Deductions on Investments
Under section 80C, a
deduction of Rs 1,50,000 can be claimed from your total income. In simple
terms, you can reduce up to Rs 1,50,000 from your total taxable income through
section 80C. This deduction is allowed to an Individual or a HUF. A maximum of
Rs 1, 50,000 can be claimed for the FY 2018-19, 2017-18 and FY 2016-17 each.
If you have paid excess
taxes, but have invested in LIC, PPF, Mediclaim, incurred towards tuition fees
etc.and have missed claiming a deduction of the same under 80C, you can fileyour Income Tax Return, claim these deductions and get a refund of
excess taxes paid
Not Enough 80C Deduction in Your Form-16?
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claiming Section 80 deductions like 80C, investments, mediclaim, or calculating HRA to
save on taxes, TaxWill’s CAs can help you claim a refund (if applicable) and
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Sometimes, you may have
deductions or investments eligible for 80C, but you may not have submitted
proof to your employer, so excess TDS may be deducted. You can still claim these
deductions while e-filing as long as you have the proof with you.
2. Section 80CCC – Insurance Premium
Deduction for Premium Paid for Annuity Plan of LIC or Other
Insurer
This section provides a
deduction to an individual for any amount paid or deposited in any annuity plan
of LIC or any other insurer. The plan must be for receiving a pension from a
fund referred to in Section 10(23AAB). 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.
3. Section 80CCD – Pension Contribution
Deduction for Contribution to Pension Account
a. Employee’s
contribution – Section 80CCD (1) is allowed to an individual who makes deposits to his/her
pension account. Maximum deduction allowed is 10% of salary (in case the
taxpayer is an employee) or 20% of gross total income (in case the taxpayer
being self-employed) or Rs 1, 50,000, whichever is less.
FY 2016-17 and earlier
years – In the case of a
self-employed individual, maximum deduction allowed is 10% of gross total
income.
b.Deduction for
self-contribution to NPS – section 80CCD (1B) A new section 80CCD (1B) has been introduced for an additional
deduction of up to Rs 50,000 for the amount deposited by a taxpayer to
their NPS account. Contributions to Atal Pension Yojana are also eligible.
c. Employer’s
contribution to NPS – Section 80CCD (2) Additional deduction is allowed for employer’s contribution
to employee’s pension account of up to 10% of the salary of the employee. There
is no monetary ceiling on this deduction. Know more about Section80CCD
4. Section 80 TTA – Interest on Savings Account
Deduction from Gross Total Income for Interest on Savings Bank
Account
A deduction of maximum
Rs 10,000 can be claimed against interest income from a savings bank account.
Interest from savings bank account should be first included in other income and
deduction can be claimed of the total interest earned or Rs 10,000, whichever
is less. This deduction is allowed to an individual or an HUF. It can be
claimed for interest on deposits in savings account with a bank, co-operative
society, or post office. Section 80TTA deduction is not available on interest
income from fixed deposits, recurring deposits, or interest income from
corporate bonds.
5. Section 80GG – House Rent Paid
Deduction for House Rent Paid Where HRA is not Received
a. This 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
b. The taxpayer should
not have self-occupied residential property in any other place
c. The taxpayer must be
living on rent and paying rent
d. The deduction is
available to all individuals
Deduction available is the least of the following:
a. Rent paid minus 10%
of adjusted total income
b. Rs 5,000/- per month
c. 25% of adjusted total
income*
*Adjusted Gross Total
Income is arrived at after adjusting the Gross Total Income for certain
deductions, exempt incomes, long-term capital gains and income relating to
non-residents and foreign companies. An online e-filing software like that of
TaxWill can be extremely easy as the limits are auto-calculated and you do not
have to worry about making complex calculations. From FY 2016-17 available
deduction has been raised to Rs 5,000 a month from Rs 2,000 per month.
6. 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 loan 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. The 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.
7. Section 80EE – Interset 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 this section is available only to an individual who is a first
time home-owner. The value of the property purchased must be less than Rs 50
lakh and the home loan must be less than Rs 35 lakh. The loan must be taken
from a financial institution and must have been sanctioned between 01 April
2016 to 31 March 2017. Through
this section, an additional deduction of Rs 50,000 can be claimed on home loan
interest. This is in addition to deduction of Rs 2,00,000 allowed under section
24 of the Income Tax Act
for a self-occupied house property.
