DEDUCTIONS TO BE MADE IN COMPUTING TOTAL INCOME In computing the total income

of an assessee, deductions specified under sections 80C to 80U will be allowed from his Gross
Total Income. However, the aggregate amount of deductions under this chapter shall not, in any
case, exceed the gross total income of the assessee. Total Income = Gross Total Income –
Deductions under sections 80C to 80U. These deductions are divided into two categories. They
are: [Link] in respect of certain payments [Link] in respect of certain incomes.
Deductions in respect of certain payments 1. SECTION 80C DEDUCTIONS ON
INVESTMENTS You can claim a deduction of Rs 1.5 lakh your total income under section 80C.
In simple terms, you can reduce up to Rs 1,50,000 from your total taxable income, and it is
available for individuals and HUFs. If you have paid excess taxes, but have invested in LIC,
PPF, Mediclaim, paid your children’s tuition fees etc. and have missed claiming a deduction for
the same, you can do so while filing your Income Tax Return. The Income Tax Department will
refund the excess money to your bank account. (1) 80 C Deduction in respect of investment in
LIP provided funds, NSC etc.:- This deduction is provided to individual and HUF assesses
maximum upto Rs. 1.5 Lac on their investments following items will be entitled for the
deductions under this section:- (i) LIP of spouse and children [upto 20% of sum assured] (ii)
Employees contribution in statutory PF.(SPF) (iii) Employees contribution in Recognized PF
(RPF) (iv) Deposit in Public provided fund.(PPF) (v) Exempted contribution Super annulations
fund.(SAF) (vi) NSC’s and accrued interest or it. (vii) Contribution to “ULIP” of UTI (viii) Amount
deposited in Public sector finance companies or housing Board. (ix) Payment of principle value
of housing loan. (x) Investment in shares or debentures of infrastructure companies. (xi) Amount
deposited in National Housing Bank. (xii) Education expenses paid for children. (xiii) Amount
deposited in fixed deposit for a period of 5 years or more in a scheduled bank. (xiv) Contribution
to employees insurance scheme of central government by an employee of central government.
(xv) Investment in Notified Bonds of NABARD (xvi) Senior Citizen saving Scheme 2. SECTION
80CCC – INSURANCE PREMIUM DEDUCTION FOR PREMIUM PAID FOR ANNUITY PLAN
OF LIC OR OTHER INSURER Section 80CCC 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. 3. SECTION 80CCD – PENSION
CONTRIBUTION DEDUCTION FOR CONTRIBUTION TO PENSION ACCOUNT a. Employee’s
contribution under Section 80CCD (1) You can claim this if you deposit in your pension account.
Maximum deduction you can avail 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 1.5 lakh –
whichever is less. b. 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. c. Employer’s contribution to NPS – Section
80CCD (2) Claim additional deduction on your contribution to employee’s pension account for
up to 10% of your salary. There is no monetary ceiling on this deduction. 4. SECTION 80 TTA –
INTEREST ON SAVINGS ACCOUNT DEDUCTION FROM GROSS TOTAL INCOME FOR
INTEREST ON SAVINGS BANK ACCOUNT If you are an individual or an HUF, you may claim a
deduction of maximum Rs 10,000 against interest income from your savings account with a
bank, co-operative society, or post office. Do include the interest from savings bank account in
other income. Section 80TTA deduction is not available on interest income from fixed deposits,
recurring deposits, or interest income from corporate bonds. 5. SECTION 80GG – HOUSE
RENT PAID DEDUCTION FOR HOUSE RENT PAID WHERE HRA IS NOT RECEIVED a.
Section 80GG 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 individuals
Deduction available is the least of the following: a. Rent paid minus 10% of adjusted total
income b. Rs 5,000/- per month c. 25% of adjusted total income* *Adjusted Gross Total Income
is arrived at after adjusting the Gross Total Income for certain deductions, exempt income,
long-term capital gains and income related 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.
