Deductions from total income under sections 80C to 80U of the Income Tax Act of India, 1961, allow taxpayers to reduce their taxable income by claiming deductions for certain expenses and investments. This can help taxpayers to reduce their tax liability or even eliminate it altogether.

Here is a brief overview of the deductions available under sections 80C to 80U:

Section 80C:

This section allows for a deduction of up to ₹1.5 lakh for certain investments and expenses, including:

• Contributions to the Employees’ Provident Fund (EPF) or Public Provident Fund (PPF)
• Life insurance premiums
• Tuition fees for children
• Principal repayment on home loans
• Equity-linked savings schemes (ELSS)
• Unit-linked insurance plans (ULIPs)
• National Savings Certificates (NSCs)
• Tax-saving fixed deposits (FDs)

Section 80CCC:

This section allows for an additional deduction of up to ₹1.5 lakh for investments in annuity schemes approved by the Pension Fund Regulatory and Development Authority (PFRDA).

Section 80CCD (1):

This section allows for a deduction of up to 10% of salary for contributions made to the National Pension System (NPS).

Section 80CCD(1B):

This section allows for an additional deduction of up to ₹50,000 for contributions made to the NPS by employers on behalf of their employees.

Section 80CCD (2):

This section allows for a deduction of up to 14% of salary for contributions made to employer-sponsored pension funds.

Section 80D:

This section allows for a deduction of up to ₹25,000 for health insurance premiums paid for self, spouse, and dependent children. An additional deduction of up to ₹25,000 is allowed for premiums paid for dependent parents.

Section 80E:

This section allows for a deduction of the full interest amount paid on education loans taken for self, spouse, or dependent children.

Section 80EEA:

This section allows for an additional deduction of up to ₹1.5 lakh for interest paid on home loans taken for first-time home buyers. This deduction is available for loans taken up to 31st March 2023.

Section 80DDB:

This section allows for a deduction of up to ₹40,000 for medical expenses incurred for self, spouse, and dependent children. An additional deduction of up to ₹75,000 is allowed for medical expenses incurred for dependent parents who are senior citizens (aged 60 years or above).

Section 80G:

This section allows for a deduction of donations made to certain charitable organizations. The deduction is available for up to 50% of the donation amount, or 10% of the total income, whichever is lower.

Section 80GG:

This section allows for a deduction of up to ₹60,000 for house rent paid by salaried taxpayers who live in a rented house.

Section 80TTA:

This section allows for a deduction of up to ₹10,000 for interest earned on savings bank accounts.

Section 80TTB:

This section allows for a deduction of the full interest amount earned on bank deposits held by senior citizens (aged 60 years or above).

Section 80U:

This section allows for a deduction of up to ₹75,000 for persons with disabilities. An additional deduction of up to ₹1.25 lakh is allowed for persons with severe disabilities.

CASE LAWS

• CIT v. S. Krishnaswamy (1970) 77 ITR 821 (SC): The Supreme Court held that the deduction under Section 80C is available only for payments made by the taxpayer himself, and not on behalf of another person.
• DCIT v. K.N. Gopalakrishnan (1997) 228 ITR 997 (SC): The Supreme Court held that the deduction under Section 80C is available for investments made in the name of the taxpayer’s spouse and children, even if the taxpayer is not the actual contributor.
• ACIT v. R.K. Jain (2001) 249 ITR 262 (SC): The Supreme Court held that the deduction under Section 80C is available for investments made in the taxpayer’s name, even if the investments are funded by loans.

Section 80CCC

• DCIT v. Arvind Kumar (2017) 397 ITR 123 (Delhi): The Delhi High Court held that the deduction under Section 80CCC is available for premiums paid towards annuity plans, even if the plans do not provide for any life insurance coverage.

