The Income Tax Department, recognizing the significance of fostering savings and investments, has incorporated a comprehensive set of income tax deductions under Chapter VI A of the Income Tax Act. While deduction under 80C stands out as a widely known provision, several other deductions exist, providing taxpayers with opportunities to strategically reduce their tax liabilities. These deductions under section 80C to 80U serve as powerful incentives, allowing individuals to optimize their financial planning and contribute to the nation's economic growth. In this article, we will present the 80C deduction list as well as discuss in detail the chapter VI A deductions.
Income Tax Deduction under Chapter VIA of Income Tax Act refers to a reduction in the taxable income of an individual or a business entity, which results in a lower tax liability. The Indian Income Tax Act provides for various deductions under sections 80C to 80U, which can be claimed by an individual or a business entity while calculating their taxable income.
Let us take an example of tax saving for individuals with yearly salaries up to 20 lakhs.
| Gross Salary | 2,000,000 |
| Less: | |
| HRA | 200,000 |
| LTA | 40,000 |
| Reimbursements | 24,500 |
| Children education and hostel allowance | 9,600 |
| Standard Deduction | 50,000 |
| Professional Tax | 2400 |
| Taxable Salary Income | |
| Less: Deductions | |
| 80C (Refer Note below) | 150,000 |
| 80D | 50,000 |
| 80E | 22,000 |
| Net Taxable Income | 14,51,500 |
| Tax on the above income | 2,57,868 |
| Rebate u/s 87A | Not applicable |
| Total Tax | 2,57,868 |
| Apart from this, you can also claim these tax deductions if eligible: | |
| Interest on home loan EMIs under Section 24b | -2,00,000 |
| Principal amount of the home loan under section 80EEA | -1,50,000 |
| National Pension Scheme (NPS) investments u/s 80CCD(1B) | -50,000 |
Only eligible taxpayers can claim these deductions in their income tax returns. Such eligible taxpayers have been specified under various sections of the Act. It is pertinent to note that the taxpayers who opt to pay tax under the new tax regime can claim only deductions under sections 80CCD(2) and 80JJAA.
Income tax deduction needs to be claimed at the time of filing your Income Tax Return, and no separate disclosure compliances are required for claiming such deductions. The number of deductions should be reduced from the gross income to reach the taxable amount.
| Sections | Income Tax Deduction for FY 2023-24(AY 2024-25) | Eligible person | Maximum deduction available for FY 2023-24(AY 2024-25) |
|---|---|---|---|
| Section 80C | Investing into very common and popular investment options like LIC, PPF, Sukanya Samriddhi Account, Mutual Funds, FD, child tuition fee, ULIP, etc | Individual Or HUF | Upto Rs 1,50,000 |
| Section 80CCC | Investment in Pension Funds | Individuals | |
| Section 80CCD (1) | Atal Pension Yojana and National Pension Scheme Contribution | Individuals | |
| Section 80CCD(1B) | Atal Pension Yojana and National Pension SchemeContribution (additional deduction) | Individuals | Upto Rs 50,000 |
| Section 80CCD(2) | National Pension SchemeContribution by Employer | Individuals | Amount Contributed or 14% of Basic Salary + Dearness Allowance (in case the employer is Government) 10% of Basic Salary+ Dearness Allowance(in case of any other employer) - Whichever is lower |
| Section 80D | Medical Insurance Premium, preventive health checkup and Medical Expenditure | Individual Or HUF | Upto Rs 1,00,000 |
| Section 80DD | Medical Treatment of a Dependent with Disability | Individual Or HUF | Normal Disability (atleast 40% or more but less than 80%): Rs 75000/- Severe Disability (atleast 80% or more) : Rs 125000/- |
| Section 80DDB | Medical expenditure for treatment of Specified Diseases | Individual Or HUF | Senior Citizens: Upto Rs 1,00,000 Others: Upto Rs 40,000 |
| Section 80E | Interest paid on Loan taken for Higher Education | Individual | No limit (Any amount of interest paid on education loan)upto 8 assessment years |
| Section 80EE | Interest paid on Housing Loan | Individual | Upto Rs 50,000 subject to some conditions |
| Section 80EEA | Interest Paid on Housing Loan | Individual | Upto Rs 1,50,000/- subject to some conditions |
| Section 80EEB | Interest paid on Electric Vehicle Loan | Individual | Upto Rs 1,50,000 subject to some conditions |
| Section 80G | Donation to specified funds/institutions. Institutions | All Assessee (Individual, HUF, Company, etc) | 100% or 50% of the Donated amount or Qualifying limit, Allowed donation in cash upto Rs.2000/- |
| Section 80GG | Income Tax Deduction for House Rent Paid | Individual | Rs. 5000 per month 25% of Adjusted Total Income Rent paid - 10% of Adjusted Total Income - whichever is lower |
| Section 80GGA | Donation to Scientific Research & Rural Development | All assessees except those who have an income (or loss) from a business and/or a profession | 100% of the amount donated. Allowed donations in cash upto Rs.10,000/- |
