Income Tax department allows a number of deductions from your Income that eventually lead to considerable amount of tax savings when you are filing returns. The main deductions allowed are mentioned under chapter VI A and deal with section 80C to 80U. In this article we will discuss the various deductions section wise discussing the details and eligibility under each.
Section 80C: Investments and Expenses
Premium paid towards Life insurance Policy, ULIPs, contribution to PPF, National Savings certificate, housing loan principal repayment, ELSS Mutual funds, tuition fees, certain Fixed deposit schemes with lock-in period of 5 years, Post office time deposits and stamp duty paper and registration charges are covered under section 80 C. The maximum amount that can be claimed under this section is Rs. 150,000.
Section 80CCC & 80CCD: Pension Scheme
Contributions made towards Pension plans for self or dependants including spouse and children are covered under 80CCC. Total exemption under section 80C and 80CCC cannot exceed 150,000. Section 80CCD (1) covers contributions made to the new Employee’s Central Government Pension scheme. In case of salaried employees the deduction allowed is 10% of the salary. Salary here means Salary for the financial year plus dearness allowance and excludes other perquisites and allowances. Non employees can claim up to 20% of the gross total income in the financial year. Maximum exemption limit under this section is Rs. 50,000 which is over and above the Rs. 150,000 ceiling under section 80C and 80CCC. Let us now move to section 80CCD(2) which covers employer’s contribution to NPS and maximum deduction allowed is 10% of the salary of individual.
Section 80D- Medical Insurance
Any premium paid towards the health insurance can be claimed under this section with upper limit of Rs. 25000. For senior citizens this limit is Rs. 30,000. For senior citizens who are above 80 years of age and not eligible for medical insurance, deduction of Rs. 30,000 is allowed towards medical expenditure. Preventive health checkups to the extent of Rs. 5000 can also be claimed within the upper ceiling specified.
Section 80DD- Rehabilitation of Handicapped dependant relative
This section allows deduction on account of medical treatments of the dependants to the extent of Rs. 75,000 in case of 40% disability whereas over and above 40%, Rs. 125,000 is allowed as deduction. However, for claiming this deduction under section 80DD, form no. 10-IA is to be submitted along with returns or to employer who is deducting tax at source. This form acts as a certificate of disability and is to be filled and signed by a medical practitioner.
Section 80DDB: Medical Expenditure on self or dependants
This section covers expenses incurred towards certain specific ailments like dementia, Motor neuron disease, malignant cancers, chronic renal failure, hemophilia, Thalassaemia, AIDS etc. Individual under 60 years can claim up to Rs. 40,000 under this section whereas it is Rs. 60,000 for senior citizens and Rs. 80,000 for very senior citizens who are above 80 years old.
Section 80E: Education Loan
If you have availed education loan for higher studies for yourself, spouse or dependants then you are eligible to claim deduction under this section towards payment of interest. There is no upper limit for interest that can be claimed under this section but the deductions are available only for 8 years.
Section 80EE: Additional Interest exemption on Home Loans
First time home buyers can avail additional deduction of up to Rs. 50,000 under this section if the loan was sanctioned in FY 2016-17 and the total amount is less than Rs. 35 lakhs. One more condition for availing this deduction is that the total value of the house should not exceed Rs. 50 lacs.
Section 80G: Donations
Under Income tax Act, donations to certain specified funds and charitable institutions can be claimed as deduction under section 80G. If the deduction is made in cash then maximum amount allowed as deduction is only Rs. 10,000. On making the donation, the institute to whom the donation has been made would give tax payer a receipt and certificate certifying that deduction is available under section 80G.
Section 80GG: House Rent
This deduction is available for tax payers who neither receive HRA nor own a residential property. Maximum amount that can be claimed is Rs. 60,000 or rent paid minus 10% of the adjusted total income or 25%of the total income whichever is less.
Section 80TTA: Interest on deposits in Savings Account
This section provides deduction on account of interest earned on savings account. First of all the tax payer has to show such interest income under the head “Income from other sources” and then show it as deduction under section 80TTA to the extent of Rs. 10,000.
Section 80U: Employee suffering from physical disability
This section deals with expenses towards treatment of employee or his dependants who are physically and mentally challenged. Deduction is allowed to the extent of Rs. 75,000 in case of 40% disability whereas over and above 40%, Rs. 125,000 is allowed as deduction. However, for claiming this deduction under section 80U, form no. 10-IA is to be submitted along with returns or to employer who is deducting tax at source duly filled and signed by the specialist doctor concerned.
Section 24: Interest Levied on home loan
Rs. 2 lakhs is allowed as deduction towards repayment of home loan interest in case of self occupied house. Entire interest is allowed to the extent of rent in case such property is let out.
Section 87A: Rebate
This section allows for rebate on Income tax to the extent of Rs. 5000 or Income tax payable whichever is less, in case of individuals whose total income for the financial year does not exceed Rs.5 lakhs.
These were some important deductions and rebates that can help a tax payer save taxes. On letzbank we have tie up with Clear tax. Visit us today and make use of the super convenient platform of clear tax to file your returns this year!