Income Tax Deductions

Deduction in respect of investment in

specified assets [Section 80C]

Deduction in respect of investment/contributions

• Section 80C provides for a deduction from the Gross Total Income of
savings in specified modes of investments. The deduction under section
80C is available only to an individual or HUF. The maximum
permissible deduction under section 80C is ` 1,50,000. The following
are the investments/contributions eligible for deduction.
• Contribution in Unit-linked Insurance Plan 1971
• Contribution in Unit-linked Insurance Plan of LIC Mutual Fund
• Premium paid in respect of Life Insurance policy- Premium paid on insurance on
the life of the individual, spouse or any child (minor or major) and in the case of
HUF, any member thereof
 • Premium paid in respect of a contract for deferred annuity
• Premium paid to effect and keep in force a contract for a deferred
annuity on the life of the individual and/or his or her spouse or any
child, provided such contract does not contain any provision for the
exercise by the insured of an option to receive cash payments in lieu of
the payment of the annuity.
• It is pertinent to note here that a contract for a deferred annuity need
not necessarily be with an insurance company. It follows therefore that
such a contract can be entered into with any person.
 Contribution to SPF/PPF/RPF
• Contributions to any provident fund to which the Provident Funds Act,
1925 applies and recognized provident fund qualifies for deduction
under section 80C.
• Contribution made to any Provident Fund set up by the Central
Government and notified in his behalf (i.e., the Public Provident Fund
established under the Public Provident Fund Scheme, 1968) also
qualifies for deduction under section 80C. Such contribution can be
made in the name of the individual, his spouse and any child of the
individual; and any member of the family, in case of a HUF. The
maximum limit for deposit in PPF is ` 1,50,000 in a year.
 Contribution to approved superannuation Fund
Contribution by an employee to an approved superannuation fund qualifies for
deduction under section 80C.
• Any sum paid or deposited in Sukanya Samridhi Account
• Subscription to any such security of the Central Government or any such deposit scheme
as the Central Government as may notify in the Official Gazette. Accordingly, Sukanya
Samriddhi Scheme has been notified to provide that any sum paid or deposited during the
previous year in the said Scheme, by an individual in the name of –
• any girl child of the individual; or
• any girl child for whom such individual is the legal guardian would be eligible for
deduction under section 80C.
 • Subscription to National Savings Certificates VIII
Subscription to any Savings Certificates under the Government Savings Certificates
Act, 1959 notified by the Central Government in the Official Gazette (i.e. National
Savings Certificate (VIII Issue)
• Contribution to approved annuity plan of LIC
Contributions to approved annuity plans of LIC (New Jeevan Dhara and New
Jeevan Akshay, New Jeevan Dhara I and New Jeevan Akshay I, II and III) or any other
insurer (Tata AIG Easy Retire Annuity Plan of Tata AIG Life Insurance Company Ltd.)
as the Central Government may, by notification in the Official Gazette, specify in
this behalf.
 • Subscription towards notified units of mutual fund or UTI
• Subscription to any units of any mutual fund or from the
Administrator or the specified company under any plan formulated in
accordance with such scheme notified by the Central Government
• Contribution to notified pension fund set up by mutual fund or UTI
Contribution by an individual to a pension fund set up by any Mutual
Fund or by the Administrator or the specified company as the Central
Government may specify.
• Payment of tuition fees to any university, college, school or other
educational institution within India for full-time education for
maximum 2 children
• Repayment of housing loan including stamp duty, registration fee
and other expenses
• Subscription to certain equity shares or debentures
• Subscription to certain units of mutual fund
• Investment in five year term deposit
• Investment in term deposit
• for a period of not less than five years with a scheduled bank; and
• which is in accordance with a scheme framed and notified by the
Central Government in the Official Gazette
• qualifies as an eligible investment for availing deduction under
section 80C.
• Subscription to notified bonds issued by NABARD- Subscription to
such bonds issued by NABARD (as the Central Government may notify
in the Official Gazette) qualifies for deduction under section 80C.
• Investment in five year Post Office time deposit
• Investment in five year time deposit in an account under Post Office
Time Deposit Rules, 1981 qualifies for deduction under section 80C
• Deposit in Senior Citizens Savings Scheme Rules, 2004
• Deposit in an account under the Senior Citizens Savings Scheme Rules,
2004 qualifies for deduction under section 80C
Deduction in respect of contribution to certain pension funds [Section 80CCC]

• Eligible assessee: Where an assessee, being an individual, has in the

previous year paid or deposited any amount out of his income
chargeable to tax to effect or keep in force a contract for any annuity
plan of LIC of India or any other insurer for receiving pension from the
fund set up by LIC or such other insurer, he shall be allowed a
deduction in the computation of his total income.
• For this purpose, the interest or bonus accrued or credited to the
assessee’s account shall not be reckoned as contribution.
Deduction in respect of contribution to pension scheme notified by the Central
Government [Section 80CCD]

• Pension Scheme of Central Government: As per the “Restructured

Defined Contribution Pension System” applicable to new entrants to
Government service, it is mandatory for persons entering the service
of the Central Government on or after 1st January, 2004, to
contribute 10% of their salary every month towards their pension
account. A matching contribution is required to be made by the
Government to the said account. The benefit of this scheme is also
available to individuals employed by any other employer as well as to
self-employed individuals.
Deduction in respect of medical insurance premium [Section 80D]

