Navigating the maze that is personal finance

Friday, 6 January 2017

Income Tax Deductions Under Section 80C and other sections - All That You Need To Know

While calculating my income tax for the year I knew the major sections under which I could reduce my liability. I thought of prodding further and was pleasantly surprised to find that there are a number of conditions under which deductions can be claimed. I am sharing with you a comprehensive list of income tax deductions under section 80C and others.

Income Tax deductions under section 80C
Total deduction of  upto Rs. 1.5 lakh is allowed under this section. The section includes contributions to:
  • Public Provident Fund (PPF). You can find all about PPF in my earlier blog post. 
  • Employee Provident Fund (EPF) employee contribution. You can find all you need to know about EPF in my earlier blog.
  • National Pension Scheme (NPS)
  • Home loan principal amount
  • Sukanya Samridhi Yojana (SSY or SSA). All you need to know about SSY can be found in my blog post.
  • Equity Linked Saving Scheme (ELSS)
  • Life Insurance premium
  • Children's tuition fee for up to two children
  • Unit Linked Insurance Plan (ULIP)
  • National Saving Certificate (NSC)
  • Sum paid to purchase deferred annuity
  • Five year deposit scheme Senior Citizens savings scheme
  • Subscription to notified securities/notified deposits scheme
  • Contribution to notified Pension Fund set up by Mutual Fund or UTI.
  • Subscription to Home Loan Account Scheme of the National Housing Bank
  • Subscription to deposit scheme of a public sector or company engaged in providing housing finance
  • Contribution to notified annuity Plan of LIC
  • Subscription to equity shares/ debentures of an approved eligible issue
  • Subscription to notified bonds of NABARD

Income Tax deductions under section 80CCC
  • Premium paid for LIC or other insurance. If surrendered before maturity the surrender value is taxable in the of receipt.

Income Tax deductions under section 80CCD
  • Deduction for self contribution to NPS
  • Section 80CCD(1B) 
    • A new section 80CCD(1B) has been introduced for additional deduction for amount deposited by a taxpayer to their NPS account . 
    • Contributions to Atal Pension Yojana are also eligible. Deduction is allowed on contribution up to Rs 50,000.
  • Section 80CCD(2)Deduction is allowed for employer's contribution to employee’s pension account up to 10% of the salary of the employee. There is no monetary ceiling on this deduction.

Income Tax deductions under section 80CCF
  • Infra bonds as notified by the government from time to time - maximum up to  Rs. 20,000/-

Income Tax deductions under section 80CCG
  • To avail deduction under this section the gross salary should less than be 12 lacs. Deductions under this section are made for contributions to Rajiv Gandhi Equity Savings Scheme (RGESS).
  • A deduction of Rs. 25000 or 50% of the money invested in equity whichever is less is allowed under the section.

Income Tax deductions under section 80D
  • Health insurance for self and/or family up to Rs.15,000 and Rs. 20,000 if tax payer above 60.
  • An additional deduction of Rs. 15000 is allowed for parents if they are less than 60 years of age and Rs. 20,000 if more than 60 years.

Income Tax deductions under section 80DD
  • Disability treatment of self/dependant up to Rs. 75,000 in mild (<40%) to moderate disability (>40% <80%) and Rs. 1.5 lakhs in case of severe disability ( >80%).
  • Also insurance policy premium paid towards such person is deductible under this section.

Income Tax deductions under section 80DDB
  • This section allows deductions against treatment taken towards certain notified diseases, of a sum up to Rs.40,000 if the taxpayer is less than 60 years, up to R. 60,000 for a senior citizen and up to Rs. 80,000 for a very senior citizen (>80years).

Income Tax deductions under section 80E
  • You can get a deduction on the amount of education loan taken for pursuit of higher studies for self or children . It is allowed for a maximum of 8 years or till the interest is paid which ever is earlier.

Income Tax deductions under section 80EE
  • Introduced last year, this deduction id for first time home owners . 
  • This section allows an additional Rs. 50,000 deduction where the value of the property is 50 lakh or less and the loan taken is less than 35 lakhs sanctioned between fiscal year 2016-17.

Income Tax deductions under section 80G
  • The deductions allowed under this section are the donations made to charities or to a social cause subject with proof of payment.

Income Tax deductions under section 80 GG
  • The section allows deduction for people who are not getting HRA as a part of their salary.
  • They should not have any self occupied property in any other place and should be living on rent. the least of the following is allowed:
    • Rent paid
    • 5000 /- per month
    • 25% of total income

Income Tax deductions under section 80GGA
  • Donations made to enhance research or towards National urban poverty eradication fund, by a salaried individuals are eligible for deduction under the section.

Income Tax deductions under section 80TTA
  • This section allows the income from interest from savings bank account up to Rs. 10,000 or actual whichever is less. 
  • It is not applicable on income from FD or RD

Income Tax deductions under sections 80QQB and 80RRB
  • Income for authors by receiving royalty on sales of books (only certain class of books are eligible like literary etc.) or royalty from patents for individual residents up to Rs.300,000 are eligible for deductions under these sections.

Income Tax deductions under section 80G
Donations with 100% deduction without any qualifying limit to
  • 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 FundNational 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 
  • 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 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

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 communityFor repairs or renovation of any notified temple, mosque, gurudwara, church or other place.

Other sections such as 80CCG/80IA/80J/80LA/80P etc are more specialized and would require a professional to guide you.
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