Every individual who is in service is always eager to know how much should he invest and how much he should save so as to bring his tax liability to minimum. Each employee always consults his colleague that where have you invested to save tax. In this article i will discuss about the sections which are available to individuals to bring clarity about them and how much an individual can save by making use of these sections like section 80 C.

Sections available as deduction under Income Tax Act, 1961

1. Section 80C

This is the most basic section which every employee knows about. Limit of deduction under this section is up to Rs. 1,00,000.

Items covered under this section are LIC premium, Tuition fees paid for children, PF contribution, Public Provident Fund(PPF), NSC, tax saving FD, principal amount of housing loan, etc

Sections 80CCC and 80CCD related to annuity funds or pension fund are also there but the combined deduction under sections 80C, 80CCC and 80CCD is limited to Rs. 1,00,000 only.

2. Section 80D-Health Insurance Premium

Health Insurance premium deduction is available to individual on premium paid by any mode other than cash on health insurance of self, spouse, dependent children, dependent parents.

Deduction is available uptoRs. 15,000 and in case of senior citizen uptoRs. 20,000.
Section 80DD-Medical Treatment of Handicapped Dependent
Expenditure incurred on treatment of dependent handicapped dependent is eligible for deduction u/s 80D.

Deduction of Rs. 50,000 or amount spent whichever is lower is eligible for deduction. For severe handicapped dependent deduction is Rs. 1,00,000.

– Cost incurred for medical treatment, training, rehabilitation and amount spent on nursing is covered.

– Amount spent on insurance scheme for maintenance of handicapped dependent in case of your untimely death.

Some important points about this section are:

• A medical certificate of disability issued by central or state government medical board is to be produced by individual to claim deduction.
• Insurance policy must be in your name and should be a policy for life.
• If the disabled dependent predeceases you, then the policy amount received shall be treated as your income and shall be taxed accordingly.

Section 80DDB-Treatment of Specified Diseases
This deduction available to individual for treatment of self, spouse, children or parent totally dependent upon the individual.
Deduction is available uptoRs. 40,000, if below 65 years of age and Rs.60,000 if over 65(Senior citizen)
Diseases covered are:
Neurological diseases, parkinson’s disease, malignant cancers, AIDS, chronic renal failure, hemophilia, thalassaemia.

Requirement:

• If already receiving any reimbursement from insurance company or employer, then deduction cannot be claimed.
• A certificate from specialist working in government hospital would be required.

3. Section 80CCF-Infrastructure Bonds

This section provides deduction to individuals uptoRs. 20,000 in addition to the existing Rs.1,00,000 limit.
Minimum investment in this section is Rs.5,000 which can go uptoRs. 1,00,000, but the deduction will be limited to Rs. 20,000 only.

Interest earned on these bonds is taxable. Therefore total deduction available during the year is not limited to Rs. 1,00,000 but is Rs. 1,35,000.

If an individual falling in 10% tax bracket and claiming Rs.1,35,000 deduction will save Rs. 3605
Individual in 20% tax bracket will save Rs. 7,210 and Individual in 30% tax bracket will save Rs. 10,815.

(This saving is computed for males below 65 years of age and only claiming general deduction under section 80C, 80D and 80CCF)

These savings will vary for women and senior citizen and those claiming deduction under section 80DD and 80DDB.