FY 2013-14 and FY
2014-15 This section
provides a deduction on the home loan interest paid. The deduction under this
section is available only to individuals for the first house purchased where
the value of the house is Rs 40 lakh or less and the loan taken for the house
is Rs 25 lakh or less. The loan must be sanctioned between 01 April 2013 to 31
March 2014. The aggregate deduction allowed under this section cannot exceed Rs
1,00,000 and is allowed for FY 2013-14 and FY 2014-15.
8. Section 80CCG – RGESS
Rajiv Gandhi Equity Saving Scheme (RGESS)
The deduction under this
section is available to a resident individual. Investors whose gross total
income is less than Rs. 12 lakhs. To avail the benefits under this section the
following conditions should be met:
a. The assessee should
be a new retail investor as per the requirement specified under the notified
scheme.
b. The investment should
be made in such listed investor as per the requirement specified under the
notified scheme.
c. The minimum lock in
period in respect of such investment is three years from the date of
acquisition in accordance with the notified scheme.
Upon fulfillment of the
above conditions, a deduction, which is lower of the following is allowed.
- 50% of the amount invested in equity shares; or
- Rs 25,000 for three consecutive Assessment Years.
Rajiv Gandhi Equity Scheme has
been discontinued starting from 1 April 2017. Therefore, no deduction
under section 80CCG will be allowed from FY 2017-18. However, if you have
invested in the RGESS scheme in FY 2016-17, then you can claim deduction under
Section 80CCG until FY 2018-19.
9. Section 80D – Medical Insurance
Deduction for the premium paid for Medical Insurance
Deduction under this
section is available to an individual or a HUF. A deduction of Rs. 25,000 can
be claimed for insurance of self, spouse and dependent children. An additional
deduction for insurance of parents is available to the extent of Rs 25,000 if
they are less than 60 years of age or Rs 50,000 (has been increased in Budget 2018
from Rs 30,000) if parents are more than 60 years old. In case, a
taxpayers age and parents age is 60 years or above, the maximum deduction
available under this section is to the extent of Rs. 100,000. Example:
Rohan’s age is 65 and his father’s age is 90. In this case, the maximum
deduction Rohan can claim under section 80D is Rs. 100,000. From FY
2015-16 a cumulative additional deduction of Rs. 5,000 is allowed for the
preventive health check up to individuals.
10. Section 80DD – Disabled Dependent
Deduction for Rehabilitation of Handicapped Dependent Relative
This deduction is
available to a resident individual or a HUF and is available on:
a. Expenditure incurred
on medical treatment (including nursing), training and rehabilitation of
handicapped dependent relative
b. Payment or deposit to
specified scheme for maintenance of dependent handicapped relative.
i. Where disability is
40% or more but less than 80% – fixed deduction of Rs 75,000.
ii. 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.
11. Section 80DDB – Medical Expenditure
Deduction for Medical Expenditure on Self or Dependent Relative
This deduction is
available to a resident individual or a HUF. The deduction that can be claimed
is Rs 40,000. Such deduction, for an individual, is available in respect of any
expenses incurred towards treatment of certain specified medical diseases or
ailments for himself or any of his dependents. For a HUF, such deduction is
available in respect of medical expenses incurred towards these prescribed
ailments, for any of the members of the HUF.
In case the individual
on behalf of whom such expenses are incurred is a senior citizen, a deduction
upto Rs 1 lakh can be claimed by the individual or HUF taxpayer. Earlier i.e.
until FY 2017-18, the deduction that could be claimed for a senior citizen and
a super senior citizen was Rs 60,000 and Rs 80,000 respectively. This otherwise
means, now it is a common deduction available upto Rs 1 lakh for all senior
citizens (including super senior citizens) unlike earlier.
Any reimbursement of
medical expenses by an insurer or employer shall be reduced from the quantum of
deduction the taxpayer can claim under this section.
Also remember that you
need get a prescription for such medical treatment from the concerned
specialist in order to be able to claim such deduction. Read our detailed
article on Section 80DDB.
