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To encourage taxpayers to save and invest, the income tax department provides several Chapter VI A deductions from taxable income. Tax deductions can assist people in reducing their tax liabilities, even the most popular being the 80C deduction. Let's examine these deductions in more detail:
Section 80C, one of the most well-liked tax laws, enables taxpayers to lower their taxable income by paying for specific charges or making economic investments.
Who is eligible for the Section 80C deduction? Individuals, as well as HUFs.
What is the maximum deduction permitted by section 80C? A deduction of up to ₹ 150,000 per year may be taken from your gross total income. LLPs, partnerships, and corporations are not allowed to deduct this amount.
Sections 80CCC and 80CCD allow you to deduct payments to the pension plan, whether you make them individually or via your employer.
A deduction of up to ₹ 1.5 lakhs is permitted under Sections 80C, 80CCC, and 80CCD (1). However, you can deduct an additional ₹ 50,000 for payments to the National Pension Scheme (NPS) under Section 80CCD (1B). Thus, the highest deduction permitted by Sections 80C + 80CCC + 80CCD(1) + 80CCD(1B) is ₹ 2 lakhs.
| Sections | Eligible investments | Max. Deduction |
|---|---|---|
| 80C | The investment was made in Equity Linked Saving Schemes, PPF/SPF/RPF, and payments were made towards Life Insurance Premiums, the principal sum of a home loan, SSY, NSC, SCSS, etc. | ₹ 1,50,000 |
| 80CCC | Payment made towards pension funds. | ₹ 1,50,000 |
| 80CCD(1) | Payments made towards the Atal Pension Yojana or other pension schemes notified by the government. | Employed: 10% of basic salary + DA Self-employed: 20% of gross total income |
| 80CCE | Total deduction under Section 80C, 80CCC, 80CCD(1). | ₹ 1,50,000 |
| 80CCD(1B) | Investments in NPS (outside ₹1,50,000 limit under Section 80CCE). | ₹ 50,000 |
| 80CCD(2) | Employer’s contribution towards NPS (outside ₹1,50,000 limit under Section 80CCE). | Central government employer: 14% of basic salary + DA |
| Others: 10% of basic salary + DA |
| Investment Options | Average Interest | Lock-in Period | Risk Factor |
|---|---|---|---|
| NPS scheme | 8% - 10% | Till 60 years of age | High |
| ULIP | 8% - 10% | 5 years | Medium |
| Tax saving FD | Up to 8.40% | 5 years | Low |
| PPF | 7.90% | 15 years | Low |
| Senior citizen savings scheme | 8.60% | 5 years (can be extended for an additional 3 years) | Low |
| National Savings Certificate | 7.9% | 5 years | Low |
| Sukanya Samriddhi Yojana | 8.50% | Till girl child reaches 21 years of age (partial withdrawal allowed when she reached 18 years) | Low |
Only an Individual or HUF may deduct under Section 80TTA.
The highest deduction permitted by section 80TTA is ₹ 10,000.
Under Section 80TTB, a resident senior adult who reaches sixty or older at any point during the fiscal year is eligible to deduct.
A deduction of up to ₹ 50,000 is permitted under Section 80TTB.
Renters who do not receive HRA as part of their compensation may be able to deduct expenses under Section 80GG.
Conditions for claiming Section 80GG:
Taxpayers must be independent contractors or salaried workers who do not get HRA.
Rent must only be paid by taxpayers for residential use.
There should be no other location for the taxpayer to own self-occupied residential property. In the same vein, any of these parties should own no residential property where the taxpayer, their spouse, minor kid, or their HUF presently resides.
File Form 10BA -
How much deduction is available Under Section 80GG?
The least of the following is available as a deduction:
Rent paid (-) 10% of adjusted total income*
₹ 5,000/- per month
25% of adjusted total income*
*Adjusted Gross Total Income =
Gross Total Income
Less:
- LTCG, if any, included in total gross income
- STCG u/s 111A
- Deductions u/s 80C to 80U except deduction under section 80GG
- Incomes of NRIs and foreign companies are taxed at a special tax rate, such as incomes u/s 115A, 115AB, 115AC, or 115AD.
