Income Tax Deductions

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  1. Section 80 C (Deductions on Investments)

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.

                Under Section 80 C, a deduction of Rs 1,50,000 can be claim from your total income. In simple terms, you can reduce upto Rs 1,50,000 from your total taxable income through section 80 C. This deduction is allowed to an individual or a HUF. A maximum of Rs 1,50,000 can be claimed for the FY 2020-21.

                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 80 C, you can file your Income Tax Return claiming these deductions and get a refund of excess taxes paid.

2. Section 80 CCC (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 (23 AAB). 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 80 CCD (Deduction for contribution to Pension Account)

(a) Employer Contribution – Section 80 CCD (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.

                (b) Deduction for Self Contribution to NPS – Section 80 CCD (1B) – A new section 80 CCO (1B) has been introduced for an additional deduction of upto Rs 50,000 for the amount deposited by a taxpayer to their NPS account contribution to Atal Pension Yojana are also eligible.

                (c) Employers Contribution to NPS – Section 80 CCD (2) – Additional deduction is allowed for employer contribution to employee’s pension account of up to 10 % of the salary of the employee. These is no monetary ceiling on this deduction.

4. Section 80 TTA (Deduction from Gross Total Income for Interest on Saving 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 80 TTA deduction is not available on interest income from fixed deposits, recurring deposits or interest income from corporate bonds.

5. Section 80 GG (Deduction from Home 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 individual

Deduction available is the least of the following:-

a) Rent paid minus 10% of adjusted total income

b) Rs 5000/per month

c) 25% of adjusted total income

6. Section 80 E (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 08 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 80 D (Deduction for the premium paid for Medical Insurance)

                Deduction under this section is available to an individual or a HUF.  A deduction of RS. 25000 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. 25000 if they are less than 60 years of age or Rs 50,000 if parents are more than 60 years of age. In case, a taxpayers age and parent age is 60 years or above the maximum deduction available under this section is to the extent of Rs. 1,00,000.

8. Section 80DD (Deduction for Rehabilitation of Handicapped Dependent Relative)

This deducting is available to a resident individual or a HUF and is available on

a) Expenditure incurred on medical treatment (individual 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’s is severe disability (80% or more) – fixed deduction of Rs. 1,25,000.

To claim this deduction a certificate of disability is required from prescribed medical authority.

9. Section 80 DDB (Deduction for Medical Expenditure on Self or Dependent Relative)

This deduction is available to 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 this dependents . In case the individual on behalf of whom such expenses are incurred is a senior citizen, a deduction upto Rs 1 Lacs can be claimed by the individual.

                Also remember that you need to get a prescription for such medical treatment from the concerned specialist in order to be able to claim such deduction.

10. Section 80 U (Deduction for person suffering from physical disability)

                A deduction of Rs 75,000 is available to a resident individual who suffers from physical disability (including blindness) or mental retardation. In case of severe disability deduction of Rs 1,25,000 can be claimed.

11. Section 80 G (Deduction for donations towards Social Causes)

                The various donations specified in section under 80 G are eligible for deduction upto either 100% or 50% with or without restrictions as provided in section 80 G. From FY 17-18 any donations made in cash exceeding Rs 2000 will not be allowed as deductions.

a) Donations with 100 % deduction without any qualifying limit

i) PM National Relief Fund

ii) National defence fund

iii) National Foundation for Communal Harmony

iv) Zila Saksharta Samiti Under Collector

v) National Blood Transfusion Council

vi) National Sports Fund

vii) National Cultural Fund

viii) Clean Ganga Fund

ix) Swachh Bharat Kosh

b) Donations with 50% deduction

i) PM Drought Relief Fund

ii) Indira Gandhi Memorial Trust

iii) The Rajiv Gandhi Foundation Trust

iv) Jawaharlal Nehru Memorial Fund

12. Section 80 GGC (Deduction on Contribution 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.

13. Section 80 RRB (Deduction with respect to any income by way of Royality of a Patent)

                Deduction for any income by way of royality for a patent registered on or after 01.04.2003 under the patents Act 1970 shall be available upto Rs 3 lacs or the income received whichever is less. The Taxpayer must be an individual resident of India who is a patenter. The taxpayer must be an individual resident of India who is a patenter. The taxpayer must furnish a certificate in the prescribed form duty signed by the prescribed authority.

14. Section 80 TTB (Deduction of Interest on Deposits for Senior Citizens)

                A new section 80 TTB has been inserted vide Budget 2018  wherein, a deduction is respect of interest income from the deposits held by senior citizens will be allowed as a deduction from the total income. The limit for this deduction is Rs. 50,000. whichever is less. The Taxpayer must be an individual resident of India who is a patenter. The taxpayer must be an individual resident of India who is a patenter. The taxpayer must furnish a certificate in the prescribed form duty signed by the prescribed authority.

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