Deductions on Section 80C, 80CCC & 80CCD
Deductions on Section 80C, 80CCC, 80CCD & other 80 Deductions
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 an HUF.
A maximum of Rs 1, 50,000 can be claimed for the financial year 2016-17. The limit for the financial year 2017-18 is also Rs 1, 50,000.
If you have paid excess taxes, but have invested in LIC, PPF, Mediclaim, incurred towards tuition fees etc., you can file your Income Tax Return and get a refund.
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. nb
Section 80CCD: Deduction for Contribution to Pension Account
Employee’s contribution – Section 80CCD (1) 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 10% of gross total income (in case the taxpayer being self-employed) or Rs 1, 50,000, whichever is less.
From FY 2017-18 – In the case of a self-employed individual, maximum deduction allowed is 20% of gross salary instead of 10% (earlier subject to a maximum of Rs1, 50,000).
However, the combined maximum limit for section 80C, 80CCC, and sec 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. And 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.
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.
Deduction available is the minimum of:
- Rent paid minus 10% of total income
- Rs 5000/- per month
- 25% of total income
For the financial year 2016-17 – Deduction calculation 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
For Financial Year 2013-14 and Financial Year 2014-15
This section provides a deduction on the home loan interest paid. The deducation 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 has to be sanctioned between 01.04.2013 to 31.03.2014. The aggregate deduction allowed under this section cannot exceed Rs 1,00,000 and is allowed for financial years 2013-14 & 2014-15 (Assessment year 2014-15 and 2015-16).
This deduction is not available for the financial year 2015-16 (Assessment year 2016-17).
For Financial Year 2016-17:
This section was revived in Budget 2016 and is applicable starting 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 01.04.2016 to 31.03.2017.
Under 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.
If you’re claiming this deduction in FY 2016-17, then you can continue to claim this deduction till the loan is repaid.
For Financial Year 2017-18:
This deduction is not available for the running FY 2017-18.
Deductions on Rajiv Gandhi Equity Saving Scheme (RGESS)
Section 80CCG: Rajiv Gandhi Equity Saving Scheme (RGESS)
The Rajiv Gandhi Equity Saving Scheme (RGESS) was launched after the 2012 Budget. Investors whose gross total income is less than Rs. 12 lakhs can invest in this scheme. Upon fulfillment of conditions laid down in the section, the deduction is lower of, 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 April 1, 2017. Therefore, no deduction under section 80CCG will be allowed from AY 2018-19.
However, if you have invested in the RGESS scheme in FY 2016-17 (AY 2017-18), then you can claim deduction under Section 80CCG until AY 2019-20.
Deductions on Medical Insurance
Section 80D: Deduction for premium paid for Medical Insurance
Deduction is available up to Rs. 25,000/- to a taxpayer for insurance of self, spouse and dependent children. If individual or spouse is more than 60 years old the deduction available is Rs 30,000. An additional deduction for insurance of parents (father or mother or both) is available to the extent of Rs. 25,000/– if less than 60 years old and Rs 30,000 if parents are more than 60 years old. For uninsured super senior citizens (more than 80 years old) medical expenditure incurred up to Rs 30,000 shall be allowed as a deduction under section 80D. Therefore, the maximum deduction available under this section is to the extent of Rs. 60,000/-. (From AY 2016-17, within the existing limit a deduction of up to Rs. 5,000 for preventive health check-up is available).
Deduction under the above section is available to an individual or a HUF.
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.A certificate of disability is required from prescribed medical authority.
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.
- Certificate can be taken from a Specialist as specified.
- Patients getting treated in a private hospital are not required to take the certificate from a government hospital.
- Patients receiving treatment in a government hospital have to take certificate from any specialist working full-time in that hospital. Such specialist must have a post-graduate degree in General or Internal Medicine or any equivalent degree, which is recognised by the Medical Council of India.
- Certificate in Form 10-I A is required. The certificate must have – name and age of the patient, name of the disease or ailment, name, address, registration number and the qualification of the specialist issuing the prescription. If the patient is receiving the treatment in a Government hospital, it should also have name and address of the Government hospital.
For financial year 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 deduction Rs. 40,000/- or the amount actually paid, whichever is less is available for expenditure actually incurred by resident taxpayer 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 which was earlier required to be furnished by the taxpayer from any Registered Doctor, is no longer required.
In case of senior citizen the deduction can be claimed up to Rs 60,000 or amount actually paid, whichever is less.
For very senior citizens Rs 80,000 is the maximum deduction that can be claimed.
Deductions for Person suffering from Physical Disability
Section 80U: Deduction for Person suffering from Physical Disability
Deduction of Rs. 75,000/- 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. Certificate should be obtained from a Govt. Doctor. The relevant rule is Rule 11A. This is a fixed deduction and not based on bills or expenses.
For financial year 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 Sec. 80G are eligible for deduction up to either 100% or 50% with or without restriction as provided in Sec. 80G. 80G deduction not applicable in case donation is done in form of cash for amount over Rs 10,000.
From Financial Year 2017-18 onwards – Any donations made in cash exceeding Rs 2000 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.
Political party means any political party registered under section 29A of the Representation of the People Act. Contribution is defined as per section 293A of the Companies Act, 1956.
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.
Political party means any political party registered under section 29A of the Representation of the People Act.
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.
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