Income Tax Act 80C and 80D: With Budget 2023 few days away, taxpayers are anxiously awaiting Finance Minister Nirmala Sitharaman's speech in a hope of some new tax saving measures. As of now, 80C and 80D are the two significant sections in the Income Tax Act that help taxpayers save some tax. 

Budget 2023: What is Section 80C of the Income Tax act?

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Section 80C is a popular tax saving option in the Income Tax Act. It allows individuals to reduce taxable income by making tax saving investments or incurring eligible expenses. It allows a maximum deduction of Rs 1.5 lakh every year from the taxpayers’ total income. 

The benefit of this deduction can be availed by taxpayers and Hindu Undivided Families (HUL). 

Companies, partnership firms, LLPs cannot avail the benefit of this deduction. 

Section 80C includes subsections — 80CCC, 80CCD (1), 80CCD (1b) and 80CCD (2).

It is important to note that the overall limit including the subsections for claiming deduction is Rs 1.5 lakh except an additional deduction of Rs 50,000 allowed u/s 80CCD(1b).

Some of the popular investments which are eligible for this tax deduction are mentioned below.

- Life insurance policies (for self, spouse or children)

- Provident fund

- Tuition fees paid to educate a maximum of two children

- Construction or purchase of a residential property

- Fixed deposit with a minimum tenure of 5 years

This section provides for a number of additional deductions like investment in mutual funds, senior citizens saving schemes, purchase of NABARD bonds, etc.

This limit was last changed in 2015 and was extended to Rs 1.5 lakhs from Rs 1 lakh, prior to that it was changed in 2005. 

Also read: Budget 2023: Why investors should keep an eye on railway stocks ahead of Union Budget 

Budget 2023: What is Section 80D of the Income Tax Act?

Section 80D allows deduction for money spent on maintaining an individual and their family’s health and health insurance.

Individuals can claim deductions against the premium payments they make on medical insurance policies under 80D. One can claim up to Rs 25,000 for insurance premiums paid on a policy in their name, spouse's name or the name of their dependent children. 

Additionally, one can also claim deduction for the insurance premium paid for their parent's medical insurance. In that case, one can again claim a maximum of Rs. 25,000 if they are less than 60 years of age, or Rs 50,000 in case both of them are above 60 years of age.

An additional deduction brought to action from FY 2015-2016, individuals are allowed to claim Rs 5,000 for the payments made towards preventive health check-up.

Budget 2023: Anil Singhvi’s view on Section 80C and 80D

Ahead of Union Budget 2023, Zee Business Managing Editor Anil Singhvi has appealed to the Finance Minister Nirmala Sitharaman to increase the limit of Income Tax Act 80C from Rs 1.5 lakhs to Rs 3 lakhs, or more. 

According to him, with inflation at its peak, it is necessary to increase the 80C limit. 

In the case of Section 80D, Anil Singhvi said that the deduction limit of Rs 25,000 in case of kids and spouse and Rs 50,000 in addition of parents for health insurance is less, considering how expensive it is to get treated in hospitals. According to him, this limit should be increased to Rs 1 lakh. 

He added that there should not be an 18 per cent or any kind of Goods and Services Tax (GST) on health insurance. 

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