DR. B.R.

AMBEDKAR NATIONAL LAW UNIVERSITY,

SONEPAT

SUBMITTED TO: SUBMITTED BY

DR. POOJA JAISWAL SIDDHARTH PANDEY

(ASSOCIATE PROF.) 2001107

SUBJECT: LAWS OF TAXATION

Table of Contents
Introduction to Income Tax Act ...................................................................................................... 2
Section 80C ...................................................................................................................................... 3
Section 80CCC of the Income Tax Act ............................................................................................ 6
Section 80CCD of the Income Tax Act ............................................................................................ 7
Section 80 D of the Income Tax ....................................................................................................... 8
Section 80E of the Income Tax .......................................................................................................... 9
Section 80GG of the Income Tax Act ............................................................................................ 10
Section 80GGA of the Income Tax Act .......................................................................................... 10
Section 80GGC of the Income Tax Act .......................................................................................... 12

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Introduction to Income Tax Act

The Income Tax Act, 1961, serves as the foundation of India’s taxation system, governing
the collection and regulation of income tax. Its scope is extensive, covering all forms of
income earned by individuals, Hindu Undivided Families (HUFs), firms, companies, and
other entities, both domestic and foreign. The Act applies across India and extends to certain
offshore incomes of Indian residents, ensuring that all taxable entities contribute fairly to the
nation’s revenue. Taxation under the Act is conducted annually, based on the financial year,
with various provisions for exemptions, deductions, and penalties to promote compliance and
equity.

The importance of the Income Tax Act lies in its multifaceted role in nation-building. It is a
crucial source of revenue for the government, funding infrastructure, healthcare, education,
defense, and other public services. By implementing a progressive tax system, it ensures
equity, taxing higher income groups more heavily to reduce social inequality. The Act also
encourages savings and investments by offering deductions and incentives in areas like
housing, health insurance, and education. Moreover, it supports social welfare by promoting
philanthropy through tax benefits for donations to approved charitable organizations. The
Act's regulatory framework prevents tax evasion, ensures accountability, and promotes ease
of doing business, contributing to a stable economic environment.

The objectives of the Act are aligned with national development goals. It aims to mobilize
revenue, prevent tax evasion, and redistribute wealth fairly. By incentivizing investments in
critical sectors like infrastructure and renewable energy, the Act fosters economic growth. It
also supports vulnerable populations through concessions and deductions for senior citizens,
differently-abled individuals, and lower-income groups. Additionally, it simplifies the tax
compliance process with digital initiatives such as e-filing and faceless assessments,
enhancing convenience for taxpayers. Overall, the Income Tax Act is a pivotal instrument of
fiscal policy, balancing revenue generation with equity, economic development, and social
welfare, ensuring the financial health and progress of the nation.

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The government has offered many exemptions under the various sections of the Income
Tax Act that you can avail to your advantage. But to do that first, you need to understand
what the multiple sections of the Income Tax Act have to offer. One of these is Section 80 of
the Income Tax Act, 1961. Deduction under Section 80 includes various options like
investments, premiums paid, loan repayment etc. These options can reduce your tax liability
considerably if you optimize them.

Section 80C

This is a list of the various expenditures and investments that can be claimed under section
80C for the current financial year-

1. Investments in EPF (Employee Provident Fund) – Most salaried employees have a

retirement benefits scheme. The EPF is generally 12% of the basic salary plus DA that
is deducted from your salary by your employer and deposited in your EPF account.
But this rate can change from time to time. The employer and employees both
contribute to this fund. An employee needs to earn a minimum basic salary of Rs
15,000 per month. This balance can be withdrawn by the employee 2 months after
leaving the job if they do not take up employment within the next two months with
another employer who is covered by the act. The interest rate for EPF is 8.55%. The
whole of this balance is tax-free if you withdraw it after 5 years of continuous service.
The entire amount that is deducted in a year from the employee can be claimed as a
deduction while calculating your total taxable income.

