Last modified: 22 June 2016
Deductions from Gross Total Income
The impact of Deductions available under various sections of Income Tax Act is not same for all. It depends upon applicable tax rates as per the total taxable income and status of assessees. An assessee, whose income is taxable at higher rates will have more tax savings i.e. more impact on his / her tax liability than the assessee whose income is taxable at lower rates. You may use Maximize Tax Savings tool to check the impact of various availabe deductions to you on your tax liability.
Deductions Allowable under various sections of Chapter VIA of Income Tax Act :
Deductions under Section 80C (Available to Individuals / HUFs)
For investments in specified schemes, saving instruments etc.
The aggregate of total deduction available under sections 80C, 80CCC and 80CCD is limited to whole of the amount paid or deposited subject to a maximum of Rs. 1,50,000/- for investment in one or more of the following :
- Life Insurance Premium For individual, policy must be in self or spouse's or any child's name in case of individuals and on life of any HUF member in case of HUF.
- Sum paid under contract for deferred annuity for individual, on life of self, spouse or any child .
- Sum deducted from salary payable to Govt. Servant for securing deferred annuity for self-spouse or child Payment limited to 20% of salary.
- Contributions by an individual made under Employees' Provident Fund Scheme
- Contribution made by a Resident Individual in PPF account. The account can be in the name of self/spouse, any child & for HUF, it can be in the name of any member of the family.
- Contribution by employee to a Recognised Provident Fund.
- Contribution by an employee to an approved superannuation fund
- Deposit in Sukanya Samriddhi Account as natural / legal guardian of girl child.
- Subscription to notified savings certificates [National Savings Certificates]
- Contribution for participation in unit-linked Insurance Plan of UTI
- Contribution to notified unit-linked insurance plan of LIC Mutual Fund [Dhanaraksha 1989]
- Subscription to notified deposit scheme or notified pension fund set up by National Housing Bank [Home Loan Account Scheme/National Housing Banks (Tax Saving) Term Deposit Scheme, 2008]
- Tuition fees (excluding development fees, donations, etc.) paid by an individual to any university, college, school or other educational institution situated in India, for full time education of any 2 of his/her children
- Certain payments for purchase/construction of residential house property
- Subscription to notified schemes of (a) public sector companies engaged in providing long-term finance for purchase/construction of houses in India for residential purposes/(b) authority constituted under any law for satisfying need for housing accommodation or for planning, development or improvement of cities, towns and villages, or for both
- Sum paid towards notified annuity plan of LIC (New Jeevan Dhara/New Jeevan Dhara-I/New Jeevan Akshay/New Jeevan Akshay-I/New Jeevan Akshay-II/Jeewan Akshay-III plan of LIC) or other insurer
- Subscription to any units of any notified [u/s 10(23D)] Mutual Fund or the UTI (Equity Linked Saving Scheme, 2005)
- Contribution by an individual to any pension fund set up by any mutual fund which is referred to in section 10(23D) or by the UTI (UTI Retirement Benefit Pension Fund)
- Subscription to equity shares or debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions
- Subscription to any units of any approved mutual fund referred to in section 10(23D), provided amount of subscription to such units is subscribed only in 'eligible issue of capital' referred to above.
- Term deposits for a fixed period of not less than 5 years with a scheduled bank, and which is in accordance with a scheme framed and notified.
- Subscription to notified bonds issued by the NABARD.
- Deposit in an account under the Senior Citizen Savings Scheme Rules, 2004 (subject to certain conditions)
- 5-year term deposit in an account under the Post Office Time Deposit Rules, 1981 (subject to certain conditions)
Section 80CCC (Available to Individuals)
Deduction in respect of Premium Paid for Annuity Plan of LIC or Other Insurer
Payment of premium for annuity plan of LIC or any other insurer Deduction is available upto a maximum of Rs. 150,000/-.
The premium must be deposited to keep in force a contract for an annuity plan of the LIC or any other insurer for receiving pension from the fund.
Note: The limit for maximum deduction available under Sections 80C, 80CCC and 80CCD(1) (combined together) is Rs. 1,50,000/-.
Section 80CCD (1 (Available to Individuals))
Deduction in respect of Contribution to Pension Account (by Assessee)
Deduction available for the amount paid or deposited in a pension scheme notified or as may be notified by the Central Government subject to a maximum of :
(a) 10% of salary in the previous year in the case of an employee
(b) 10% of gross total income in any other case.