The borrower may deduct interest paid on education loans taken out for higher study under section 80E.
The taxpayer, their spouse, their children, or a student for whom they are the legal guardian may all take out education loans.
The 80E deduction is available for a maximum of eight years, starting with the year interest is paid and ending with the year interest is paid in full, whichever comes first. The total amount of interest that can be claimed has no upper limit.
Under Section 80EEA, interest on a home loan excess is deductible by taxpayer. This provision permits consumers to claim a tax exemption of up to ₹ 1.5 lakhs each financial year on interest paid on house loans used to build or buy an affordable home. In contrast, interest on housing loans up to ₹ 2 lakhs was free under section 24. The deduction period for a house loan is April 1, 2019, through March 31, 2022.
The borrower must not have owned a residential property when the loan was approved.
The house's Stamp Duty Value must be less than or equal to ₹45 lakhs.
Not qualified to get a deduction under Section 80 EE
The loan must be approved between April 1, 2019, and March 31, 2022.
This deduction may only be used for loans taken out in FY 2016–17; it is accessible beginning in FY 2016–17.
Section 80EE only allows the deduction for homeowners (individuals) who owned a single residence on the day the loan was approved. The value of the property shall not exceed ₹ 50 lakh, and the amount of the house loan cannot exceed ₹ 35 lakh. It is necessary that the loan from the financial institution was authorized between April 1, 2016, and March 31, 2017.
There is a ₹ 50,000 home loan interest deduction available in addition to the ₹ 2 lakh (on the interest component of house loan EMI) allowed under section 24.
Interest paid on a car loan used to buy an electric vehicle may be deducted up to ₹1,50,000 to promote the purchase and use of these vehicles.
| Policy taken for? | Deduction for self & family | Deduction for parents | Preventive Health check-up | Max. Deduction |
|---|---|---|---|---|
| Self & Family (below 60 years) | 25000 | - | 5000 | 25000 |
| Self & Family + Parents (all of them below 60 years) | 25000 | 25000 | 5000 | 50000 |
| Self & Family (below 60 years) + Parents (above 60 years) | 25000 | 50000 | 5000 | 75000 |
| Self & Family + Parents (above 60 years) | 50000 | 50000 | 5000 | 100000 |
You can deduct ₹ 25,000 for insurance for yourself, your spouse, and your dependent children under section 80D, whether you're a person or a HUF. An additional deduction for parents' insurance up to ₹ 25,000 is allowed if they are under 60. In the event that either parent is above 60, there is a ₹ 50,000 discount.
The highest deduction allowed under this clause, provided the taxpayer and parent(s) are 60 years of age or more, is ₹ 1 lakh.
Seniors without health insurance may deduct the amount spent toward their incurred medical expenditures under Section 80D.
MODE OF PAYMENT
Preventive health checkups permit cash payments; however, premium payments require alternate payment methods.
Rahul, for example, is 65 years old, and his father is 90. In this case, Rahul can deduct up to ₹ 100,000 under section 80D.
Beginning in FY 2015–16, a cumulative additional deduction of ₹ 5,000 is allowed for preventative health examinations.
Residents, individually or as a HUF, are eligible for the Section 80DD deduction.
Deduction: The costs associated with providing medical care (including nursing care), education, and rehabilitation for a dependant member who is specially-abled.
| Disability | Disability Level | Deduction Amount |
|---|---|---|
| Normal | 40% - 79% | ₹ 75,000 |
| Severe | 80% or more | ₹ 1,25,000 |
A certificate of disability from the designated medical authority is necessary in order to be eligible for this deduction.
Note: A dependant is someone who is not eligible to claim a deduction under section 80U in his or her income tax return. A dependent includes a husband, children, parents, siblings, and sisters in the case of an individual, and a member of a Hindu undivided family in the case of a HUF.