12. Section 80U – Physical Disability
Deduction for Person suffering from Physical Disability
A deduction of Rs.
75,000 is available to a resident individual who suffers from a physical
disability (including blindness) or mental retardation. In case of severe
disability, deduction of Rs. 1,25,000 can be claimed. 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.
13. Section 80G – Donations
Deduction for donations towards Social Causes
The various donations
specified in u/s 80G are eligible for deduction up to either 100% or 50% with
or without restriction as provided in section 80G. 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
as deduction u/s 80G.
a. Donations with 100% deduction without any qualifying limit
- National Defence Fund set up by the Central Government
- Prime Minister’s National Relief Fund
- National Foundation for Communal Harmony
- An approved university/educational institution of
National eminence
- Zila Saksharta Samiti constituted in any district under
the chairmanship of the Collector of that district
- Fund set up by a State Government for the medical
relief to the poor
- National Illness Assistance Fund
- National Blood Transfusion Council or to any State
Blood Transfusion Council
- National Trust for Welfare of Persons with Autism,
Cerebral Palsy, Mental Retardation and Multiple Disabilities
- National Sports Fund
- National Cultural Fund
- Fund for Technology Development and Application
- National Children’s Fund
- Chief Minister’s Relief Fund or Lieutenant Governor’s
Relief Fund with respect to any State or Union Territory
- The Army Central Welfare Fund or the Indian Naval
Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh
Chief Minister’s Cyclone Relief Fund, 1996
- The Maharashtra Chief Minister’s Relief Fund during
October 1, 1993 and October 6,1993
- Chief Minister’s Earthquake Relief Fund, Maharashtra
- Any fund set up by the State Government of Gujarat
exclusively for providing relief to the victims of earthquake in Gujarat
- Any trust, institution or fund to which Section 80G(5C)
applies for providing relief to the victims of earthquake in Gujarat
(contribution made during January 26, 2001 and September 30, 2001) or
- Prime Minister’s Armenia Earthquake Relief Fund
- Africa (Public Contributions — India) Fund
- Swachh Bharat Kosh (applicable from financial year
2014-15)
- Clean Ganga Fund (applicable from financial year
2014-15)
- National Fund for Control of Drug Abuse (applicable
from financial year 2015-16)
b. Donations with 50% deduction without any qualifying limit
- Jawaharlal Nehru Memorial Fund
- Prime Minister’s Drought Relief Fund
- Indira Gandhi Memorial Trust
- The Rajiv Gandhi Foundation
c. Donations to the following are eligible for 100% deduction
subject to 10% of adjusted gross total income
- Government or any approved local authority, institution
or association to be utilized for the purpose of promoting family planning
- Donation by a Company to the Indian Olympic Association
or to any other notified association or institution established in India
for the development of infrastructure for sports and games in India or the
sponsorship of sports and games in India
d. Donations to the following are eligible for 50% deduction
subject to 10% of adjusted gross total income
- Any other fund or any institution which satisfies
conditions mentioned in Section 80G(5)
- Government or any local authority to be utilized for
any charitable purpose other than the purpose of promoting family planning
- Any authority constituted in India for the purpose of
dealing with and satisfying the need for housing accommodation or for the
purpose of planning, development or improvement of cities, towns, villages
or both
- Any corporation referred in Section 10(26BB) for
promoting the interest of minority community
- For repairs or renovation of any notified temple,
mosque, gurudwara, church or other places.
14. Section 80GGB – Company Contribution
Deduction on contributions given by companies to Political Parties
Deduction is allowed to
an Indian company for the amount contributed by it to any political party or an
electoral trust. Deduction is allowed for contribution done by any way other
than cash.
15. Section 80GGC – Contribution to Political Parties
Deduction on contributions given by any person to Political
Parties
Deduction under this
section is allowed to a taxpayer except for a company, local authority and an
artificial juridical person wholly or partly funded by the government, for any
amount contributed to any political party or an electoral trust. The deduction
is allowed for contribution done by any way other than cash.
16. Section 80RRB – Royalty of a Patent
Deduction with respect to any Income by way of Royalty of a Patent
Deduction for any income
by way of royalty for a patent registered on or after 01.04.2003 under the
Patents Act 1970 shall be available up to Rs. 3 lakhs or the income received,
whichever is less. The taxpayer must be an individual resident of India who is
a patentee. The taxpayer must furnish a certificate in the prescribed form duly
signed by the prescribed authority.
