Deductions U/S 80C to 80U (Chapter VIA)

Deductions are the claims which reduce taxable income. Less taxable income leads to lower payment of tax to government. There are certain relief in the form of deduction available to a taxpayer. But there are Section which define deduction criteria and amount of deduction. So let’s dive in details :

  • It came into force with effect from 1st April 2006.
  • This Section is related to Deduction for Savings (It means there is no need to pay on saving made by taxpayer)
  • This Section enables tax payers to claim a deduction of Rs. 1,50,000 from total income.
  • Deduction are available to individuals and HUF (Hindu Undivided family) under this Section.
  • Schemes where savings can be made :       
    1. Investment in PPF :  You can claim deduction for investment made in PPF account. You can          invest a maximum of Rs. 1.50 lakh in a year. Receipts on maturity and withdrawal are tax free. 
    2.  Investment in National Savings Certificate: National Savings Certificate is eligible for deductions in the year they are Purchased. Interest accrued on such certificates is eligible for tax deductions.     
    3.  Investment in Fixed Deposit Interest earned on fixed deposits with tenure of not less than 5    Years are eligible for tax deduction. For Senior citizens tax exempted interest income on               deposits with banks has been increased from ₹ 10,000 to ₹ 50,000.           
    4. Premium on LIC (life insurance policy) You can claim a deduction under section 80c for the       premium paid for a life insurance policy as per the Income Tax Act.           
    5.  Contribution to Employee Provident Fund : You can claim a text deduction for the             contribution made in Employee Provident Fund under section 80c. Government to contribute     12% of EPF contribution for employees (with less than 3 years of employment) in all sectors.      new women Employees (with less than 3 years of employment) contribute only 8% of salary as   EPF contribution as opposed to 12% earlier.                           
    6. Equity oriented Mutual Funds : You can claim a tax deduction for investment made in any unit   of mutual funds that is listed on stock exchange or not.                           
    7. Repayment of Principal on Housing Loan : You can claim a tax deduction on the principal         amount paid for home loan under section 80c.     
    8. Tuition Fees : The deduction is available for two children for each individual. Thus, deduction      for up to 4 children can be claimed, 2 by each parent.                                                                                   

This Section allow deduction for any amount contributed in any insurance scheme to receive pension.

  • This section allow the deduction if you have contributed to any pension scheme initiated by the central government. If 10% of your salary is going in schemes like National Pension Scheme you can get deduction for that.
  • An exclusive tax benefit is available for NPS subscribers under section 80CCD. As per income tax act, Tier 1 account holders get an additional deduction for investment up To Rs. 50,000 in NPS. This deduction is over and above the deduction of rupees 1.50 lakh available under section 80c of IT Act 1961

You can claim a tax deduction under section 80TTA for interest earned on Bank savings account. Deduction is subject to a maximum amount of rupees 10,000. However, the income earned will be first added under the head of income from other sources first and after that the deduction can be claimed.

  • This section allow deduction when we give donation to certain funds, charitable Institution etc.

There are certain limits on which deduction amount can be availed :

  • 100% deductions without any limits : If a Taxpayer donate funds to National Defence fund, Prime Minister’s relief fund, National illness assistance fund etc, is eligible 100% deduction on the amount donated .
  • 100 % deduction with qualifying limits : If a taxpayer donate funds to local authorities, associations, or institutes to promote family planning and development of sports etc, is eligible for 100% deduction subject to certain qualifying limits.
  • 50% deduction without qualifying limits : If you are donating to funds like the PM’s Drought Relief fund, Rajiv Gandhi Foundation, etc, then you are eligible for 50% deduction.
  • 50% deduction with qualifying limits : If a taxpayer donating to religious organizations, local authorities ( doesn’t include family planning) and other charitable institutes are eligible for 50% deduction.

This section allow the deduction for the house rent paid by the taxpayer.

Important Points to remember

  • Individuals and HUF taxpayers can claim this deduction
  • Businesses or other enterprises are not eligible for this deduction.
  • Salaried employees and self employed professionals can claim deductions under this section
  • A Person should not be getting HRA benefits in salary

How much amount to claim :

  • ₹ 60,000 annually ( ₹5000 monthly)
  • Total Rent Paid – 10% of Total Income
  • 25% of Salary

After calculating the above three points . The amount whichever is Less will be taken into consideration as deduction.

  • Own a house in location where you are employed.
  • Claiming benefit for and own house in another location (not city) as self occupied property.
  • You can claim deduction under this section if you are living with your parents and enter into an rental agreement and parents will show that amount as income

What this section say : You took a loan to buy a house and you have to pay interest on that loan. You will get deduction of that amount as much as the interest you are paying

Eligibility Criteria : This deduction is available to Individual only

Amount Limit : Up to ₹50,000 per financial year until home loan is fully paid

Condition : You should not own any other house property on the date of sanction of a loan from a financial institute.

Eligibility Criteria : Only Individual and HUF whether resident or non-resident.

Amount Limit : A amount of Rs. 25,000 can be claimed when paid towards the insurance for Self, spouse or dependent children and amount of deduction for senior citizen medical expenditure is Rs. 50,000. The limit is Rs. 25,000 in case of Non-senior citizen.

Deduction will be claimed only when Payment should be made in other than cash mode.

  • This Section provides deduction of Rs. 75,000 for normal disability and Rs. 1.25 lakh for severe disability.
  • If payment made towards the treatment of dependants with disability
  • If amount paid as premium to purchase or continue an insurance policy for such dependant
  • HUF and Resident individual can claim this deduction
  • Spouse, siblings, parents or Children can be dependants

  • Section 80u of the Income Tax Act 1961 includes provision for tax deduction benefit to individual taxpayer suffering from a disability. in order to claim tax deduction under section 80u by individual must be satisfied as a person with disability by appropriate medical authority
  • Deduction limit under section 80u : If a person is suffering from at least 40% disability he or she can claim a tax deduction of rupees 75000 on the taxable income under Section 80U. If a person is suffering from 80% disability can claim a tax deduction of Rupees 1.25 lakh under section 80u.

Under section 80u individual suffering from a disability can claim for tax deduction for self only

While under section 80DD, Dependent family members of the individual suffering from the disability can claim the tax deduction. Dependent family members include spouse children parents sibling of the disabled person

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