A resident individual or a HUF is eligible for an 80DDB deduction each year. Any money you spend on medical care for yourself or your dependents is deductible.
Quantum of deduction under 80DDB?:
| Age | Deduction Amount |
|---|---|
| < 60 years | Amount paid or 40,000, whichever is less. |
| 60 and above | Amount paid or 1,00,000, whichever is less. |
Regarding requests for reimbursement: The amount of any medical expenditure reimbursement granted by an insurance provider or employer will be subtracted from the maximum deduction allowed by this section for the taxpayer. Also, remember that to be eligible for this kind of deduction, you must have a prescription for the necessary medical care from the relevant specialist.
| Disability | Disability Level | Deduction Amount |
|---|---|---|
| Normal | Upto 80% | ₹ 75,000 |
| Severe | 80% or more | ₹ 1,25,000 |
A person who has mental retardation or a physical impairment (including blindness) is eligible for a deduction of ₹ 75,000. In the event of a serious handicap, a deduction of ₹ 1,25,000 may be made.
Depending on the circumstances, 100% or 50% of the donations mentioned in u/s 80G may be deducted.
Donations in cash above ₹ 2,000 will not be deducted starting in FY 2017–18. Donations over ₹ 2000, to be eligible for an 80G deduction, must be made in a form other than cash.
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)
Donations with a 50% deduction without any qualifying limit.
Jawaharlal Nehru Memorial Fund*
Prime Minister’s Drought Relief Fund
Indira Gandhi Memorial Trust*
The Rajiv Gandhi Foundation*
Note: * Deductions won’t be available for the donations made on or after 1st April 2024.
The following charities qualify for a 100% deduction on donations, up to 10% of adjusted gross total income.
Government or any authorized local government, organization, or association to be used in the family planning promotion.
Contribution by a Company to the Indian Olympic Association or any other recognized Indian association or institution for the purpose of building sports and games infrastructure in India or supporting sports and games in India.
The following charities are eligible for a 50% deduction on donations, up to 10% of adjusted gross total income.
Any additional fund or organization that meets the requirements outlined in Section 80G(5) Government or any local government to be used for any philanthropic purpose other than supporting family planning.
Any Indian authority established with the intention of addressing and meeting the need for housing or planning, developing, or enhancing cities, towns, villages, or both.
Any company listed in Section 10(26BB) for advancing minority community interests for the purpose of repairing or renovating any temple, mosque, gurudwara, church, or other location that has been informed.
Under Section 80GGB, an Indian firm may deduct its contributions to any political party or electoral trust. Any payment made for donations other than cash is eligible for a deduction.
Section 80GGC Deduction: What Is It? Any sum given to an electoral trust or political party is deductible under Section 80GGC. Only if you pay using a method other than cash can you take advantage of this deduction.
Who is eligible for a deduction under 80GGC? Under section 80GGC, only an individual taxpayer is eligible to claim a deduction. Companies, municipal governments, and artificial juridical persons who get all or a portion of their funding from the government are not eligible. They can use Section 80GGB to seek the deduction.
The 80RRB Deduction can be used to deduct up to ₹3 lakh from any royalties earned for patents registered under the Patents Act of 1970 on or after April 1, 2003, whichever is less. The taxpayer has to be a resident of India and an individual patent holder. A certificate in the required format, properly signed by the designated authority, must be provided by the taxpayer.