So, 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. 6. SECTION 80E –
INTEREST ON EDUCATION LOAN DEDUCTION FOR INTEREST ON EDUCATION LOAN
FOR HIGHER STUDIES A deduction is allowed to an individual for interest on loans 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. 80E 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. 7. SECTION 80EE – INTEREST ON HOME LOAN 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 section
80EE is available only to home-owners (individuals) having only one house property on the date
of sanction of the loan. The value of the property must be less than Rs 50 lakh and the home
loan must be less than Rs 35 lakh. The loan taken from a financial institution must have been
sanctioned between 1 April 2016 and 31 March 2017. There is an additional deduction of Rs
50,000 available on your home loan interest on top of deduction of Rs 2 lakh (on interest
component of home loan EMI) allowed under section 24. 8. SECTION 80CCG – RGESS RAJIV
GANDHI EQUITY SAVING SCHEME (RGESS) The deduction under this section 80CCG is
available to a resident individual, whose gross total income is less than Rs.12 lakh. To avail the
benefits under this section the following conditions should be met: a. The assessee should be a
new retail investor as per the requirement specified under the notified scheme. b. The
investment should be made in such listed investor as per the requirement specified under the
notified scheme. c. 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.
9. SECTION 80D – MEDICAL INSURANCE DEDUCTION FOR THE PREMIUM PAID FOR
MEDICAL INSURANCE You (as an individual or HUF) can claim a deduction of Rs.25,000
under section 80D on insurance for self, spouse and dependent children. An additional
deduction for insurance of parents is available up to Rs 25,000, if they are less than 60 years of
age. If the parents are aged above 60, the deduction amount is Rs 50,000, which has been
increased in Budget 2018 from Rs 30,000. In case, both taxpayer and parent(s) are 60 years or
above, the maximum deduction available under this section is up to Rs.1 lakh. Example:
Rohan’s age is 65 and his father’s age is 90. In this case, the maximum deduction Rohan can
claim under section 80D is Rs. 100,000. From FY 2015-16 a cumulative additional deduction of
Rs. 5,000 is allowed for preventive health check. 10. SECTION 80DD – DISABLED
DEPENDENT DEDUCTION FOR REHABILITATION OF HANDICAPPED DEPENDENT
RELATIVE Section 80DD deduction is available to a resident individual or a HUF and is
available on: a. Expenditure incurred on medical treatment (including nursing), training and
rehabilitation of handicapped dependent relative b. Payment or deposit to specified scheme for
maintenance of handicapped dependent relative. i. Where disability is 40% or more but less
than 80% – fixed deduction of Rs 75,000. ii. 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. 11. SECTION
80DDB – MEDICAL EXPENDITURE Deduction for Medical Expenditure on Self or Dependent
Relative a. For individuals and HUFs below age 60 A deduction up to Rs.40,000 is available to a
resident individual or a HUF. It is available with respect to any expense incurred towards
treatment of specified medical diseases or ailments for himself or any of his dependents. For an
HUF, such a deduction is available with respect to medical expenses incurred towards these
prescribed ailments for any of the HUF members. b. For senior citizens and super senior
citizens In case the individual on behalf of whom such expenses are incurred is a senior citizen,
the individual or HUF taxpayer can claim a deduction up to Rs 1 lakh. Until FY 2017-18, the
deduction that could be claimed for a senior citizen and a super senior citizen was Rs 60,000
and Rs 80,000 respectively. This has now become a common deduction available upto Rs 1
lakh for all senior citizens (including super senior citizens) unlike earlier. c. For reimbursement
claims Any reimbursement of medical expenses by an insurer or employer shall be reduced
from the quantum of deduction the taxpayer can claim under this section. Also remember that
you need to get a prescription for such medical treatment from the concerned specialist in order
to claim such deduction. Read our detailed article on Section 80DDB. 12. SECTION 80U –
PHYSICAL DISABILITY 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, one can claim a deduction of Rs
1,25,000. From FY 2015-16 – Section 80U 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. 13. SECTION 80G – DONATIONS
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. 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 for 80G
deduction. a. 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)
b. 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 c. 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 utilized 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 d. 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 utilized 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 the interest of minority community For
repairs or renovation of any notified temple, mosque, gurudwara, church or other places. 14.
