Deductions under Chapter VI of Income Tax Act - Viz Sec 80C, 80D and 80G
Section 80C
The Section 80C of the Income Tax Act allows deduction on:
1. Investment in a residential/commercial house property 2. Investment up to a maximum of Rs. 1 lakh
3. Investment up to Rs.10, 000/- in a medical claim popularly known as medi-claim Policy
Cont.
Some more options are:-
1.a. Contribution to Provident Fund or Public Provident Fund (PPF)
O It has a lock-in period of 15 years
O Interest earned is not taxed
O Investment limit of Rs 1 lakh p.a.
1.b. Employee provident fund (EPF)
O Not an investment O Employee contributes equal amount
Cont.
2. Payment of Life Insurance Premium
3. Investment in Equity Linked Savings schemes (ELSS) of mutual funds
O Profit earned is tax free O Maximum lock-in period of 3 years
Cont.
4. Senior Citizen Saving Scheme (SCSS)
O Interest earned is taxed O Maximum investment can be Rs 15 lakh but
only Rs 1 lakh will get the profit under Section 80C
O Only for senior citizens O Interest obtainable is 9%
Cont.
5. Investment in National Savings Certificates
O Unlimited investment O 10-year NSC offers 8.9%, 5-year NSC
delivers 8.6%
O Interest earned is subject to tax
Cont.
6. Tax saving Fixed Deposits
O Fixed deposit cannot be pledged to get a loan O The maximum limit an individual can invest is Rs
1 lakh
O Interest earned is taxed
O The tenure period of the FD is for 5 years
O Early withdrawals are not allowed
Cont.
7. Payments towards principal repayment of housing loans
8. Payments towards tuition fees for children to any school or college or university or similar institution
Cont.
9. Post office investments – NSC, Post office saving schemes
O The investment can be from any source and not
necessarily from income chargeable to tax.
10. Unit Linked Insurance Plan (ULIP)
O These schemes offer an investment option as well
as an insurance cover O Premium paid towards these schemes qualifies for a deduction under Section 80C O They are partially exposed to the stock market, depending on the investment mandate
Section 80D
The Section 80D of the Income Tax Act allows deduction on Health Insurance Premium & Preventive Health Check up
O In case of individual and / or his family O Parents of assesse O HUF
Section 80E
Section 80G
O The Section 80G of the Income Tax Act
allows exemption to any Registered NGO (Non-Government Organization)
O The Income Tax Act has certain provisions
which offer tax benefits to the "donors"
Cont.
Benefits of Registration Under Section 80G
O If an NGO gets itself registered under Section 80G, then
the person or the organization making a donation to the NGO will get a deduction of 50% from his/its taxable income.
O Section 80G is available in respect of donation to
charitable institutions, etc. by any taxpayer, i.e. individual, company, firm or any other person.
O The three steps for calculation:O Gross qualifying amount O Net qualifying amount O Amount deductible
doc_298133209.pptx
Section 80C
The Section 80C of the Income Tax Act allows deduction on:
1. Investment in a residential/commercial house property 2. Investment up to a maximum of Rs. 1 lakh
3. Investment up to Rs.10, 000/- in a medical claim popularly known as medi-claim Policy
Cont.
Some more options are:-
1.a. Contribution to Provident Fund or Public Provident Fund (PPF)
O It has a lock-in period of 15 years
O Interest earned is not taxed
O Investment limit of Rs 1 lakh p.a.
1.b. Employee provident fund (EPF)
O Not an investment O Employee contributes equal amount
Cont.
2. Payment of Life Insurance Premium
3. Investment in Equity Linked Savings schemes (ELSS) of mutual funds
O Profit earned is tax free O Maximum lock-in period of 3 years
Cont.
4. Senior Citizen Saving Scheme (SCSS)
O Interest earned is taxed O Maximum investment can be Rs 15 lakh but
only Rs 1 lakh will get the profit under Section 80C
O Only for senior citizens O Interest obtainable is 9%
Cont.
5. Investment in National Savings Certificates
O Unlimited investment O 10-year NSC offers 8.9%, 5-year NSC
delivers 8.6%
O Interest earned is subject to tax
Cont.
6. Tax saving Fixed Deposits
O Fixed deposit cannot be pledged to get a loan O The maximum limit an individual can invest is Rs
1 lakh
O Interest earned is taxed
O The tenure period of the FD is for 5 years
O Early withdrawals are not allowed
Cont.
7. Payments towards principal repayment of housing loans
8. Payments towards tuition fees for children to any school or college or university or similar institution
Cont.
9. Post office investments – NSC, Post office saving schemes
O The investment can be from any source and not
necessarily from income chargeable to tax.
10. Unit Linked Insurance Plan (ULIP)
O These schemes offer an investment option as well
as an insurance cover O Premium paid towards these schemes qualifies for a deduction under Section 80C O They are partially exposed to the stock market, depending on the investment mandate
Section 80D
The Section 80D of the Income Tax Act allows deduction on Health Insurance Premium & Preventive Health Check up
O In case of individual and / or his family O Parents of assesse O HUF
Section 80E
Section 80G
O The Section 80G of the Income Tax Act
allows exemption to any Registered NGO (Non-Government Organization)
O The Income Tax Act has certain provisions
which offer tax benefits to the "donors"
Cont.
Benefits of Registration Under Section 80G
O If an NGO gets itself registered under Section 80G, then
the person or the organization making a donation to the NGO will get a deduction of 50% from his/its taxable income.
O Section 80G is available in respect of donation to
charitable institutions, etc. by any taxpayer, i.e. individual, company, firm or any other person.
O The three steps for calculation:O Gross qualifying amount O Net qualifying amount O Amount deductible
doc_298133209.pptx