The maximum deduction allowable under the secion is Rs. 1.00 lac. Rs. 1.50 lacs w.e.f. 01.04.2015 in case of contribution to New Pension Scheme (NPS).
Section 80CCD (2) (Available to Individuals)
Deduction in respect of Contribution to Pension Account (by Employer)
Deduction available for the amount paid or deposited by the employer of the assessee in a pension scheme notified or as may be notified by the Central Government subject to a maximum of 10% of salary in the financial year.
Section 80CCD (1B) (Available to Individuals)
Deduction in respect of Additional Contribution to New Pension Scheme (NPS)
A deduction of upto Rs. 50,000 is available over and above the limit of Rs. 1.50 lakh in respect of contributions made to NPS under Section 80CCD(1).
Section 80CCG (Available to specified Resident Individuals)
Deduction in respect of investment in listed shares or listed units
50 per cent of amount invested by resident individuals, whose gross total income does not exceed Rs. 12 lakhs, in listed shares or listed units in accordance with notified scheme for a lock-in period of 3 years (Subject to certain conditions). Maximum deduction : Rs. 25,000/-.
Section 80D (Available to Individuals / HUFs)
Deduction in respect of Medical Insurance
Deduction is available upto Rs. 30,000/- (enhanced from Rs. 20,000 w.e.f. 01.04.2015) for senior citizens and upto Rs. 25,000/- (enhanced from Rs. 15,000 w.e.f. 01.04.2015) in other cases for insurance of self, spouse and dependent children. Additionally, a deduction for insurance of parents (father or mother or both) is available to the extent of Rs. 30,000/- (enhanced from Rs. 20,000 w.e.f. 01.04.2015) if parents are senior Citizen and Rs. 25,000/- (enhanced from Rs. 15,000 w.e.f. 01.04.2015) in other cases. Therefore, the maximum deduction available under this section is to the extent of Rs. 60,000/- in case of individuals and Rs. 30,000/- in case of HUFs. From AY 2013-14, within the existing limit a deduction of upto Rs. 5,000 for preventive health check-up is available.
Section 80DD (Available to Resident Individuals / HUFs)
Deduction in respect of Rehabilitation of Handicapped Dependent Relative
Deduction of Rs. 75,000/- (enhanced from Rs. 50,000 w.e.f. 01.04.2015) in respect of
- Expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent relative.
- Payment or deposit to specified scheme for maintenance of dependent handicapped relative.
Further, if the defendant is a person with severe disability a deduction of Rs. 125,000/- (enhanced from Rs. 1,00,000 w.e.f. 01.04.2015) shall be available under this section. The handicapped dependent should be a dependent relative suffering from a permanent disability (including blindness) or mentally retarded, as certified by a specified physician or psychiatrist. Note: A person with 'severe disability' means a person with 80% or more of one or more disabilities as outlined in section 56(4) of the 'Persons with disabilities (Equal opportunities, protection of rights and full participation)' Act.
Section 80DDB (Available to Individuals / HUFs)
Deduction allowed to resident Individual and HUF in respect of Medical Expenditure on Self or Dependent Relative
A deduction to the extent of Rs. 40,000/- (Rs. 60,000 in case of senior citizen) or the amount actually paid, whichever is less is available for expenditure actually incurred by resident assessee on himself or dependent relative for medical treatment of specified disease or ailment. The diseases have been specified in Rule 11DD. A certificate in form 10 I is to be furnished by the assessee from any Registered Doctor.
Section 80E (Available to Individuals)
Deduction in respect of Interest on Loan for Higher Studies
Deduction in respect of interest on loan taken for pursuing higher education (subject to certain conditions) (maximum period : 8 years).
Section 80EE (Available to Individuals)
Deduction in respect of Interest on Residential House Property
The deduction under this sub-section is available w.e.f. AY 2014-15. The maximum deduction available is Rs. 1 lac. In a case where the interest payable for the financial year 2013-14 is less than Rs. 1 lac, the balance deduction amount shall be available in AY 2015-16.
The deduction under sub-section (1) shall be subject to the following conditions :
- the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2013 and ending on the 31st day of March, 2014;
- the amount of loan sanctioned for acquisition of the residential house property does not exceed twenty-five lakh rupees;
- the value of the residential house property does not exceed forty lakh rupees;
- the assessee does not own any residential house property on the date of sanction of the loan.