SECTION 80GGB – COMPANY CONTRIBUTION DEDUCTION ON CONTRIBUTIONS GIVEN
BY COMPANIES TO POLITICAL PARTIES Section 80GGB deduction is allowed to an Indian
company for the amount contributed by it to any political party or an electoral trust. Deduction is
allowed for contribution done by any way other than cash. 15. SECTION 80GGC –
CONTRIBUTION TO POLITICAL PARTIES Deduction on contributions given by any person to
Political Parties Deduction under section 80GGC is allowed to an individual taxpayer for any
amount contributed to a political party or an electoral trust. It is not available for companies,
local authorities and an artificial juridical person wholly or partly funded by the government. You
can avail this deduction only if you pay by any way other than cash. 16. SECTION 80RRB –
ROYALTY OF A PATENT DEDUCTION WITH RESPECT TO ANY INCOME BY WAY OF
ROYALTY OF A PATENT 80RRB Deduction for any income by way of royalty for a patent,
registered on or after 1 April 2003 under the Patents Act 1970, shall be available for up to Rs.3
lakh or the income received, whichever is less. The taxpayer must be an individual patentee and
an Indian resident. The taxpayer must furnish a certificate in the prescribed form duly signed by
the prescribed authority. 17. SECTION 80 TTB – INTEREST INCOME DEDUCTION OF
INTEREST ON DEPOSITS FOR SENIOR CITIZENS A new section 80TTB has been inserted
vide Budget 2018 in which deductions with respect to interest income from deposits held by
senior citizens will be allowed. The limit for this deduction is Rs.50,000. No further 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 TDS on interest income payable to
senior citizens. The earlier limit was Rs 10,000, which was increased to Rs 50,000 as per the
latest Budget. 18. SECTION 80GG DEDUCTION IN RESPECT OF RENT PAID Persons
Covered Any assessee other than assessee having income falling u/s 10(13A) (i.e., House Rent
Allowance). Eligible Amount Any expenditure incurred by him on payment of rent (by whatever
name called) in respect of any furnished or unfurnished accommodation in excess of 10% of his
total income, before making any deduction under this section. Extent of Deduction- Lower of (a)
Rs. 2,000 per month, or (b) 25% of the total income (after allowing all deductions except under
this section), or (c) Expenditure incurred in excess of 10% of the total income (after allowing all
deductions except under this section). 19. SECTION 80GGA DEDUCTION IN RESPECT OF
CERTAIN DONATIONS FOR SCIENTIFIC RESEARCH OR RURAL DEVELOPMENT Persons
Covered- All assessees: Eligible [Link] sum paid to a scientific research association or
to a university, college, or other institution to be used for scientific research [approved u/s. 35(1)
(ii)]; [Link] sum paid to a university, college, or other institution to be used for research in social
science or statistical research [approved u/s. 35(1)(iii)]; [Link] sum paid to an association or
institution for any programme of rural development [approved u/s. 35CCA]; [Link] sum paid to
an association or institution for training of persons for implementing rural development
programmes [approved u/s. 35CCA]; [Link] sum paid to a public sector company or local
authority or to an association or institution approved by National Committee for carrying out any
eligible project or scheme [approved u/s. 35AC]; [Link] sum paid to a rural developemt fund set
up and notified by Central Government for the purposes of Section 35CCA(1)(a); [Link] sum
paid to a National Urban Poverty Eradication Fund set up and notified by Central Government
for the purposes of Section 35CCA(1)(d). Extent of Deduction-100% of the amount paid as
donation/contribution.