Prefer Old Tax Regime? Know All About Section 803 min read
‘Taxes are the price we pay for civilization – but savings soften the blow.’- Justice Oliver Wendell Holmes Jr.
Tax planning is a crucial aspect of personal finance, and Section 80 of the Income Tax Act offers a wide range of deductions to help individuals lower their taxable income. While the new tax regime introduced in 2020 offers lower tax rates, it comes at the cost of forfeiting these deductions. For those sticking to the old tax regime, Section 80 remains a treasure trove of tax-saving opportunities. Let’s explore the key benefits under Section 80 and how you can make the most of them.
What is Section 80?
Section 80 of the Income Tax Act comprises various sub-sections that allow taxpayers to claim deductions on specific investments, expenses, and contributions. These deductions reduce your taxable income, helping you save significantly on your tax outgo. Some of the major sub-section within Section 80 are given below:
- Section 80C: Investments and Expenses
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- Deduction up to Rs 1,50,000.
- Section 80D: Health Insurance Premiums
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- Deduction up to Rs 50,000 (Rs 1,00,000 for senior citizens)
- Section 80E: Education Loan Interest
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- Deduction Limit: No cap (entire interest paid is deductible)
- Section 80 EEA: Additional Deduction for Affordable Housing Loans
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- Deduction Limit: ₹1,50,000
- Section 80G: Donations to Charitable Institutions
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- Deduction Limit: Varies based on the organization (50% or 100% of the donation with or without a limit).
- Section 80TTA: Savings Account Interest
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- Deduction Limit: ₹10,000 (₹50,000 for senior citizens under Section 80TTB).
- Section 80GG: Rent Paid
- Section 80U: Deduction for Disabled Individuals
Instruments and Expenses Eligible Under Section 80C








Reasons You May Consider the Old Tax Regime
- Flexibility in Deductions:
The old regime not only offers deductions under Section 80C but also under other sections like 80D (health insurance), 80E (education loan), 80EEA (affordable housing loan), and 80TTA (savings account interest). This makes it ideal for individuals with varied financial responsibilities. - Effective for High-Income Groups:
Taxpayers in the higher tax brackets benefit more as the absolute tax savings under these exemptions are significant. - Encourages Investments:
The old regime incentivizes saving and investing through tax benefits, which can lead to long-term wealth creation.
Maximizing Tax Savings with Section 80: A Practical Example
To understand the potential savings under Section 80, let’s consider Ramesh, a salaried individual earning ₹10 lakhs annually.
- Standard Deduction: Ramesh is eligible for a standard deduction of ₹50,000. This reduces his taxable income to ₹9,50,000.
- Section 80C: By fully utilizing the ₹1.5 lakh limit under Section 80C, his taxable income is further reduced to ₹8,00,000.
- Section 80D, Section 80 EEA: This will help reduce the taxable income further to ₹6,00,000 (non-senior citizen for 80D).
Now, let’s calculate Ramesh’s tax liability under the old tax regime:

Without Using Section 80
Had Ramesh not used Section 80, his taxable income would have been ₹9,50,000, and his total tax liability would be:

By utilizing Section 80, Ramesh saves ₹70,000 (₹1,02,500 – ₹32,500).
Conclusion
This example illustrates how Section 80 can significantly reduce tax liability for individuals, especially those in higher income brackets. It encourages disciplined savings while providing tax benefits, making it a cornerstone for financial planning under the old tax regime.
Source: ClearTax
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