| Section 80GGB | Contribution to Political Parties | Companies | 100% of the amount contributed No deduction available for the contribution made in cash |
| Section 80GGC | Individuals on contribution to Political Parties | Individual HUF AOP BOI Firm | 100% of the amount contributed. No deduction available for the contribution made in cash |
| Section 80RRB | Royalty on Patents | Individuals (Indian citizen or foreign citizen being resident in India) | Rs.3,00,000/- Or Specified Income - whichever is lower |
| Section 80QQB | Royalty Income of Authors | Individuals (Indian citizen or foreign citizen being resident in India) | Rs.3,00,000/- Or Specified Income - whichever is lower |
| Section 80TTA | Interest earned on Savings Accounts | Individual Or HUF (except senior citizen) | Upto Rs 10,000/- |
| Section 80TTB | Interest Income earned on deposits(Savings/ FDs) | Individual (60 yrs or above) | Upto Rs 50,000/- |
| Section 80U | Disabled Individuals | Individuals | Normal Disability: Rs. 75,000/- Severe Disability: Rs. 1,25,000/- |
If you want to know about more such tax-saving options and want to maximize your tax refund, file your ITR with Tax2win’s tax experts and never fall prey to penalties.
Tax saving options under Section 80C
There are several options you can choose to save tax under Section 80C of the Income Tax Act. The Income Tax deduction list include:
Please note that these benefits are available if you have chosen the “Old Tax Regime.”
An income tax deduction list consisting of the investments that are eligible for deduction under section 80 is given below -
Under section 80CCC income tax deduction for the contributions made in specified pension plans can be claimed. The tax deduction can be claimed by individuals (whether resident or non-resident). Maximum permissible deduction under sections 80C, 80CCC, and 80CCD(1) put together is Rs. 1,50,000
The contribution made to eligible NPS account is tax-deductible up to Rs 1.5 lakhs under section 80CCD(1). The deductions shall be restricted to the amount contributed or the below-given percentage, whichever is less. However, this tax benefit is within the overall ceiling limits of section 80CCE, i.e., Rs. 1,50,000. To know the computation of the exempt amount, eligibility, and much more. Read more
Section 80CCD(1B) gives you the additional tax saving benefit of up to Rs 50,000 for contributions to the NPS account. It is over and above the limits of section 80C,i.e., It shall not be subjected to the ceiling limit of Rs. 1,50,000. This section 80CCD has gained so much attention as you can invest up to Rs. 2 lakh in an NPS account and claim a deduction of the full amount, i.e., Rs. 1.50 lakh under Sec 80CCD(1) and Rs. 50,000 under Section 80CCD(1B). Click to know more.
The contribution to NPS is deductible under 80CCD(1), and 80CCD(1B), and the amount contributed by your employer towards your NPS account is also tax-deductible under section 80CCD(2). Read to know more details. The deduction amount shall be restricted to 14% of salary(Basic salary + DA) in the case of Govt. employees and 10% in case of any other employees.
Section 80D is amongst the most popular tax-saving options. Under this tax, the benefit is admissible for
The admissible deductions under this section are as under:
The maximum deduction available to a HUF in respect of premium paid to insure the health of any member of the family would be Rs. 25,000, and in case any member is a senior citizen, then Rs. 50,000.
Section 80DD provides an income tax benefit to the extent of Rs 75,000 (Where disability is 40% or more but less than 80%) & Rs 1,25,000 (Where there is a severe disability (disability is 80% or more), respectively. The benefit can be availed for incurring medical expenditures for a disabled dependent relative. For diseases covered, documents required, and other information, please refer to the detailed guide.
The income tax deduction under section 80DDB serves as financial help for those suffering from a severe disease or taking care of such dependent family members. The deduction is allowed regarding the amount paid for the medical treatment of such disease or ailment of the specified persons. The maximum deduction is summarized hereunder:
| Dependant | Maximum limit (Rs.) |
|---|---|
| A senior citizen (being a resident individual) | 1,00,000 |
| Other than a senior citizen | 40,000 |
No such deduction shall be allowed unless a prescription is obtained for such medical treatment from a neurologist, oncologist, urologist, hematologist, immunologist, or other specialists, as may be prescribed. Read more to know the eligibility and other qualifying criteria.
The interest paid on higher education loans taken for self, spouse, child, or student of whom you are a legal guardian is eligible for income tax deduction under section 80E. The tax benefit is available for the 8 Assessment Years. i.e., The current year and the next 7 years, without maximum limits. Read to know more.