2. Public Provident Fund – The Public Provident Fund or PPF is a scheme the
government provides, and the investments you make in this are eligible for deductions
under 80C. A resident of India, whether salaried or non-salaried can open a PPF
account. A Hindu Undivided Family cannot open this type of account. In a year, the
lowest contribution you can make towards PPF is Rs 500, while the maximum is Rs
1.5 lakh. The interest on this account is tax-free at present and is compounded
yearly. Currently, the interest rate is 8% per annum. The maturity period of PPF is 15

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 years, but you can extend this period by an additional 5 years. You can make partial
withdrawals from your account after 7 years. The interest rate is not fixed, but is
assured, and is revised every three months.

3. Equity Linked Savings Scheme (ELSS) – Certain mutual fund schemes were
explicitly designed to save tax.The investments you make in Equity Linked Savings
Scheme are eligible for tax deductions under 80C. This scheme offers the chance to
earn higher returns when compared to similar tax-saving investments because it is
linked with equity. But, this also means that this has more risks involved. There is no
upper limit to the amount you can invest in this scheme. However, the tax benefits
you can avail are limited to Rs 1.5 lakh. The Equity Linked Savings Scheme has a
lock-in period of 3 years, which is the shortest one of all the options available under
80C. The capital gains you make from the ELSS are taxed under long-term capital
gains tax.

4. Sukanya Samriddhi Scheme – The Sukanya Samriddhi Scheme is a popular scheme

that is offered by the Indian government. It aims to better the lives of women in India,
right from a very early age. A Sukanya Samriddhi Scheme can be opened in the name
of a female child at any point between her date of birth to her 10th The minimum
amount that can be invested in this scheme is Rs 1000 in a financial year, while the
maximum limit is set at Rs 1.5 lakh. You can prematurely withdraw as much as half
of the amount deposited when the child reaches the age of 18. The interest in the
Sukanya Samriddhi Scheme is calculated and compounded every year and is 8.5% at
present. The interest you receive is eligible for tax deduction under 80C. The
investments, withdrawals, and maturity amount in the Sukanya Samriddhi Scheme are
all tax-free.

5. Home loan principal repayment – The EMI we pay as repayment of our home loans
comprises two parts- the principal and interest. The principal amount is qualified for
tax deduction under 80C. Even the interest you pay helps you save income tax
significantly, and it comes under section 80EE. So, if you have a home loan that you
are currently repaying, then the principal amount you repay in a financial year can be
claimed by you for the deduction. If you make use of the tax deductions offered by
section 80C to its limits in home loan repayment itself, you do not need to worry
about investing in other tax-saving products for the sole purpose of tax benefits. Any

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 payment to development authorities like the Delhi Development Authority or other
similar ones for the purchase of a house that has been assigned to you by a scheme is
also eligible for tax deduction under section 80C.

6. National Pension System – The Indian Government started this pension scheme that
permits the unorganized sector and working professionals to receive a pension after
they retire. Investments made in this system can avail tax deductions under 80C too,
and the maximum amount that can be claimed is Rs 1.5 lakh. Every Indian citizen in
between the ages 18 to 60 is eligible to open a National Pension System account. This
account permits partial withdrawals under special conditions after 15 years are over.
Rate of returns vary from 12% to 14%, and there is no upper limit to the investment
permitted.

7. National Savings Certificate – The National Savings Certificate is one of the most
widely used tax-saving instruments that are at the disposal of Indian citizens. The
maturity period of the NSC is 5 years, and the interest is compounded annually. But,
since the interest remains in the account, it is considered as a reinvestment. A
reinvestment qualifies for deduction under 80C in the next year. The current rate of
interest is 8%. The minimum amount for investment is as low as Rs 100, and there is
no upper limit. The sum you invest in the NSC is eligible for tax exemption under
80C, with the upper limit for such a tax deduction being Rs 1.5 lakh per year.