If deduction for Housing Loan Interest is availed under this section, no deduction can be availed for such interest under any other provisions of the Act for the same or any other assessment year.
Section 80G (Available to all assessees)
Deduction in respect of Various Donations
The various donations specified in Sec. 80G are eligible for deduction upto either 100% or 50% with or without restriction as provided in Sec. 80G
Section 80GG (Available to Individuals not receiving any house rent allowance)
Deduction in respect of House Rent Paid
Deduction available is the least of
- Rent paid less 10% of total income
- Rs. 5000/- ( Rs. 2000/- upto AY 2016-17) per month i.e. Maximum Deduction available is 60,000/- ( 24,000/- upto AY 2016-17).
- 25% of total income, provided
- Assessee or his spouse or minor child should not own residential accommodation at the place of employment.
- He should not be in receipt of house rent allowance.
- He should not have self occupied residential premises in any other place.
Section 80GGA (Available to All assessees not having any income chargeable under the head 'Profits and gains of business or profession')
Deduction in respect of certain donations for scientific research or rural development
Section 80GGB (Available to Indian company)
Deduction in respect of Sum contributed to any political party/electoral trust
Section 80GGC (Available to All assessees, other than local authority and artificial juridical person wholly or partly funded by Government) Deduction in respect of contributions given by any person to political parties.
Section 80QQB (Available to Resident Individual - Author)
Deduction in respect of Royalty Income of resident individuals on patents.
Maximum deduction Rs. 3,00,000/-
Section 80RRB (Available to Resident Individuals)
Deduction in respect of Royalty Income of resident individual authors of certain books other than text books.
Maximum deduction Rs. 3,00,000/-
Section 80 TTA (Available to Resident Individuals/HUFs)
Deduction from gross total income in respect of any Income by way of Interest on Savings account
Deduction from gross total income of an individual or HUF, upto a maximum of Rs. 10,000/-, in respect of interest on deposits in savings account ( not time deposits ) with a bank, co-operative society or post office, is allowable w.e.f. 01.04.2012 (Assessment Year 2013-14).
Section 80U (Available to Resident Individuals)
Deduction in respect of Person suffering from Physical Disability
Deduction of Rs. 75,000/- (enhanced from Rs. 50,000 w.e.f. 01.04.2015) to a resident individual who suffers from a physical disability(including blindness) or mental retardation. Further, if the individual is a person with severe disability, deduction of Rs. 125,000/- (enhanced from Rs. 1,00,000 w.e.f. 01.04.2015) shall be available u/s 80U. Certificate should be obtained from a Govt. Doctor. The relevant rule is Rule 11D.
Deduction in respect of Interest on Housing Property Loans (Home Loans)
- The maximum tax deduction for accrued interest during the year for a self-occupied property acquired, constructed, repaired, renewed or reconstructed with borrowed capital and aquired / constructed within 3 years from the end of financial year in which the loan was taken, is allowed upto a maximum limit of Rs. 2 Lakhs (increased in Budget 2014 from 1.5 Lakhs to Rs. 2 Lakhs).
- In case the property for which the Home Loan has been taken is not self-occupied, no maximum limit has been prescribed and the entire amount of accued interest during the year can be claimed as deduction. Such property is treated as let out property and rental income is to be shown in the Income Tax return. Even if the the property is not occupied, it is still considered letout. A notional rent income is computed based on market rates, which becomes taxable after making 30% deduction towards maintenance and repair.
- In case the property has not been self-occupied by the owner due to reason of his employment, business or profession carried on at any other place and he has to reside at that other place not belonging to him, then the amount of tax deduction allowed shall be Rs. 2,00,000/- only.
- If the property is not acquired/constructed completed within 3 years from the end of financial year in which the loan was taken, the maximum deduction for accrued interest is reduced to Rs 30,000/- only. This limit of 3 years has been increased to 5 years from Financial Year 2016-17 and onwards.
Deduction in respect of Interest for Pre-construction Period: The interest payable by an assessee in respect of funds borrowed for the aquisition / construction of a house property and pertaining to the period prior to the previous year in which such property has been aquired of constructed, to the extent it is is not allowed as a deduction under any other provison of Income Tax Act, will be deducted in five equal installments commencing from the previous year in which the property is aquired or constructed.
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