Indian authors who get royalties or copyright payments may deduct up to ₹3 lakh from their earnings, whichever is smaller, under section 80QQB. To qualify for this tax deduction, a few requirements need to be met.
| Section | Deduction on | Maximum allowed limit (FY 2022-23) |
|---|---|---|
| 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 |
₹ 1,50,000 |
| 80CCC | For sums placed from a fund mentioned in Section 10(23AAB) into an annuity plan of LIC or any other insurer for a pension | |
| 80CCD(1) | Employee’s contribution to NPS account (maximum up to ₹ 1,50,000) | |
| 80CCD(2) | Employer’s contribution to NPS account | Maximum up to 10% of salary |
| 80CCD(1B) | Additional contribution to NPS | ₹ 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 – ₹ 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 | ₹ 50,000 |
| 80D |
|
|
| 80DD | Medical treatment for handicapped dependents or payment to specified scheme for maintenance of handicapped dependent – Disability is 40% or more but less than 80% – Disability is 80% or more |
|
| 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 ₹ 40,000 or the amount actually paid – Lower of ₹ 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 |
|
| 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 ₹ 3,00,000 or income received |
By the conclusion of the fiscal year, you must provide your employer with documentation of your investments. This assists your employer in figuring out how much tax to take from your pay and your taxable income. You can still claim the investments when you file your income tax return, even if you fail to give your employer the documentation of your assets. Just make sure the investments were completed before March 31, 2024, the conclusion of the fiscal year.
The investments you made are deductible on your income tax return for that particular fiscal year. Assuming, for example, that you invested on April 30, 2024, you will be able to deduct it from your taxes in the FY 2024–2025.
Suppose you took out an education loan to pay for your higher education. In that case, you can only deduct the interest under Section 80E if the loan was obtained from a bank or other financial institution. In the event that you borrowed money from your employer, Section 80E will not allow you to deduct interest.
There is no maximum allowed by law for the Section 80E deduction. Therefore, it is possible to deduct the real interest paid over a year.
Only individuals or Hindu Undivided Families are covered by Section 80C. (HUF). As a result, a business or entity is not eligible to use Section 80C.
When you pay life insurance premiums to any public or private insurance firm approved by the Insurance Regulatory and Development Authority of India, you are eligible for a deduction under Section 80C. In other words, you may be able to claim an 80C deduction in addition to paying insurance payments.
Under Section 80C, you can proceed with claiming the stamp duty for the acquisition of a home in the year that the payment is made for stamp duty.
Under Section 80G, any taxpayer who donates to designated charities, funds, etc., may be entitled for a deduction.
Your interest income from a fixed deposit is deductible under Section 80TTB if you are a resident senior citizen who is over 60.
Taxpayers can claim deductions from the income tax department, which lower their taxable income if they make certain investments or make eligible expenditures allowed under Chapter VI A. For example, 80C allows a deduction for investments made in PPF, EPF, LIC premiums, Equity linked savings schemes, home loan principal payments, stamp duty and registration charges for property purchases, Sukanya Samriddhi Yojana (SSY), National saving certificate (NSC), Senior citizen savings scheme (SCSS), ULIP, tax-saving FD for five years, Infrastructure bonds, and so on.
Yes, you can deduct the rent you paid under section 80GG if you do not receive HRA as part of your pay. Nonetheless, the annual deduction cap of ₹ 60,000 is permitted.
Rent paid by self-employed people with income other than salary or even if your pay does not contain the HRA component can be deducted under 80GG. To be eligible for an 80GG deduction, you must not own any residential property in the area where you now reside.
According to notifications from the federal government, 80CCD permits a deduction for payments made to national pension plans. Contributions from the company, employees, or voluntary self-contributions are all eligible for the deduction. The maximum deduction permitted under section 80C is ₹ 1.5 lakh overall, with an extra ₹ 50,000 deduction under section 80CCD(1B) for contributions made to the Atal Pension Yojana or NPS.
According to a UIDAI circular dated April 28, 2017, "It is informed that the Aadhaar holder's Name, Address, Gender, Photo, and Date of Birth information are carried in the downloaded Aadhaar (e-Aadhaar) in a format identical to that of the printed Aadhaar letter. The dates of Aadhaar production and download are also included in the downloaded Aadhaar. In compliance with the IT Act, 2000, which permits the legal recognition of electronic documents with a digital signature, the downloaded Aadhaar (e-Aadhaar) is a document that UIDAI has digitally signed.
