Deductions under Income Tax

Deductions under Income Tax

Introduction

Section 80C is considered as the popular sections among the taxpayers as it can reduce the taxable income with the help of tax saving investments. This section allows getting a maximum deduction up to Rs 1.5 lakh every year from the total income of the taxpayers.  The benefit of this section can be availed by Hindu Undivided Family (HUFs), Companies, Individuals, Limited Liability Partnerships (LLPs), Partnership Firm etc. This section also includes certain sub sections including 80CCC, 80CCD (1), 80CCD (1b) and 80CCD (2).

The following are some of investments which are eligible for tax deductions under Section 80C;

• Public Provident Fund Investment
• Employees Provident Fund Investment
• LIC Premium Paid
• Stamp Duty
• Registration Charge for Buying of Property
• Principal Amount paid for home loan
• National Savings Certificate
• Equity Linked Saving Scheme
• Sukanya Smriddhi Yojana (SSY)
• Tax Saving on Fixed Deposit
• Investment on Infrastructure Bond

Section 80CCC 

The aforesaid section is applicable towards deduction for payment made for life insurance annuity plans. The pensions include amount received by family members on account of pension or any amount received as a result of surrender of annuity including bonus and interest.

Section 80CCD 

The above-mentioned section is meant for deduction for NPS, with the following criteria;

• Maximum deduction of 10% of basic salary is allowed in case the taxpayer is an employee
• Maximum deduction of 20% of gross total income is allowed in case the taxpayer is self employed

It is to be noted that the maximum limit is     Rs 1.5 Lakh is allowed u/s 80C.

Section 80CCEH 

There are investments which are allowed for deduction under this aforesaid section which can help a taxpayer to save taxes and also helps to grow money.

Section 80 TTA

 This section is with regard to deduction for interest received on savings bank account. In case of Individual or HUF, a maximum of Rs. 10,000 can be claimed against the interest income received from savings bank account or post office or co-operative society.

Section 80GG – House Rent Paid

This Section 80GG deduction is available when for rent paid already but House rent Allowance is not received. It is to be noted that the residential accommodation must not be owned by the taxpayer, spouse or minor child.

Section 80E - Interest on Education Loan

 This section is related to deduction for Interest on Education Loan for Higher Studies. The loan must be taken for educational purposes for children and spouse. Under this section maximum deduction is available for 8 years or till the whole interest is repaid whenever is earlier. It is to be noted that there is no restriction on the amount to be claimed.

Section 80EE -Interest on Home Loan

 This section is for deductions on Interest on home loan for new home buyers for the first time. The deduction is allowed under this section of the property value is Rs. 50 Lakhs and the loan amount is less than 35 Lakh.

Section 80D 

This section is meant for deduction for the premium paid in respect of Medical Insurance. An Individual or HUF can claim a deduction of Rs. 25000 for insurance done for spouse, dependent children or self. Additionally, a deduction of Rs. 25000 is allowed for old parents who are less than 60 years old.

Section 80DD 

This section is related to deduction for Rehabilitation of Handicapped Dependent Relative. This section is applicable to resident individual and HUF on the expenses incurred on medical treatment for handicapped relative for rehabilitation. Under this section, if the disability between 40 to 80 percent, a fixed deduction of Rs. 75000 is allowed. Where the disability is more than 80 percent then a fixed deduction of Rs. 1, 25,000 is allowed.

Section 80DDB – Medical Expenditure

This section is related to deduction for Medical Expenditure made on self or Dependent Relative.  A table depicting the same is provided below;

Particulars	Deduction Limit
For individuals and HUFs below age 60	A deduction up to Rs.40,000 is available to a resident individual or a HUF
For senior citizens and super senior citizens	The individual or HUF taxpayer can claim a deduction up to Rs 1 lakh.

 

Section 80U – Physical Disability

This section is regarding deduction for Person suffering any sort of Physical Disability. For resident individuals a deduction of Rs. 75,000 is allowed for person who is suffering from physical disability. However, in case of severe disability, the deduction limit is Rs 1,25,000.

Section 80G – Donations

The aforesaid section is meant for deduction for donations made towards Social Causes. The term donation has been specified under Section 80G and the deduction are allowed up to 100 or 50 percent with or without any restriction.

Section 80GGB – Company Contribution

This section is for deduction on contributions provided to political parties by companies. This section is applicable to Indian company only. The deduction under this section is allowed for contribution made by any way other than cash.

Section 80GGC – Contribution to Political Parties

This section is related to deduction on contributions provided by persons to some political parties. It is applicable only to individual taxpayer and not applicable for any other person defined under Income Tax Act, 1961.

Section 80RRB – Royalty of a Patent

This is for deduction regarding the income received as royalty for a patent registered under Patents Act 1970 after 1 April 2003.  The deduction is limited up to Rs. 3 Lakh of the income received as Royalty. 

Section 80 TTB – Interest Income

This section is meant for deduction of Interest on Deposits made by senior citizens. This section was inserted in Budget 2018. The maximum limit for deduction is Rs.50,000.

 

Team Tax4wealth