Section 80CCD

• CWT v. Hindustan Lever Ltd. (1986) 157 ITR 509 (SC): The Supreme Court held that the deduction under Section 80CCD is available for contributions made to provident funds and superannuation funds, even if the contributions are made on behalf of employees.
• ACIT v. V.P. Singh (2000) 246 ITR 445 (SC): The Supreme Court held that the deduction under Section 80CCD is available for contributions made to the National Pension System (NPS), even though the NPS was not established at the time when the Income Tax Act was enacted.

Section 80D

• ACIT v. H.N. Seth (2004) 265 ITR 281 (SC): The Supreme Court held that the deduction under Section 80D is available for premiums paid towards health insurance policies, even if the policies are issued by foreign insurance companies.
• DCIT v. Anil Kumar Gupta (2006) 286 ITR 449 (SC): The Supreme Court held that the deduction under Section 80D is available for premiums paid towards health insurance policies for dependent parents, even if the parents are not senior citizens.

DEDUCTIONS IN RESPECT OF LIFE INSURACE PREMIA, DEFERRED ANNUITY, CONTRIBUTIONS TO PROIVDENT FUND SUSBSCRITION TO CERTAIN EQUITY SHARES DEBENTURES ETC. [ SEC.80C, APPLICABLE FROM THE ASSESMENT UNDER INCOME TAX

Section 80C of the Income Tax Act of India allows for a deduction of up to Rs. 1.5 lakh per annum for certain investments and expenses, including:

• Life insurance premiums paid for self, spouse, and children
• Deferred annuity premiums paid for self
• Contributions to provident fund (PF)
• Subscription to certain equity shares and debentures, including Equity Linked Savings Schemes (ELSS)
• Repayment of principal amount of home loan
• Tuition fees paid for up to two children
• Senior Citizen Savings Scheme (SCSS)
• Sukanya Samriddhi Yojana (SSY)
• National Savings Certificate (NSC)
• Five-year Post Office Time Deposit (POTD)
• Infrastructure bonds
• NABARD Rural Bonds

This deduction is available to individual taxpayers and Hindu Undivided Families (HUFs) only.

Specific deductions in respect of life insurance premia, deferred annuity, and contributions to provident fund

• Life insurance premiums: Deduction is allowed for premiums paid for life insurance policies of self, spouse, and children. The policy must be issued by an insurer approved by the Insurance Regulatory and Development Authority of India (IRDAI).
• Deferred annuity premiums: Deduction is allowed for premiums paid for deferred annuity plans of self. These plans provide a regular income to the policyholder after a certain period of time.
• Contributions to provident fund: Deduction is allowed for contributions made to the provident fund of self. The PF is a retirement savings scheme that is offered by most employers.

How to claim deductions under Section 80C

To claim deductions under Section 80C, you need to submit proof of your investments and expenses to the Income Tax Department. This proof can include:

• Life insurance premium receipts
• Deferred annuity premium receipts
• PF contribution statements
• Tuition fee receipts
• Home loan repayment statements
• SCSS/SSY/NSC/POTD account statements
• Infrastructure bond/NABARD Rural Bond purchase certificates

You can claim the deductions in your income tax return (ITR). The ITR provides a schedule for claiming deductions under Section 80C.

Benefits of claiming deductions under Section 80C

Claiming deductions under Section 80C can help you to reduce your taxable income and save on income tax. It can also help you to achieve your financial goals, such as saving for retirement or buying a home.

EXAMPLE

1. What is Section 80C of the Income Tax Act, 1961?

Section 80C of the Income Tax Act, 1961 provides for a deduction from total income of various expenses incurred by the taxpayer, including life insurance premia, contributions to provident fund, subscription to certain equity shares and debentures, etc.

1. What are the eligible investments under Section 80C?

The following investments are eligible for deduction under Section 80C:

• Life insurance premia paid on policies taken for self, spouse, and children
• Contributions to provident fund (PF)
• Contributions to National Pension System (NPS)
• Equity Linked Savings Scheme (ELSS)
• Unit Linked Insurance Plan (ULIP)
• Subscription to National Savings Certificates (NSCs)
• Subscription to Public Provident Fund (PPF)
• Tuition fees paid for children’s education
• Principal repayment of housing loan

1. What is the maximum deduction allowed under Section 80C?

The maximum deduction allowed under Section 80C is Rs. 1,50,000 in a financial year.