8. Senior Citizen Savings Scheme – One of the best possible investment schemes for
senior citizens is the Senior Citizen Savings Scheme. It provides moderate returns
compared to other options, and interests are paid every three months. Individuals
above 60 years can make long term investments under this scheme and can also claim
tax benefits amounting to Rs 1.5 lakh for it under section 80C. Individuals who have
retired using a Voluntary Retirement Scheme are also eligible to open this scheme.
They need to be between 55 to 60 years old and must open the account within 3
months of their retirement. The rate of interest that is being offered at present is 8.7%
per annum.

9. Unit linked Insurance Plans – If you want a plan that is a mixture of insurance and
investment, you should go for Unit-linked Insurance Plans. A portion of the amount
you invest in a ULIP is used to provide coverage, while the rest is invested in the
stock market. An individual can purchase a ULIP for the benefit of oneself, spouse or

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 child. The interest rates fluctuate since it is linked to the market. The rate of return
you can expect on your ULIP investment is between 12% – 14%. In the long term, a
ULIP offers substantial profits. There is no upper investment limit of this plan. These
plans have gained so much popularity in recent times because of these features.
Investments and withdrawals are free of tax, as is the maturity amount.

10. National Bank offers NABARD Rural Bonds – Two types of bonds for Agriculture
and Rural Development- the NABARD Rural Bonds and the Bhavishya Nirman
Bonds. The NABARD Rural Bond is eligible for tax deductions under 80C of the
Income Tax Act. But, it is essential to note that the availability of these bonds for
investment that is eligible for the section 80C tax benefit depends on the government.

11. Five-year Post Office Time Deposit Scheme – The deposit schemes offered by post
offices are quite similar to the fixed deposits of banks. These schemes could range
from 1 year to 5 years in duration. The interest is eligible for the section 80C tax
deductions. It is paid annually, even though it is compounded quarterly. The interest
rate is also revised by the government each quarter. The interest you earn is entirely
taxable.

12. Tax Saving FDs – Tax saving Fixed Deposits are like regular fixed deposits but have
5 years as the lock-in period. You can receive tax deduction benefits under 80C on
investments going up to Rs. 1.5 lakh. The interest rates vary from 5% to 7.75%. The
minimum investment amount in this kind of investment is Rs 1000.

13. Children’s Tuition Fees – The amount you pay as tuition fee, whether it is at the time
of admission or later, is eligible for deduction. This excludes the development fee you
pay of the donation amount, and it must be a school, college or university in India.

Section 80CCC of the Income Tax Act

Under Section 80CCC, individuals can claim tax deductions on investments made in pension
plans offered by public or private sector insurers. Whether it’s buying a new policy or
renewing an existing one, payments made towards such a fund are eligible for tax deductions.
However, it’s essential to know that the final pension amount you receive as well as the
interest and bonuses are taxable and hence cannot be claimed as tax deductions

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The maximum tax deduction that you can claim under Section 80CCC is Rs. 1.5 Lakhs. This
amount is clubbed with Section 80C and Section 80CCD.

Who is eligible for deductions under Section 80CCC?

Individual taxpayers who have subscribed to an annual pension plan offered by approved
insurance companies. HUF or Hindu Undivided Families are not eligible for Section 80CCC
deduction. The above provisions apply to both Indian residents and NRIs.

Important things to know about Section 80CCC deductions

1. Section 80CCC deduction can only be claimed if some payment towards purchase or
renewal of pension plan has taken place

2. The payment of the pension fund must happen from the accumulated funds as per
Section 10 (23AAB) of the Income Tax Act

3. The maximum deduction you can claim under Section 80CCC is Rs. 1,50,000. This is
a cumulative amount which also includes deductions from Section 80C and Section
80CCD

4. If for some reason the policyholder surrenders the policy, the amount received upon
surrendering is taxable in its entirety

5. All bonuses and interests received from the policy are taxable

Section 80CCD of the Income Tax Act

Under Section 8CCD of the Income Tax Act, 1961, contributions made to Pension plans
offered by the Central Government are eligible for tax deductions. These are namely the
National Pension Scheme (NPS) and the Atal Pension Yojana (APY).

