March 06,2026

An investment guide: Tax deductions under Sections 80C, 80CCC, 80CCD, and 80D

Summary

Certain sections of the Income Tax Act in India provide some measure of relief to individual and Hindu Undivided Family (HUF) taxpayers. In this article, we will take a closer look at what these sections entail, who are eligible for deductions, what expenditures or investments qualify for deductions, and what the limits are to these deductions.
The Income Tax Act in India provides certain deductions to taxable income available only to individuals and Hindu Undivided Families (HUFs). Sections 80C, 80CCC, 80CCD, and 80D contain provisions that allow individuals and/or HUFs to claim deductions from taxable income. These deductions are not available to corporates and partnerships.
According to Section 80CCE of the Act, the combined maximum deduction available to individuals and HUFs under Sections 80C, 80CCC, and 80CCD is INR 1.5 lakh per annum from the taxpayer’s total income. An additional deduction of INR 50,000 is available under Section 80CCD (IB).

Eligible investments for tax deduction under Section 80C

Section 80C covers a breadth of eligible investments. However, only individuals can claim deductions under this section. Qualifying investments include:
  • Investments made in Equity Linked Saving Schemes
  • Public Provident Fund (PPF)/Statutory Provident Fund (SPF)/Recognized Provident Fund (RPF)
  • Payments made towards life insurance premiums
  • Principal sum of a home loan
  • Sukanya Samridhi Yojana (SSY), National Savings Certificate (NSC), Senior Citizens Savings Scheme (SCSS), etc.
  • National Pension Scheme
  • Fixed deposits
  • Unit Linked Insurance Plan (ULIP)

Eligible investments for tax deduction under Section 80CCC

Deduction for annuity paid under any pension plan is covered under Section 80CCC. Any insurer may provide these pension investments. However, only individuals can claim deductions under this section.

Eligible investments for tax deduction under Section 80CCD

Section 80CCD covers deduction for Pension Account Contribution. Under this section, there are three subclauses:
  • Section 80CCD (1) covers payments made by employees or self-employed individuals
  • Section 80CCD (1b) covers investments in NPS (beyond the INR 1.5 lakh limit specified in Section 80C)
  • Section 80CCD (2) covers employer’s contribution towards NPS (beyond the INR 1.5 lakh limit specified in Section 80CCE)
Under Section 80CCD (1), an employee’s contribution towards the Atal Pension Yojana or another eligible pension scheme recognised by the government of up to 10% of basic salary and dearness allowance (DA). Up to INR 1.5 lakh qualifies for tax deduction under this section. For self-employed individuals, the deduction permitted is 20% of gross total income.
Under Section 80CCD (1b), an employer’s contribution of up to 10% of basic salary and DA qualifies for deduction. However, it must be noted that the employer’s contribution is an additional deduction, and not a part of the INR 1.5 lakh permitted under Section 80C.
Section 80CCD (2) covers an employer’s contribution towards NPS (over and above the INR 1.5 lakh limit under Section 80CCE. For central government employees, the employer’s contribution permissible for deduction is 14% of the basic salary and DA, while for other employers it is 10% of basic salary and DA.
To conclude, the total permissible tax benefits under Section 80CCD (1) and Section 80CCD (1B) could reach up to INR 2 lakh for a particular financial year and can vary based on the circumstances of each case.

Eligible expenditures for tax deduction under Section 80D

Section 80D covers deduction for medical insurance premiums. Both HUFs and individuals qualify for the deductions under Section 80D. Eligible deductions include the cost of an individual’s and their dependant spouse’s and children’s health insurance premium. Deductions also include the cost of the individual’s parents’ annual preventive health exams, providing that the restrictions and guidelines mentioned in Section 80D of the Income Tax Act of 1961 is followed.
The assessee is qualified to claim an INR 25,000 deduction per annum under Section 80D on medical insurance for self, spouse, and dependent children. This deduction is increased to a maximum of INR 50,000 per annum for assessees over 60 years of age.
Over and above the eligible deduction mentioned earlier, the assessee also qualifies for a deduction for the insurance of parents of up to INR 25,000 for each assessment year. However, if the assessee’s parents are over 60 years of age, the qualifying deduction is INR 50,000 for each assessment year.
If the assessee and their parent(s) are 60 years of age or above, then the assessee is eligible to receive a maximum deduction of INR 1 lakh per assessment year.

In conclusion

A deduction of INR 1.5-2 lakh from the assessee’s taxable income could result in considerable tax savings. The exact amount of tax payable that could be saved would depend on the individual or HUF’s tax brackets.

Disclaimer

The above piece discusses several investments and should not be taken as financial advice to make these investments. Please discuss these issues with a professional tax advisor or consultant before undertaking any investments.

Never miss a trading opportunity with Margin Trading Facility

Enjoy 2X leverage on over 900+ stocks

Upstox Margin Trading Facility
Apple Logo
Downloadlogo
iOS App
Google Play Logo
Downloadlogo
Android App

RELATED ARTICLES

Double Taxation Avoidance Agreement, Rates, Benefits & Types

Many NRIs working abroad may need some assistance if both their countries implement taxes on their income, which results in double taxation. This phenomenon can consume a sizable amount of your total income and place you under financial stress. To avoid this, Double Taxation Avoidance Agreements are in place, to make your life simpler.

A Complete Guide to the Senior Citizen Savings Scheme (SCSS)

The Senior Citizen Savings Scheme is a Government of India initiative for retired citizens of India who have reached the age of 60 years. This scheme was launched in 2004 to provide a secure and steady source of income to senior citizens over 60 years during their retirement. The most important feature of the SCSS is that the Government of India backs it, and investors don't face the risk of capital loss. To apply for this scheme, individuals can approach the nearest post office or private or public sector bank. Investors get guaranteed returns quarterly from the sr citizen saving scheme. However, the rate of return varies and is reset every quarter by the Government. The upper investment limit in SCSS is INR 15 lacs; even if you hold multiple accounts, the total amount cannot exceed INR 15 lacs. Find out the main features of SCSS in the next section.

Section 24(b) decoded: A comprehensive look at house property income deductions

Summary: Section 24(b) of the Income Tax Act offers taxpayers deductions on interest from loans used for purchasing, constructing, or renovating homes. This comprehensive guide delves into the types of loans covered, various income sources from house property, and the conditions to claim these deductions. Through practical examples and implications of recent tax amendments, readers gain a clear understanding of how to optimize their tax benefits related to house property. Owning a home is a dream for many, and for Indians, it’s often a significant milestone. But with the joy of purchasing a new home comes the responsibility of managing finances, especially when loans are involved. Enter Section 24(b) of the Income Tax Act, a beacon for homeowners. Let’s dive deep into this section and understand how it can be a boon for taxpayers.

Tax Strategies for Bond Investors: Unveiling The Secrets of Financial Success

In the realm of diverse investment options, bonds offer stability for investors seeking a balance between risk and returns. Navigating the intricacies of bond investments requires an understanding of the taxation of bond income. This involves comprehending the tax implications of interest income and capital gains. Interest income is taxed based on the bond’s nature, while capital gains are categorised as short-term or long-term, each with its tax implications. Optimising the holding period and diversifying investments are strategic approaches for tax-efficient and lucrative bond investments.