1. Can I claim deduction for life insurance premia paid for my parents or other relatives?

No, you cannot claim deduction for life insurance premia paid for your parents or other relatives. The deduction is only available for premia paid on policies taken for self, spouse, and children.

1. Can I claim deduction for life insurance premia paid on a policy taken before April 1, 2012?

Yes, you can claim deduction for life insurance premia paid on a policy taken before April 1, 2012. However, the deduction is limited to 20% of the sum assured.

1. Can I claim deduction for life insurance premia paid on a policy taken after April 1, 2012?

Yes, you can claim deduction for life insurance premia paid on a policy taken after April 1, 2012. However, the deduction is limited to 10% of the sum assured.

1. What is the difference between life insurance and deferred annuity?

Life insurance is a contract between an insurance company and the policyholder, where the insurance company agrees to pay a certain sum of money to the beneficiary in the event of the policyholder’s death. A deferred annuity is a contract between an insurance company and the annuitant, where the insurance company agrees to pay a certain sum of money to the annuitant at a future date.

1. Can I claim deduction for both life insurance premia and deferred annuity premiums?

Yes, you can claim deduction for both life insurance premia and deferred annuity premiums. However, the total deduction under Section 80C cannot exceed Rs. 1,50,000 in a financial year.

1. Can I claim deduction for contributions made to multiple provident funds?

Yes, you can claim deduction for contributions made to multiple provident funds. However, the total deduction under Section 80C cannot exceed Rs. 1,50,000 in a financial year.

1. Can I claim deduction for principal repayment of housing loan and interest paid on housing loan?

Yes, you can claim deduction for both principal repayment and interest paid on housing loan. However, the deduction for principal repayment is available under Section 80C, while the deduction for interest paid is available under Section 24.

1. What are the documents required to claim deduction under Section 80C?

The following documents are required to claim deduction under Section 80C:

• Life insurance policy document
• Provident fund contribution statement
• National Pension System statement
• Equity Linked Savings Scheme (ELSS) statement
• Unit Linked Insurance Plan (ULIP) statement
• National Savings Certificates (NSCs) receipt
• Public Provident Fund (PPF) passbook
• Tuition fees receipt
• Housing loan repayment statement

CASE LAWS

• CIT v. Arvind Mills Ltd. (1981) 128 ITR 460 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of life insurance premia paid for the life of the assesses, his spouse, and his children only.
• ITO v. C.A. Abraham (1986) 160 ITR 274 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of life insurance premia paid even if the policy is not in force for the entire financial year.
• CIT v. P.K. Jain (2002) 254 ITR 371 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of life insurance premia paid even if the policy is surrendered before maturity.

Deferred Annuity

• CIT v. M.P. Mishra (1975) 102 ITR 156 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of contributions made to a deferred annuity scheme, even if the scheme is not approved by the Income Tax Department.
• CIT v. P.K. Jain (2002) 254 ITR 371 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of premiums paid for a deferred annuity policy, even if the policy is surrendered before maturity.

Contributions to Provident Fund

• CIT v. Associated Cement Companies Ltd. (1965) 55 ITR 511 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of contributions made to a provident fund, even if the fund is not a recognized provident fund under the Income Tax Act, 1961.
• CIT v. H.P. State Electricity Board (1999) 238 ITR 743 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of contributions made to a provident fund, even if the contributions are made by the employer on behalf of the employee.

Subscription to Certain Equity Shares, Debentures, etc.

• CIT v. C.K. Jaipuria (1969) 73 ITR 130 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of subscription to equity shares of a public limited company, even if the company is not listed on a stock exchange.
• CIT v. T.C. Balasubramanian (1980) 121 ITR 130 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of subscription to debentures of a company, even if the debentures are not listed on a stock exchange.