Who is eligible for claiming tax deductions under Section 80 CCD?

1. Resident Individuals, both salaried and self-employed can claim tax deductions under
this section

2. Citizens of India, including NRIs, can claim tax benefits under this scheme

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 3. HUF (Hindu Undivided Families) are not eligible to claim tax deductions under
Section 80CCD

4. NPS is mandatory to the central government employees whereas for the others it is
voluntary

5. To claim tax deduction under NPS tier-1 account, individuals must contribute a
minimum of Rs. 6000 per year or Rs. 500 per month

6. To claim tax deduction under NPS tier-2 account, individuals must provide a
minimum of Rs. 2000 per year or Rs. 250 per month

Section 80CCD has subdivisions for further clarity on the tax deductions that can be claimed
under this section:

Section 80CCD (1) is related to the contribution made by the individual towards the NPS.
Provisions under this section apply to individuals irrespective of whether they are
government employee, private employee or self-employed. These provisions are also
applicable to NRIs.

The deduction amount under this section is capped at 10% of the salary or 10% of the gross
income of the individual. This limit has been increased to 20% for self-employed individuals
from FY 2017-2018.

Section 80CCD (2) is related to the employer’s contribution to the NPS on behalf of the
employee. This contribution made by the employer is in addition to the one made towards
PPF and EPF. Employers can contribute as much as the employee does or more. Under this
section, employees can claim tax deductions up to 10% of their salary which includes basic
pay and dearness allowance or matches the contribution made by their employer towards the
NPS.

Section 80 D of the Income Tax

It offers deduction on premium paid for medical insurance – You can claim up to Rs. 25,000
in any financial year. These insurance policies could be for yourself, your spouse or your
children. In case, one of the insured members is 60 years or more, the tax deducted can be
claimed up to Rs. 30,000. Additional tax deduction on medical insurance for parents is

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allowed to the extent of Rs. 25,000. In case, parents are over 60 years or more; you can claim
up to Rs. 30,000. The maximum permissible deduction under Section 80D is Rs. 60,000.

Section 80D has subdivisions which if applicable to you, can be used to claim deductions.
The subdivisions are as follows:

Section 80DD is for tax deductions in two scenarios – If you pay for treatment of dependents
with a disability, deduction of Rs. 1.5 Lakh can be claimed in case of severe disability and
deduction of Rs. 75,000 in other disability cases.

Section 80DDB of the Income Tax Act offers provisions for deductions on expenditures
incurred on the treatment of a particular disease. The maximum deduction under this section
is Rs. 40,000. In case the treatment is for senior citizens, a deduction can be claimed up to Rs.
60,000.

Section 80E of the Income Tax

It offers deduction on interest paid towards education loans taken for higher studies. So, if
you are repaying the education loan taken for yourself, your spouse or your children’s higher
education, then you can claim a tax deduction on the interest amount you’ve paid towards the
repayment of this loan. This deduction is valid for 8 years from the time when the loan was
taken or until the interest is paid – whichever is earlier. If you’ve taken a loan for foreign
education, that can be claimed as deduction under Section 80E too.

Who can Claim Education Loan Deduction?

Only an individual can claim deduction of the interest paid on education loan. It is not
available to HUF or any other kind of taxpayer.
The loan should be taken for the higher education of self, spouse or children or for a
student for whom the individual is a legal guardian.
Parents can easily claim this deduction for the loan taken for the higher studies of their
children.

Further, the deduction can be claimed only by those who pay taxes under the old tax regime.

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Section 80GG of the Income Tax Act

It offers deductions on House Rent Paid. If HRA is not a part of your salary, you can claim
deduction on house rent paid. However, you, your spouse or your children mustn’t own
residential accommodation in the place of employment. The individual claiming the
deduction should be the one living on rent and paying the rent. The deduction under this
section is capped at Rs. 60,000.