Section 80EE provides an additional deduction of up to Rs. 50,000 in respect of the interest on a loan taken by an individual to acquire residential house property from any financial institution. Read insights here. 80EE deduction is in addition to the deduction available under section 24 while computing ‘income from house property’. The conditions for availing deduction of interest are: here.
This section is Section 80EEA, which allows an additional deduction to taxpayers for paying interest on a home loan availed by them. While Section 24 allowed for interest exemption on home loans up to INR 2 lakhs, this section allows an additional exemption of Rs 1.5 lakhs to home buyers who avail of a home loan and pay interest on the loan.
Other conditions for availing deduction of interest:
This section was introduced to promote the purchase of electric vehicles among individuals by giving them tax relief on the interest paid on loans taken to purchase such vehicles from any financial institution from 01/04/2019 to 31/03/2023. The limit of deduction is up to Rs 1.5 lakhs.
Check the complete list of funds under section 80G with their qualifying limit and the calculation of the deduction amount, for example.
Deduction under this section is available only to those individuals who do not receive benefits by way of HRA(House Rent Allowance) or RFA(Rent Free Accommodation). Deduction u/s 80GG can be claimed to Rs 5,000 per month for the house rent paid. Read to know more.
The admissible deduction shall be the least of the following:
a. Rs. 5,000 per month
b. 25% of the adjusted total income*; or
c. Rent paid less than 10% of total income*
*Adjusted Total Income = total income excluding short-term capital gains under section 111A, long-term capital gains, income under section 115A and deductions under sections 80C to 80U
Donations for Scientific Research or Rural Development can avail of deduction under section 80GGA. Assessee having an income from Business/Profession cannot avail of this benefit. Under this section, the whole amount is allowed as a deduction without any upper limit. However, cash donations of more than Rs. 2,000 are not allowed. Read More about Section 80GGA.
Donations made by an Indian company to any political party or an electoral trust shall be eligible for deduction under this section. However, no deduction shall be permissible in respect of cash donations.
Any person other than an Indian Company can avail of deduction under section 80GGC of the total amount paid to a political party or electoral trust, except the cash donations. However, local authorities and every artificial judicial (wholly or partly funded by the government) person cannot claim a deduction under this section.
A resident of India and an individual patentee (true and first inventor of the invention, including co-patentee) can claim a deduction under section 80RRB in respect of patents registered on or after 01.04.2003. The deduction amount shall be the lower of:
For claiming the benefit under this section patent must be registered under the Patents Act 1970. Read More about Section 80RRB
An author (Resident of India or resident but not ordinarily resident in India), including the joint author of a book, can claim a deduction under Sec 80QQB. The deduction amount shall be as follows:
a. In the case of lump sum payment - Total amount of royalty income subject to a maximum of Rs. 3,00,000.
b. In other cases - The total amount of such income is subject to a maximum of 15% of the value of books sold during the previous year.
Read More about Section 80QQB
resident individual certified by the medical authority or a government doctor to be a person with a disability (having a disability of 40% or more) can claim a deduction of Rs. 75,000 under this section. In the case of a person with a severe disability (having a disability of 80% or more ), the quantum of deduction allowed is Rs. 1,25,000. It is a fixed deduction and is not based on actual expenses.
For more details about this deduction, Read More.
Section 80TTA allows deduction in respect of interest income on deposits in Savings Bank Accounts of Banks, Co-Operatives Banks, or Post Office. The quantum of deduction allowed under this section is Rs. 10,000 or the actual interest earned, whichever is lower. Both individual and HUF can avail of this deduction (Other than Resident Senior Citizen). This deduction is not available on the interest income from fixed deposits
For more details about this deduction Read More.
Section 80TTB allows a deduction upto Rs 50,000 in respect of interest income from deposits held by resident senior citizens (age 60 years or more) with a banking company, a post office, cooperative, society engaged in the banking business etc. Consequently, the limit of tds deduction u/s 194A for senior citizens has been raised to Rs. 50,000. However, no deduction under section 80TTA shall be allowed in these cases. Note that the senior citizen aged 75 years and above, earning only pension and interest income, is exempted from ITR filing as tax shall be deducted at source by the banks.
For more details about this deduction Read More.
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Individuals can claim an additional deduction of upto Rs.50,000 in NPS (Tier 1) account, if they have subscribed to NPS.
The maximum deduction allowed under Section 80C is Rs. 1.5 lakh.
Yes, you can claim a deduction under both Section 80C and Section 80CCC, subject to the overall limit of Rs. 1.5 lakh.
