Section 80C of Income Tax Act - Deductions u/s 80C, 80CCC, 80CCD & 80D

What are Section 80C Deductions?

Section 80C is one of the most popular sections amongst taxpayers as it allows them to reduce taxable income by making tax-saving investments or incurring eligible expenses. Planning these investments and expenditures helps taxpayers save substantial amounts of tax.  

Section 80C deduction can be claimed only by Individuals and HUF. But Companies, partnership firms, and LLPs cannot avail the benefit of this deduction. Under Section 80C up to Rs.1.5 lakh can be claimed as a deduction every year from the Gross total income.

It is important to note that the deductions under Section 80C are only available under the Old Tax Regime and are disallowed under the New Tax Regime.   

What Investment Avenues and Expenditures are Covered Under Section 80C? 

For example, an individual could invest Rs. 50,000 in PPF, Rs. 40,000 in ELSS, pay a life insurance premium of Rs. 30,000, and have an EPF contribution of Rs. 30,000, thereby utilizing the full Rs. 1.5 lakh 80C deduction limit.

Comparison of Risk Factor of Investment Options under Section 80C

The following table compares the various features of section 80C deduction options, easy for taxpayers to choose the most suitable option for them.

Deduction Limits under section 80C, 80CCC, 80CCD(1), 80CCE, 80CCD(1B)

• Section 80CCC and Section 80CCD provide deductions for the investments in the pension scheme.
• The maximum deduction under Section 80C, 80CCC and 80CCD(1) put together is Rs 1.5 lakhs. 
• However, you may claim an additional deduction of Rs 50,000 allowed u/s 80CCD(1B) for contributions made to NPS(National Pension Scheme). 
• Thus, the maximum deduction limit is Rs 2 lakhs under Section 80C, 80CCC, 80CCD(1) and Section 80CCD(1B) combined.

Section 80C - An Illustration

Let us understand how section 80C helps in reducing tax implications using an example.

Mr. A has a salary income of Rs. 10 lakhs and other income of Rs. 1 lakh. He has invested Rs. 1.5 lakh in NSC. The difference in tax implications when 80C deductions are claimed and not claimed is explained below: 

Section 80TTA – Interest on Savings Accounts

• Section 80TTA deduction can be claimed by an individual or HUF. 
• Maximum deduction allowed under section 80TTA is Rs 10,000

Section 80TTB – Interest From Deposits Held by Senior Citizens

• Section 80TTB deduction can be claimed by a resident senior citizen aged 60 years and above at any time during the financial year.
• Maximum deduction allowed under section 80TTB is Rs 50,000 

Section 80GG – Income Tax Deduction on House Rent Paid

• Those who do not receive HRA in their salary structure but live in rented accommodation are eligible to claim deduction under Section 80GG.
• Deduction can be claimed subject to limits prescribed under the act.

Section 80E – Interest on Education Loan

• An individual who has taken education loan for higher education is eligible to claim interest deduction under Section 80E.
• The education loan can be taken for the taxpayer, their spouse or children or for a student for whom the taxpayer is a legal guardian.

Section 80EEA – Interest on Home Loan For First-Time Home Owners

• Section 80EEA, which provides taxpayers with an extra deduction for paying interest on a house loan. 
• This section provides a tax exemption of up to Rs1.5 lakhs per financial year to individuals on the interest paid on home loans for purchasing/constructing an affordable house. 

80EE- Interest on Home Loan For First-Time Home Owners

• The deduction under section 80EE is available only to home-owners (individuals) having only one house property on the date of sanction of the loan.
• This deduction can be claimed from FY 2016-17 and onwards only if the loan has been taken in FY 2016-17.

Section 80EEB - Interest paid on Electric Vehicle Loan

• To encourage the purchase and usage of electric vehicles, deduction u/s 80EEB  is allowed for interest paid on vehicle loan availed to purchase the electric vehicles
• Up to Rs.1.5 lakhs of deduction can be claimed.

Section 80D – Deduction on Medical Insurance Premium

• Deduction on medical insurance premium, medical expenses for senior citizens, and preventive health check-up can be claimed under section 80D.

The maximum limits for deduction under section 80D is given in below table.

Section 80DD – Deduction for Medical Treatment of a Dependent with Disability

• Section 80DD deduction is available to a resident individual or a HUF.
• Expenditure incurred on medical treatment, training and rehabilitation of specially-abled dependent relative can be claimed as a deduction under this section.

Section 80DDB – Deduction for Medical Treatment etc

• 80DDB deduction is available to a resident individual or a HUF. 
• You can get a deduction for any money you spend on medical treatments for yourself or your dependents under this section.

Section 80U – Deduction for Disabled Individuals

• A deduction of Rs.75,000 is available under section 80U to a resident individual who suffers from a physical disability (including blindness) or mental retardation. 
• In case of severe disability, one can claim a deduction of Rs 1.2 lakhs.

Section 80G – Income Tax Benefits Towards Donations for Social Causes

• The various donations specified in u/s 80G are eligible for deduction up to either 100% or 50% with or without restriction.
• Any donations made in cash exceeding Rs 2,000 will not be allowed as a deduction. 
• Donations above Rs 2000 should be made in any mode other than cash to qualify for an 80G deduction.

Section 80GGB – Company Donation to Political Parties

• Section 80GGB deduction is allowed to an Indian company for the amount contributed by it to any political party or an electoral trust. 
• A deduction is allowed for donations done by any mode of payment other than cash.

Section 80GGC – Deduction on Donations By a Person to Political Parties

• Section 80GGC provides deduction for any amount donated to a political party or an electoral trust. 
• You can avail this deduction only if you pay by any mode other than cash. 
• Only an individual taxpayer can claim deduction under section 80GGC.

Section 80RRB – Deduction on Income via Royalty of a Patent

• 80RRB Deduction for any income by way of royalty for a registered patent shall be available for up to Rs.3 lakh or the income received, whichever is less. 
• The taxpayer must be an individual patentee and an Indian resident. 

Section 80QQB – Deduction on Royalty Income of Authors

• Authors of India who are earning royalty or copyright income are eligible to claim deduction under section 80QQB.
• Maximum of Rs. 3 lakh can be claimed as a deduction under this section. But the deduction claimed should not exceed the income received.

Final Word

While there are several tax-saving deductions under Chapter VI-A, taxpayers should carefully select the options that best align with their financial goals, ensuring both tax efficiency and long-term benefits.