17. Section 80 TTB – Interest Income
Deduction of Interest on Deposits for Senior Citizens
A new section 80TTB has
been inserted vide Budget 2018 wherein, a deduction in respect of interest
income from deposits held by senior citizens will be allowed as a deduction
from the total income The limit for this deduction is Rs. 50,000. Further, no 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
deduction of tax at source on interest income payable to senior citizens from
the existing limit Rs 10,000 to Rs. 50,000.
18. Deductions-Summary
Section 80 Deduction Table
Section
|
Deduction
on
|
Allowed
Limit (maximum) FY 2018-19
|
80C
|
Investment in PPF
– Employee’s share of PF
contribution
– NSCs
– Life Insurance Premium payment
– Children’s Tuition Fee
– Principal Repayment of home loan
– Investment in Sukanya Samridhi
Account
– ULIPS
– ELSS
– Sum paid to purchase deferred
annuity
– Five year deposit scheme
– Senior Citizens savings scheme
– Subscription to notified
securities/notified deposits scheme
– Contribution to notified Pension
Fund set up by Mutual Fund or UTI.
– Subscription to Home Loan
Account scheme of the National Housing Bank
– Subscription to deposit scheme
of a public sector or company engaged in providing housing finance
– Contribution to notified annuity
Plan of LIC
– Subscription to equity shares/
debentures of an approved eligible issue
– Subscription to notified bonds
of NABARD
|
Rs. 1,50,000
|
80CCC
|
For amount deposited in annuity
plan of LIC or any other insurer for a pension from a fund referred to in
Section 10(23AAB)
|
-
|
80CCD(1)
|
Employee’s contribution to NPS
account (maximum up to Rs 1,50,000)
|
-
|
80CCD(2)
|
Employer’s contribution to NPS
account
|
Maximum up to 10% of salary
|
80CCD(1B)
|
Additional contribution to NPS
|
Rs. 50,000
|
80TTA(1)
|
Interest Income from Savings
account
|
Maximum up to 10,000
|
80TTB
|
Exemption of interest from banks,
post office, etc. Applicable only to senior citizens
|
Maximum up to 50,000
|
80GG
|
For rent paid when HRA is not
received from employer
|
Least of :
– Rent paid minus 10% of total
income
– Rs. 5000/- per month
– 25% of total income
|
80E
|
Interest on education loan
|
Interest paid for a period of 8
years
|
80EE
|
Interest on home loan for first
time home owners
|
Rs 50,000
|
80CCG
|
Rajiv Gandhi Equity Scheme for
investments in Equities
|
Lower of
– 50% of amount invested in equity
shares; or
– Rs 25,000
|
80D
|
Medical Insurance – Self, spouse,
children
Medical Insurance – Parents more
than 60 years old or (from FY 2015-16) uninsured parents more than 80 years
old
|
– Rs. 25,000
– Rs. 50,000
|
80DD
|
Medical treatment for handicapped
dependent or payment to specified scheme for maintenance of handicapped
dependent
– Disability is 40% or more but
less than 80%
– Disability is 80% or more
|
– Rs. 75,000
– Rs. 1,25,000
|
80DDB
|
Medical Expenditure on Self or
Dependent Relative for diseases specified in Rule 11DD
– For less than 60 years old
– For more than 60 years old
|
– Lower of Rs 40,000 or the amount
actually paid
– Lower of Rs 1,00,000 or the
amount actually paid
|
80U
|
Self-suffering from disability :
– An individual suffering from a
physical disability (including blindness) or mental retardation.
– An individual suffering from
severe disability
|
– Rs. 75,000
– Rs. 1,25,000
|
80GGB
|
Contribution by companies to
political parties
|
Amount contributed (not allowed if
paid in cash)
|
80GGC
|
Contribution by individuals to
political parties
|
Amount contributed (not allowed if
paid in cash)
|
80RRB
|
Deductions on Income by way of
Royalty of a Patent
|
Lower of Rs 3,00,000 or income
received
|
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