Everybody
knows that section 80C along with section 80CCC and section 80CCD of Income Tax
Act, 1961, allows a tax deduction of Rs 1.5 lakh from the gross total income. Various tax saving options and investment avenues eligible for deductions under section
80C and also discussed the various limitations of section 80C.
But, did
you know that apart from section 80C, there are many more tax deductions
available under section (u/s) 80? You can avail deduction under section
80D for health insurance,
section 80DD & section 80DDB for medical treatment,
section 80E for educational loan,
80G for donations and 80GG for rent paid.
Here’s a list of 7 such deductions available to individuals under section 80:
Medical Based Deductions under Section 80
1. Health insurance premium under
section 80D
You can claim a deduction of Rs 15,000 (RS 20,000 in case of senior citizens)
under section (u/s) 80D for medical or health insurance--popularly known as
mediclaim policy--premiam paid on the health of yourself, spouse and dependent
children.
Additionally, (from 1st April, 2008) you’re also allowed a further deduction of
Rs 15,000 u/s 80D for buying health insurance policy for your parents (Rs
20,000 if either of your parents is a senior citizen) irrespective of whether
they’re dependent on you or not.
Thus, if neither you nor your parents are senior citizens,
you’re allowed a maximum deduction of Rs 30,000. On the other
hand, if both you and your parents are senior citizens, then the maximum limit
allowed under section 80D increases to Rs 40,000.
Please also note that part payment of premium is also eligible for deduction u/s 80D. For example,
suppose that your parents buy a health insurance policy having an annual
premium of Rs 14,000. Out of the total premium, let’s say your parents pay only
Rs 5,000 and the balance of Rs 9,000 is paid by you. So, you’ll be allowed a
tax deduction of Rs 9,000 under section 80D and your parents will be allowed a
deduction of Rs 5,000.
2.
Medical treatment of disabled dependent under section 80DD
You’re also allowed a fixed deduction of Rs 50,000 (irrespective of the
actual expenses) u/s 80DD, if you happen to incur any expenditure on the
medical treatment (including nursing, training & rehabilitation) of
handicapped dependent (spouse, children, parents, brothers and sisters). For
severe disability, the amount of deduction available is Rs 75,000.
Furthermore,
section 80DD also allows deduction on insurance premium paid on certain
specified life insurance policies.
JEEVAN ADHAR policy of Life Insurance
Corporation (LIC) qualifies for deduction under section 80DD.
The policy is
meant for the maintenance of handicapped dependent after the death of the
insured. This is a whole life policy with no maturity value. On the death of
the insured (individual depositing the money), 20% is paid in lump sum and
balance is utilized to pay annuity to the handicapped dependant or the nominee
for the benefit of the handicapped dependent. If the handicapped dependent dies
before the insured, the amount is refunded back and is taxable in the year of
receipt.
There is yet another policy of LIC (JEEVAN VISHWAS) meant for the purpose of
providing for the handicapped dependents; however, it is not eligible for
deduction section 80DD of the IT Act. It is a with-profit endowment plan with
guaranteed and loyalty additions.
The point worth remembering is that section 80DD
allows fixed deduction of Rs 50,000 / Rs 75,000 irrespective of the expenditure
incurred on the medical treatment of the handicapped dependent or amount deposited
in the Jeevan Adhar Policy. It might seem absurd, but it’s true.
To know the specific ailments covered and other
formalities to be completed for availing deduction u/s 80DD.
3. Medical treatment of certain
specified ailments under section 80DDB
You’re also allowed a deduction of actual expenditure incurred—minus any
amount reimbursed by employer or by an insurance company—up to Rs 40,000 (Rs
60,000 for senior citizens) for medical treatment of certain specified diseases
and ailments (e.g. AIDS, cancer, Parkinson’s disease etc.) of yourself or any
dependent family member (spouse, children, parents, bothers and sisters) under
section 80DDB subject to certain conditions.
4. Handicapped person under section 80U
You’re allowed a fixed deduction of Rs 50,000, if you’re suffering from any
of the disabilities specified such as blindness, hearing impairment, mental
retardation or illness, leprosy-cured, low vision and locomotive disability,
autism and celebral palsy. For severe disability, deduction is Rs 75,000.
Please note the following points for claiming deduction u/s 80U:
1.
The disability pertains to you (i.e., the taxpayer) and not any of your family
members.
2. You need not spend any amount on the medical treatment.
3. A certificate is required from specified medical authority.
4. For up to 40% disability, nothing is allowed; for disability ranging from
40% to less than 80% a deduction of Rs 50,000 is allowed and if the disability
is 80% or more, Rs 75,000 is allowed to be deducted from your gross total
income.
Other Deductions under Section 80
5. Educational Loan under section 80E
You’re allowed a deduction u/s 80E for the repayment of loan taken (from
any bank, financial institution, or approved charitable institution) for higher
studies (full time studies including graduation of specified courses such as
management, engineering and medicine) for yourself or any of your family
members (children, spouse).
However, the deduction u/s 80E is only for the interest portion and unlike home loans, deduction for
principal repayment is not allowed. Finally, deduction u/s 80E is limited to a
maximum period of 8 years. .
6. Donations under section 80G
Donations paid to specified institutions also qualify for tax deduction
under section 80G but is subject to certain ceiling limits. Based on limits, we
can broadly divide all eligible donations under section 80G into four
categories:
a) 100% deduction without any qualifying limit (e.g., Prime
Minister’s National Relief Fund).
b) 50% deduction without any qualifying limit (e.g., Indira Gandhi Memorial
Trust).
c) 100% deduction subject to qualifying limit (e.g., an approved institution
for promoting family planning).
d) 50% deduction subject to qualifying limit (e.g., an approved institution for
charitable purpose other than promoting family planning).
The qualifying limit u/s 80G is 10% of the adjusted gross total income.
7. Rent paid under section 80GG
If you’re either self-employed or employed but not getting any HRA from
your employer, you can get a deduction under section 80GG for the rent paid by
you. However, unlike HRA exemption under section 10(13A) of I.T.Act, here the
maximum amount allowed is only Rs 2,000 per month (Rs 24.000 annually) and is
also subject to certain conditions.
So, make sure that (in addition to section 80C, 80CCC and 80CCD), you consider
all the above tax concessions available to you u/s 80 while doing your tax
planning.
In fact, the first course of action while doing your tax
planning is to
avail to all the tax breaks related to expenses (whether under section 80C or
any other section such as 80E) before making any further investment commitments
for tax savings under section 80.