Section 80GGA of the Income Tax Act

It offers deductions on donations towards the National Poverty Eradication Fund or as a

contribution to further social, scientific or education research. The amount paid towards this
contribution can be claimed as a tax deduction

Section 80GGB of the Income Tax Act offers tax deductions to Indian Companies who
make donations to electoral trusts or political parties.

Eligibility Requirements for Section 80GGB Tax Benefits

With exceptions listed below, all Indian businesses registered under the Companies Act of
2013 are allowed to deduct donations made to recognised political parties or electoral trusts
under Section 80GGB:

1. A government agency

2. A company that has only been in operation for three years.

3. Cash donations are not eligible for tax breaks. The only extra donation methods that
qualify for a tax deductible under Section 80GGB are demand drafts, cheques, and electronic
payments.

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Contributions must be made to a recognised political party, according to Section 29A of the
Representation of the People Act (RPA), 1951. Contributions to the electoral trust are also tax
deductible under section 80GGC

Rules and Conditions to Claim Section 80GGB Deductions

Section 80GGB specifies the rules and conditions related to donations being made to political
parties in India. Following are the essential points that you must remember:

 Cash contributions are not allowed under Section 80GGB. Therefore, the respective
contributions to political parties must be made through other modes of payments such
as Cheque, Demand Draft or Electronic Transfer.

 There is no maximum applicable limit on the contributions made to political parties,

under Section 80GGB of the Income Tax Act. But as per the Companies Act, 2103 it
is necessary that the respective company discloses the amount contributed and the
name of the political party in its Profit and Loss account for the said financial year.

 If the amount has been contributed via electoral bonds, then there is no requirement
for mentioning the name of the party in the Profit and Loss Account of the company.
Only the amount paid has to be mentioned.

 As per the latest guidelines, any advertisement from a company on a platform owned
by a Political Party would be considered as a contribution under Section 80GGB. It is
therefore eligible for income tax deduction. This includes social media, magazines,
newspapers, etc.

 There is no limit on the amount being contributed to a political party, but it is

necessary for a company to pay the amount via an acceptable route and keep a
documentary record of the same.

 There are certain exceptions to the contributions made under Section 80 GGB:

 A Public Sector Enterprise

 A company that has an age of three years or less.

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Section 80GGC of the Income Tax Act

It offers tax deductions to tax-paying individuals who donate or contribute to electoral funds
or political parties.

Who Can Avail 80GGC Deduction?

Any person other than:

 companies,

 local authorities, and

 artificial juridical person which is wholly or partly funded by the Government.

Thus, any individual, Hindu Undivided Family (HUF), an AOP or BOI, a firm, and an
artificial juridical person which is not wholly or partly funded by the government are eligible
to claim deduction under Section 80GGC.

It is also necessary to keep in mind the taxpayer must pay the taxes under the old tax regime
to claim the benefit under section 80GGC.

Section 80GGC Deduction Limits

There is a certain limitation for deduction under Section 80GGC of the income tax. Here is
the list of the 80GGC exemption limit:

 100% of a taxpayer’s donation to a registered electoral trust or political party can be

claimed as deduction. However, since this section is under Chapter VIA deductions,
the total deduction cannot surpass the total income of an individual donating.

 Contributions or donations to political parties or electoral trusts in cash or kind are not
eligible for tax deductions of Section 80GGC. This amendment was brought into
effect from 2013-2014 onwards.

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  Contributions or donations should be made to political parties through legitimate
banking portals, such as Internet banking, credit cards, debit cards, cheques, demand
drafts, etc., to claim deductions under Section 80GGC.

 If you fail to provide sufficient documents while claiming the deduction and filing a
tax return, then the authority has the power to deny the tax deduction claim under this
section.

Documents Required for Section 80GGC

In order to become eligible for claiming tax deduction under this section, you have to
submit the following documents:

 A receipt for proof of donation.

 The receipt must contain the following details like PAN, TAN, address of the political
party, fund registration number, payment method, and donor name.

 Income tax return form must be completed and submitted within a specific time.

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