No, recurring deposits do not come under the purview of section 80C. 5 years tax saving fixed deposit comes under section 80C but not the recurring deposit. There are many other investments under section 80C, such as ELSS, LIC, PF, and principal repayment.
Yes, the provident fund comes under 80C. There are two types of PF: Recognized provident fund and Statutory provident fund. An employee can avail deduction for the amount which has been contributed by him, not by the employer.
Yes, investing in NPS comes under the purview of Section 80C.
Investment in SIPs of ELSS comes under Section 80C, but Section 80C does not cover investment in other mutual fund SIPs.
Section 80CCD and 80CCC are available in addition to deduction under section 80C however, the deduction under section 80C, 80CCC and 80CCD(1) in aggregate cannot exceed INR 1,50,000 as per 80CCE.
NPS under section 80C can be claimed upto Rs. 1,50,000 where deduction under section 80CCD(1B) can be claimed over and above section 80C upto Rs. 50,000.
An investment made in APY comes under the ambit of Section 80CCD(1B) and can be treated the same as NPS. Therefore, the deduction can be claimed for APY under 80CCD(1B). However, an investment made under the spouse’s name cannot be claimed under this section.
Yes, Section 80CCD(2) can be claimed when the employer contributes to the NPS account of the employee. There is no restriction on the amount of deduction of 80CCD(2). The same can be claimed as a deduction by the employee. Only Section 80CCD(1B) allows a claim of Rs. 50,000 over and above Rs. 1,50,000, checkup thereby allowing a deduction of Rs. 2 lakhs.
An assessee can claim section 80D on medical insurance and health checkups of himself, spouse, parents, and dependent children. Hence, no amount can be availed as a deduction by the assessee on the medical policy of the father-in-law.
Section 80D allows you to claim a deduction of the amount spent on medical insurance and health check-ups of the assessee himself or his spouse, parents, and dependent children. If the mediclaim is combined, then the same deductions will be available as provided when individual policies are taken based on their age, as discussed above in section 80D.
Section 80D is available for parents, whether dependent or not.
Section 80E states that deduction can be claimed under this section if any loan has been taken in India for the higher education of the assessee, spouse of the assessee and children of the assessee. Higher education here means any course pursued after Class XII or its equivalent, recognised by the Central Government, State Government, local authority, or any other specified authority. Therefore, the assessee can claim a deduction for pursuing higher education abroad, provided the loan is taken in India.
Section 24 and Section 80EE can be claimed simultaneously. However, interest on housing loan should be first claimed under section 24 upto INR 2,00,00, and only then it can be claimed as a deduction under section 80EE of INR 50,000.
Under this section, a deduction is available only on the expenses incurred for certain specific diseases. Rule - 11DD, in the income tax rules, provide an entire list of diseases for which deduction can be claimed.
Hence, from the above-mentioned list, it can be concluded that Infertility treatment expenses are not included in Section 80DDB.
Section 80DDB defines that an individual can claim a deduction for any expense incurred by them for a disabled relative. Whereas Section 80U defines that an individual, if certified as disabled, can claim a deduction under this section for any expenses incurred by him for his own treatment. Therefore, a parent can claim a deduction for the expenses incurred by them for the treatment of their disabled son under Section 80DDB and not under Section 80U.
Section 80DD is the best-suited deduction for you as Section 80DD provides a deduction for any amount incurred for the treatment of disabled dependants and mental illness is one of the diseases covered under this section.
Yes, the assessee can claim a deduction provided expenses have been actually incurred by him for his father’s treatment. The amount of deduction will be Rs.75000 (60% disabled), having money in a bank account does not seem to count.
Interest on REC bonds is not exempt under section 80TTB.
A tax rebate is available for all individuals who have a gross total income of Rs. 5,00,000 or less. The source of income does not seem to matter.
Tax benefit under section 80C is available only for life insurance premiums paid, and it does not extend to general insurance like car insurance, travel insurance, etc.
Stamp duty, registration fee, and other related expenses related to transfer of house property can be claimed under section 80C if:
The tax is chargeable on income after adjusting the deductions from it. The net taxable income so arrived shall be offered for taxation based on slab rates applicable. Use our free income tax calculator tool to make an accurate calculation of your payable taxes.
For claiming deductions while furnishing your ITR 1, you need to report the amount invested in PART-C, as shown below.
For investments made in July 2022, i.e. Financial Year 2022-23, the income tax return would be filed in July 2023 (approximately). At the time of filing ITR, you can claim the deductions.
In the Budget 2020, Finance Minister Nirmala Sitharam pronounced that a taxpayer who chooses not to claim certain deductions and exemptions i.e. forgo certain deductions and exemptions. Such taxpayers can opt for the reduced income tax slab for the FY 2022-23 ( AY 2023-2024) under the new tax regime.
