of pensioner(s) is tax-free under sec 10(10d).
Dominique, you can buy as many pension plans as you want – tax benefits are based on value and not no. of plans.
– all contribution for pension gets 80C benefit with a cap of Rs. 1 lakh as explained in the article
– any commutation (allowed up to 1/3rd of accumulated pension fund) is fully tax exempt under section 10 (10a)(iii)
– all pension you get is added to the pensioner’s annual income and is taxable as per applicable slabs
– any amount that the nominee gets back on death of pensioner(s) is tax-free under sec 10(10d).
Hi. Please clarify what are the tax benefits in a pension plan. also whether we can but more than one pension plan and get the benefits. thank you.
Hi. Please clarify what are the tax benefits in a pension plan. also whether we can but more than one pension plan and get the benefits. thank you.
There are 4 versions for post office time deposit based on tenor – 1yr, 2yr, 3yr and 5 yr.
80C is indeed valid if
– the tenor is at least 5 years, and
– you stay invested for the entire period and do not break the deposit.
I hope this clarifies it for you, SRP.
There are 4 versions for post office time deposit based on tenor – 1yr, 2yr, 3yr and 5 yr.
80C is indeed valid if
– the tenor is at least 5 years, and
– you stay invested for the entire period and do not break the deposit.
I hope this clarifies it for you, SRP.
is the post office time deposit scheme eligible for tax deduction under 80c?
is the post office time deposit scheme eligible for tax deduction under 80c?
Karan,
Both your questions are indeed very valid but any answer at this time is purely hypothetical because like I am sure you know, the DTC is still a ‘final draft’ still awaiting its deliverable shape and form, and of course date. Also, while the proposal to make it effective Apr 2013 was a consideration till recently, its implementation appears further distant to me today. Given the sweeping changes it proposes, I personally doubt it reaching fruition even in 2014, given it will be an election year.
There are too many things in the DTC, but I will try answer it from the limited perspective here.
In its current form, many of the Exempt-Exempt-Exempt (EEE) products will move to Exempt-Exempt-Taxed (EET) mode (Click here for more on this). So while 80C benefits may continue (and in fact may be enhanced), final returns are likely to be taxed, that being the basic philosophy of the DTC. And many products such as ELSS, TD, ULIPs, NSC, Housing Loan principal, etc. are likely to lose benefits.
2 questions remain…
1. There will be some products that will continue under EEE. It is unclear which ones, but it could be PPF, pure insurance products, etc. Some of these are likely to get exclusive benefits as well. 80D may merge with 80C. We have to wait and see.
2. The bigger question in my mind is whether it will be prospective or retrospective. That is the key because tax on final returns can shave away a significant amount of profits.
From the investor’s perspective, just try to maximise your gains as of today. Tomorrow is another day.
While you may not have got a very clear answer (nobody can give you the right one as of now), I hope you got a perspective.
Would all these deductions also be allowed under the Direct Tax Code?
And when is the Direct Tax Code expected to be applicable from?
The information describe in this blog is good because it gives ideas that how the person can get tax benefit under different sections like Section 80C, Section 80D, Section 80E. It would be easiest to pay the tax if one can properly invest money in different schemes. Thanks for sharing the good information.