12 Must know deductions under Sec 80 of Income Tax Act

It is the time of the year when many of us are putting together our documents for filing returns. While the Income Tax Act 1961 provides categories for levy of income tax, there are a range of sections that offer tax deductions to the taxpayer. There are provisions that are tax payer friendly and enable tax savings to a reasonable amount allowing the taxpayer to enjoy numerous benefits. The most popular being 80G that allows you to claim tax benefit on donations made towards charitable institutions and specific relief funds. There are several other provisions from which you can avail tax benefits. Have you ever paid attention to the tax deductions you can avail and tax savings you can make on your income? In this article, we bring you a range of Income Tax saving provisions anyone can avail. With this information, you can plan your finances in a better way and add savings to your kitty.

Mr. Ravikumar lives in an apartment on rent with his family. He is a software professional earning twelve lakhs per annum. His parents are senior citizens, his wife is a homemaker, his children are studying in school (daughter in class III and son in play school). He supports his younger brother’s college education and has taken an educational loan. His brother is physically challenged, has a hearing disability. He has life insurance policies in his name and his wife’s name and has taken medical insurance for the entire family. He has a few investments on NSC, PPF etc. He is the sole earning member of the family and savings on his tax will help the family to a large extent. Let us see tax deductions he can avail to get maximum savings.

1. Deduction of house rent paid where HRA is not received- Ravikumar lives in a rented apartment and does not receive a House Rent Allowance therefore he is eligible for various combinations of deductions which will depend on few other factors. (Section 80GG). If you pay rent and have not claimed a deduction till now, check with a Tax expert if you can avail that provision in your case. Chennai Accounts can advise you if you are eligible to avail this. 
2. Tax deduction for medical treatment who is suffering from a specified disease for self or dependent (parent, spouse, sibling, children)- Ravikumar can claim deductions on medical expenses of upto Rs. 40000 for a person, Rs. 1,00,000 for his parents. (Section 80DDB)
3. Tax deduction on Investments in Provident Funds such as EPF, PPF, etc., payment made towards life insurance premiums, Equity Linked Saving Schemes, payment made towards the principal sum of a home loan, SSY, NSC, SCSS, etc. which allows taxpayers to reduce their taxable income- Ravikumar can claim deductions on the above categories of upto Rs. 1.5 lakhs every year. This would help him save a considerable amount of money. (Section 80C)
4. Tax deductions on payments in the form of premium for LIC or any Other insurers for the assessment year- Ravikumar pays premiums for life insurance policies, so this is a provision that will allow him to save tax of upto Rs. 1.5 lakhs (Section 80CCC)
5. Tax deduction from the total taxable income for the payment of medical insurance premium paid by an individual- This is another provision Ravikumar will be able to avail as he pays a medical insurance premium for the entire family. (Sec 80D)
6. Tax deduction on tuition and education fees for children, deductions of upto Rs. 1.5 lakhs can be claimed. Every assessee can claim deductions on fees paid for two children – Mr. Ravikumar will be able to avail this provision as he pays school fees for both his children. He can claim  the actual fees paid during the financial year.  (Section 80C)
7. Tax benefits for medical treatment of disabled dependent- Ravikumar spends a considerable amount of money as expenses for his brother’s medical treatment owing to his condition. This provision is like a boon and will help him save claim deductions of upto Rs. 75,000 (Section 80DD)

Standard deduction means a flat deduction to individuals earning salary or pension income. The amount of standard deduction cannot exceed the salary. The maximum amount of deduction will be Rs. 50,000/- or Salary amount whichever is lower. Standard deduction is not available on the basis of number of employers. The standard deduction is the overall limit for a whole year rather than on the basis of the number of employers.

This is just the tip of the iceberg, there are numerous provisions in the Income Tax Act that are taxpayer friendly and help save. There are provisions for individuals who invest on equity, on education loans, contributions to a political party, special provisions for authors. These are special allowances apart from the standard deductions one can avail. The provisions discussed in the article apply to the most common kind of family. A deeper look at what each person is eligible for, will help save tax. To know this in detail, approach an expert such as Chennai Accounts who can help you with the provisions that apply in your case. With that you will be in for a surprise at the amount of money that will return to your kitty as savings. 

While awareness of these sections and provisions are important, it is equally important to keep all the bills, receipts and related payment vouchers carefully to be able to claim deductions. Planning your tax savings in advance is key and keeping track of all payment receipts such as insurance premium receipt, school fees receipt, rent receipt etc is mandatory. These receipts are proof that the payments have been made. Once you get a system of putting the necessary documents aside, doing it every year becomes easy. As an alternative option, digitalising the receipts will be helpful for quick reference. With many transactions becoming digital and the income tax returns itself in digital mode, it is a wise idea to have your receipts and vouchers digitalised. You could do this on your own or take professional assistance to keep track of the receipts. 

You can refer the above blog image for complete 12 deductions under Sec 80 of Income Tax Act

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