Income tax department with a view to encourage savings and investments amongst the taxpayers have provided various deductions from the taxable income under chapter VI A deductions. 80C being the most famous, there are other deductions which are beneficial for the taxpayers to reduce their tax liability. Let us understand these deductions in detail:

Section 80C – Deductions on Investments

Section 80C is one of the most popular and favourite sections amongst the taxpayers as it allow reducing 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 taxpayer’s total income.

The benefit of this deduction can be availed by Individuals and HUFs. 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 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)

Section 80CCC – Insurance Premium /Section 80CCD – Pension Contribution

80 C:-

80C allows deduction for investment made in PPF , EPF, LIC premium , Equity linked saving scheme, principal amount payment towards home loan, stamp duty and registration charges for purchase of property, Sukanya smriddhi yojana (SSY) , National saving certificate (NSC) , Senior citizen savings scheme (SCSS), ULIP, tax saving FD for 5 years, Infrastructure bonds etc.

80CCC Deduction for life insurance annuity plan:-

80CCC allows deduction for payment towards annuity pension plans Pension received from the annuity or amount received upon surrender of the annuity, including interest or bonus accrued on the annuity, is taxable in the year of receipt.

80CCD (1) Deduction for NPS:-

Employee’s contribution under section 80CCD (1) Maximum deduction allowed is least of the following

• 10% of salary (in case taxpayer is employee)
• 20& of gross total income (in case of self-employed)
• Rs 1.5 Lakh ( limit allowed u/s 80C)

80CCD (1b) Deduction for NPS:-

Additional deduction of Rs 50,000 is allowed for amount deposited to NPS account

Contributions to Atal Pension Yojana are also eligible for deduction.

80CCD (2) Deduction for NPS:-

Employer’s contribution is allowed for deduction up to 10% of basic salary plus dearness allowance under this section. Benefit in this section is allowed only to salaried individuals and not self-employed.

Section 80 TTA – Interest on Savings Account:-

Deduction from Gross Total Income for Interest on Savings Bank Account

If you are an individual or an HUF, you may claim a deduction of maximum Rs 10,000 against interest income from your savings account with a bank, co-operative society, or post office. Do include the interest from savings bank account in other income.

Section 80TTA deduction is not available on interest income from fixed deposits, recurring deposits, or interest income from corporate bonds.

Section 80GG – House Rent Paid:-

Deduction for House Rent Paid Where HRA is not received

1. Section 80GG deduction is available for rent paid when HRA is not received. The taxpayer, spouse or minor child should not own residential accommodation at the place of employment
2. The taxpayer should not have self-occupied residential property in any other place
3. The taxpayer must be living on rent and paying rent
4. The deduction is available to all individuals

Section 80E – Interest on Education Loan:-

Deduction for Interest on Education Loan for Higher Studies

A deduction is allowed to an individual for interest on loans taken for pursuing higher education. This loan may have been taken for the taxpayer, spouse or children or for a student for whom the taxpayer is a legal guardian.

80E deduction is available for a maximum of 8 years (beginning the year in which the interest starts getting repaid) or till the entire interest is repaid, whichever is earlier. There is no restriction on the amount that can be claimed.

Section 80EE – Interest on Home Loan:-

Deductions on Home Loan Interest for First Time Home Owners

FY 2017-18 and FY 2016-17

This deduction is available in FY 2017-18 if the loan has been taken in FY 2016-17.

The deduction under section 80EE is available only to home-owners (individuals) having only one house property on the date of sanction of the loan. The value of the property must be less than Rs 50 lakh and the home loan must be less than Rs 35 lakh. The loan taken from a financial institution must have been sanctioned between 1 April 2016 and 31 March 2017.

There is an additional deduction of Rs 50,000 available on your home loan interest on top of deduction of Rs 2 lakh (on interest component of home loan EMI) allowed under section 24.

FY 2013-14 and FY 2014-15

During these financial years, the deduction available under this section was first-time house worth Rs 40 lakh or less. You can avail this only when your loan amount during this period is Rs 25 lakh or less. The loan must be sanctioned between 1 April 2013 and 31 March 2014. The aggregate deduction allowed under this section cannot exceed Rs 1 lakh and is allowed for FY 2013-14 and FY 2014-15.

Section 80D – Medical Insurance:-

Deduction for the premium paid for Medical Insurance

You (as an individual or HUF) can claim a deduction of Rs.25,000 under section 80D on insurance for self, spouse and dependent children. An additional deduction for insurance of parents is available up to Rs 25,000, if they are less than 60 years of age. If the parents are aged above 60, the deduction amount is Rs 50,000, which has been increased in Budget 2018 from Rs 30,000.

In case, both taxpayer and parent(s) are 60 years or above, the maximum deduction available under this section is up to Rs.1 lakh.

Example: Raghav’s age is 65 and his father’s age is 90. In this case, the maximum deduction Raghav can claim under section 80D is Rs. 100,000.

From FY 2015-16 a cumulative additional deduction of Rs. 5,000 is allowed for preventive health check.

Section 80DD – Disabled Dependent:-

Deduction for Rehabilitation of Handicapped Dependent Relative

Section 80DD deduction is available to a resident individual or a HUF and is available on:

1. Expenditure incurred on medical treatment (including nursing), training and rehabilitation of handicapped dependent relative
2. Payment or deposit to specified scheme for maintenance of handicapped dependent relative.
3. Where disability is 40% or more but less than 80% – fixed deduction of Rs 75,000.
4. Where there is severe disability (disability is 80% or more) – fixed deduction of Rs 1,25,000.

To claim this deduction a certificate of disability is required from prescribed medical authority.

From FY 2015-16 – The deduction limit of Rs 50,000 has been raised to Rs 75,000 and Rs 1,00,000 has been raised to Rs 1,25,000.

Section 80DDB – Medical Expenditure

Section 80U – Physical Disability

Section 80G – Donations:-

The various donations specified in u/s 80G are eligible for deduction up to either 100% or 50% with or without restriction.

From FY 2017-18 any donations made in cash exceeding Rs 2,000 will not be allowed as deduction. The donations above Rs 2000 should be made in any mode other than cash to qualify for 80G deduction.

Section 80GGB – Company Contribution

Section 80GGC – Contribution to Political Parties

Section 80RRB – Royalty of a Patent

Section 80 TTB – Interest Income:-

A new section 80TTB has been inserted vide Budget 2018 in which deductions with respect to interest income from deposits held by senior citizens will be allowed. The limit for this deduction is Rs.50, 000.

No further deduction under section 80TTA shall be allowed. In addition to section 80 TTB, section 194A of the Act will also be amended so as to increase the threshold limit for TDS on interest income payable to senior citizens. The earlier limit was Rs 10,000, which was increased to Rs 50,000 as per the latest Budget.