• In case of an Individual
• Deduction in respect of insurance premium paid for family: A
deduction to the extent of ` 25,000 is allowed in respect of the
following payments –
• premium paid to effect or to keep in force an insurance on the health of self,
spouse and dependent children or
• any contribution made to the Central Government Health Scheme or
• such other health scheme as may be notified by the Central Government.
Contributory Health Service Scheme of the Department of Space has been
notified by the Central Government.
• An increased deduction of 50,000 (instead of ` 25,000) shall be
allowed in case any of the persons mentioned above is a i.e., an
individual resident in India of the age of 60 years or more at any time
during the relevant previous year.
• Deduction in respect of payment towards preventive health check-
up: Section 80D provides that deduction to the extent of ` 5,000 shall
be allowed in respect payment made on account of preventive health
check-up of self, spouse, dependent children or parents during the
previous year. However, the said deduction of ` 5,000 is within the
overall limit of ` 25,000 or ` 50,000, specified in (i) and (ii) above.
Mode of payment: For claiming deduction under section 80D, the
payment can be made:

by any mode, including cash, in respect of any sum paid on account of
preventive health check-up;
 by any mode other than cash, in all other cases
 Deduction U/S 80GG
• An individual should reside in a rented property and not own property in
the same city to claim a deduction under Section 80GG. If the employer
provides a Home Rent Allowance (HRA) as part of the monthly salary, an
individual will not be eligible to claim a deduction under this section.
• Section 80GG deduction is applicable to salaried and self-employed
professionals. Thus, if an individual is a business owner, he/she will be
eligible to claim tax deductions under this section. Individuals residing in
their parents' property, which they own, are also eligible to claim
Section 80GG benefits. However, such individuals should sign a rental
agreement with their parents and pay rent to them. The rental amount
paid to their parents will be taxable when they file their ITR.
Eligibility for Claiming Deduction under Section
80GG

• A taxpayer must fulfil the following conditions to claim a deduction under Section
80GG:
• You should have opted to pay tax under the old tax regime (i.e., he should opt to
move out of the applicability of Section 115BAC(1A).
• You have not received HRA from an employer at any time during the year for which
you are claiming 80GG. The HRA component should not form part of your salary to
claim 80GG.
• In case you own any residential property at any place for which your income from
house property is calculated under applicable sections (as a self-occupied property),
no deduction under section 80GG is allowed. In case you own any residential property
at any place for which your income from house property is calculated under
applicable sections (as a self-occupied property), no deduction under section 80GG is
allowed.
• You will be required to file Form 10BA with details of the payment of
rent.
• If your rent amount exceeds Rs.1 lakh per annum, you will have to
submit the PAN card of your property owner to claim the deduction.
• You should not have claimed the HRA at any time during the financial
year. If you have changed jobs and received an HRA deduction from your
previous employment in the financial year, you will be ineligible to claim
a deduction under this section.
• The lowest of these will be considered as the deduction under this
section-
• Rs.5,000 per month or 60,000 per year
• 25% of the total income before allowing deduction for expenditure
under this section
• Actual rent less 10% of income before allowing deduction for
expenditure under this section
 Deduction U/S 80DD
• Deduction under Section 80DD of the income tax act is allowed
to Resident Individuals or HUFs for a dependent-who is differently-
abled and is wholly dependent on the individual (or HUF) for
support & maintenance.
• Deduction is allowed for a dependant of the taxpayer and not the
taxpayer himself.
• The deduction can only be claimed by resident individuals of India.
• The taxpayer is not allowed this deduction if the dependant has
claimed a deduction under section 80U for himself/herself.
• Dependant in case of an individual taxpayer means spouse, children,
parents, brothers & sisters of the taxpayer. In case of a HUF means a
member of the HUF.
• The taxpayer has incurred expenses for medical treatment (including
nursing), training & rehabilitation of the differently-abled dependant
or the taxpayer may have deposited in a scheme of LIC or another
insurer for maintenance of the dependant.
• The disability of the dependant must not be less than 40%.
• Disability is defined under section 2(i) of the Persons of Disabilities
Act, 1995.
What is the Maximum Amount of Deduction
allowed under Section 80DD?

• Fixed amount of deductions are allowed under Section 80DD,

irrespective of the actual expenditure. However, the amount of
deduction depends on the severity of the disability.
• Where the disability is more than 40% and less than 80%: Rs 75,000.
• Where the disability is 80% or more: Rs 1,25,000.
 Deduction U/S 80GG
• Section 80G of the Indian Income Tax Act allows a tax deduction for
contributions to certain relief funds and charitable institutions. The
following taxpayer can claim a deduction under this section:
• Individuals
• Companies
• Firms
• Hindu Undivided Firm (HUF)
• Non-Resident Indian (NRI)
• Any other person
• Section 80G deductions can be claimed by taxpayers when they make
donations through the following modes:
• Cheque
• Demand draft
• Cash (for donations below Rs 2,000)
• Note: In-kind contributions such as food, material, clothes, medicines
etc., and donations of above Rs 2,000 in cash they do not qualify for
deduction under Section 80G. Donations above Rs 2,000 should be
made in any mode other than cash to qualify under Section 80G.
• The various donations specified in Section 80G are eligible for a
deduction of up to 100% or 50% with or without restriction, as
provided in Section 80G.
 List of Donations Eligible for 100% Deduction
without 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 medical relief to the poor
• National Illness Assistance Fund
• National Blood Transfusion Council or 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
• Any trust, institution or fund to which Section 80G(5C) applies for
providing relief to the victims of the earthquake in Gujarat
(contribution made between January 26, 2001, and September 30,
2001)
• Prime Minister’s Armenia Earthquake Relief Fund
• Africa (Public Contributions – India) Fund
• Swachh Bharat Kosh (applicable from FY 2014-15)
• Clean Ganga Fund (applicable from FY 2014-15)
• National Fund for Control of Drug Abuse (applicable from FY 2015-16)
• 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 the earthquake in Gujarat