There are various deductions a taxpayer can claim from his total income which would bring down his taxable income and thereby reduce his tax outgo. Discussed in this article are some of the important deductions under Section 80C a taxpayer is eligible to claim.
Section 80C Deductions
|Section 80C||Section 80CCC||Section 80CCD||Section 80 TTA|
|Section 80GG||Section 80E||Section 80EE||Section 80CCG|
|Section 80D||Section 80DD||Section 80DDB||Section 80U|
|Section 80G||Section 80GGB||Section 80GGC||Section 80RRB|
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 file your Income Tax Return, claim these deductions and get a refund of excess taxes paid
Not Enough 80C Deduction in Your Form-16?
If you need help claiming Section 80 deductions like 80C, investments, mediclaim, or calculating HRA to save on taxes, cleartax’s CAs can help you claim a refund (if applicable) and e-file in 48 hours.
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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.
Section 80CCC: 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.
Section 80CCD: Deduction for Contribution to Pension Account
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.
However, the combined maximum limit for section 80C, 80CCC, and 80CCD (1) deduction is Rs 1, 50,000, which can be availed.
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.
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.
Deductions on Interest on Savings Account
Section 80 TTA: 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.
Section 80 TTB: 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.
Deductions on House Rent
Section 80GG: Deduction for House Rent Paid Where HRA is not Received
- 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.
- The taxpayer should not have self-occupied residential property in any other place.
- The taxpayer must be living on rent and paying rent.
- The deduction is available to all individuals
Deduction available is the least of the following
- Rent paid minus 10% of adjusted total income;
- Rs 5,000/- per month;
- 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 ClearTax 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.
Deductions on Education Loan for Higher Studies
Section 80E: 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.
Deduction for First Time Home Owners
Section 80EE: 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.
Deductions on Rajiv Gandhi Equity Saving Scheme (‘RGESS’)
Section 80CCG: 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:
- The assessee should be a new retail investor as per the requirement specified under the notified scheme.
- The investment should be made in such listed investor as per the requirement specified under the notified scheme.
- 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.
Deductions on Medical Insurance
Section 80D: Deduction for 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.
Therefore, the maximum deduction available under this section is to the extent of Rs. 100,000
From FY 2015-16 a cumulative additional deduction of Rs. 5,000 is allowed for preventive health check up to individuals.
Deductions on Medical Expenditure for a Handicapped Relative
Section 80DD: Deduction for Rehabilitation of Handicapped Dependent Relative
This deduction is available to a resident individual or a HUF and is available on:
- 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.
Where disability is 40% or more but less than 80% – fixed deduction of Rs 75,000.
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.
Deductions on Medical Expenditure on Self or Dependent Relative
Section 80DDB: Deduction for Medical Expenditure on Self or Dependent Relative
A claim of Rs. 40,000 or the amount actually paid, whichever is less is available for deduction to a resident individual or HUF. The expense should have been made on self or dependent relative for medical treatment of specified disease or ailment.
From FY 2018-18 onwards, in case of senior citizen or very senior citizen, the deduction can be claimed up to Rs 1,00,000 or amount actually paid, whichever. Earlier, the deduction that could be claimed for a senior citizen and a super senior citizen was Rs 60,000 and Rs 80,000 respectively.
Deductions for Person suffering from Physical Disability
Section 80U: 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.
Deduction for donations towards Social Causes
Section 80G: 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.
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 50% deduction without any qualifying limit
- Jawaharlal Nehru Memorial Fund
- Prime Minister’s Drought Relief Fund
- Indira Gandhi Memorial Trust
- The Rajiv Gandhi Foundation
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 utilised 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.
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 utilised 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 interest of minority community
- For repairs or renovation of any notified temple, mosque, gurudwara, church or other place.
Deductions on Contribution by Companies to Political Parties
Section 80GGB: Deduction on contributions given by companies to Political Parties
Deduction is allowed to an Indian company for amount contributed by it to any political party or an electoral trust. Deduction is allowed for contribution done by any way other than cash.
Deductions on Contribution by Individuals to Political Parties
Section 80GGC: Deduction on contributions given by any person to Political Parties
Deduction under this section, is allowed to a taxpayer except 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. Deduction is allowed for contribution done by any way other than cash.
Deductions on Income by way of Royalty of a Patent
Section 80RRB: 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.
Section 80 Deduction Table
|Section||Deduction on||Allowed Limit (maximum) FY 2018-19|
|Section 80C||– Investment in PPF
– Employee’s share of PF contribution
– Life Insurance Premium payment
– Children’s Tuition Fee
– Principal Repayment of home loan
– Investment in Sukanya Samridhi Account
– 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
|80CC||For amount deposited in annuity plan of LIC or any other insurer for 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
|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
|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%
| – 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
| – 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:
– Individual suffering from a physical disability (including blindness) or mental retardation.
| – 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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