DEDUCTIONS
•80 C •80 E
•80 CCC •80 G
•80 CCD •80 GG
•80 CCE •80 GGC
•80 CCF •80 U
•80 D
•80 DD
•80 DDB
SECTION 80-C
• Section 80C of the Income Tax Act allows
certain investments and expenditure to be tax-
exempt.
• Maximum Rs 1 ,00,000 is allowed.
• Investment need not be from taxable income.
• General deduction for investment in PPF, PF,
Life Insurance, ULIP, Stamp duty on house,
Fixed deposits for 5 years , bonds etc
Some of the Qualifying Investments under 80-C
• Provident Fund (PF) & Voluntary Provident Fund (VPF): PF is automatically deducted
from the salary. Both employee and employer contribute to it. While employer’s
contribution is exempt from tax, employee’s contribution is counted towards section 80C
investments. Employee also have the option to contribute additional amounts through
voluntary contributions (VPF). Current rate of interest is 8.5% per annum (p.a.) and is tax-
free.
• Life Insurance Premiums: Any amount that you pay towards life insurance premium for
yourself, your spouse or your children can also be included in Section 80C deduction. If
you are paying premium for more than one insurance policy, all the premiums can be
included. It is not necessary to have the insurance policy from Life Insurance Corporation
(LIC) – even insurance bought from private players can be considered here. It should be
self paid.
• Home Loan Principal Repayment: The Equated Monthly Installment (EMI) that you pay
every month to repay your home loan consists of two components – Principal and
Interest. The principal component of the EMI qualifies for deduction under Sec 80C.
.
• National Savings Certificate (NSC): National Savings Certificate (NSC) is a 6-Yr small
savings instrument eligible for section 80C tax benefit. Rate of interest is eight per
cent compounded half-yearly, i.e., the effective annual rate of interest is 8.16%.
The interest accrued every year is liable to tax (i.e., to be included in your taxable
income) but the interest is also deemed to be reinvested and thus eligible for
section 80C deduction.
• Infrastructure Bonds and Rural Bonds: Popularly called Infra Bonds. These are
issued by infrastructure companies, and not the government.
There are two types of Rural Bonds issued by NABARD :NABARD Rural Bonds and
Bhavishya Nirman Bonds (BNB). Out of these two, only NABARD Rural Bonds
qualify under section 80C.
• 5-Yr post office time deposit (POTD) scheme: Only 5-Yr post-office time deposit
(POTD) – which currently offers 7.5 per cent rate of interest –qualifies for tax saving
under section 80C. The Interest is entirely taxable.
• Unit linked Insurance Plan : ULIP stands for Unit linked Saving Schemes. ULIPs
cover Life insurance with benefits of equity investments.
SECTION 80-CCC
Any individual who makes a contribution for any annuity plan of
the Life Insurance Corporation of India or any other insurer is
eligible for a deduction of the amount paid or Rs. 10,000,
whichever is less.
When an individual or his nominee receives any amount under
the following circumstances it will be taxed as the income of
the individual or his nominee, in the year of withdrawal or the
year in which the pension is received:
• On the surrender of the annuity plan or
• As pension received from the annuity plan.
Section 80-CCD
• It includes contributions to a pension scheme of the Central Government.
• It is available only to those individual who have been employed by the central
government on or after 1st January 2004.
• Deduction up to 10% of the employee's salary is allowed.
• The contributions to the fund are also made by the Central Government.
Deduction will be available for any contribution which is made by the Central
Government or 10 per cent of the employee's salary, whichever is less.
• The term 'salary' here includes Dearness Allowance (if considered for retirement
benefits), but it excludes other allowances and perquisites.
When the individual or his nominee receives any amount out of the scheme
which meets the following descriptions, it shall be taxed in the hands of the
recipient.
• On closure/ opting out of the pension scheme; or
• As pension received from the annuity plan.
Section 80-CCE
• As per section 80CCE , the maximum amount
of deduction which can be claimed in
aggregate of 80C ,80CCC & 80CCD is Rs
1,00,0000
Section 80-CCF
Section 80-D
• Health insurance, popularly known as Mediclaim Policies, provides
a deduction of up to Rs. 35,000.
• Rs. 15,000.00 for premium payments towards policies on
self, spouse and children and
• Rs. 15,000.00 for premium payment towards non-senior
citizen dependant parents or Rs. 20,000.00 for premium
payment towards senior citizen dependant parents.
• This deduction is in addition to Rs. 1,00,000 savings under IT
deductions clause 80C.
• For consideration under a senior citizen category, age should be 65
or above.
• This deduction is also applicable to the cheques paid by proprietor
firms.
Section 80-DD
Deduction under this section is available to an individual who:
• Incurs any expenditure for the medical treatment, training and rehabilitation of a
disabled dependant; or
• Deposits any amount in schemes like Life Insurance Corporation for the maintenance of
a disabled dependant.
A deduction of Rs 50,000 is available. Where the depandant is with a severe disability, a
deduction of Rs 1,00,000 is allowed.
If the death of the dependant occurs before that of the assessee, the amount in the
scheme is returned to the individual and is taxable in his hands in the year that it is
received.
An individual should furnish a copy of the issued certificate by the medical board
constituted either by the Central government or a state government in the prescribed
form, along with the return of income of the year for which the deduction is claimed.
The term 'dependent' here refers to the spouse, children, parents and siblings of the
assessee who are dependant on him for maintenance and who themselves haven't
claimed a deduction for the disability in computing their total incomes.
This deduction is also available to Hindu Undivided Families (HUF).
Section 80-DDB
• An individual, resident in India spending any amount for the medical
treatment of specified diseases affecting him or his spouse, children,
parents, brothers and sisters and who are dependant on him, will be
eligible for a deduction of the amount actually spent or Rs 40,000,
whichever is less under this section.
• The complete list of disease specified, are given in Rule 11DD of the
Income Tax Rules.
• For any amount spent on the treatment of a dependent senior citizen an
individual is eligible for a deduction of the amount spent or Rs 60,000,
whichever is less is available.
• The individual should furnish a certificate in Form 10-I with the return of
income issued by a specialist working in a government hospital.
• If any amount of medical expenditure is borne by the employer or is
reimbursed under an insurance scheme, the eligibility of the deduction is
the reduction to that extent.
• This deduction is also available to Hindu Undivided Families (HUF).
Section 80-E
• For self occupied properties, interest paid on a housing loan up to Rs
150,000 per year is exempt from tax.(Excluding Rs.1,00,000/p.a. u/s 80c
Saving) However, this is only applicable for a residence constructed within
three financial years after the loan is taken and also the loan if taken after
April 1, 1999.
• If the house is not occupied due to employment, the house will be
considered self occupied.
• For let out properties, the entire interest paid is deductible under section 24
of the Income Tax act. However, the rent is to be shown as income from such
properties. 30% of rent received and municipal taxes paid are available for
deduction of tax.
• The losses from all properties shall be allowed to be adjusted against salary
income at the source itself. Therefore, refund claims of T.D.S. deducted in
excess, on this count, will no more be necessary.
Section 80-G
Section 80-GG
Section 80-GGC
Section 80-U
• It is deduction in the case of a person with a disability. An individual
who is suffering from a permanent disability or mental retardation
as specified in the persons with disabilities (Equal Opportunities,
Protection of Rights and Full Participation) Act, 1995 or the National
Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental
Retardation and Multiple Disabilities Act, 1999, shall be allowed a
deduction of Rs 50,000. In case of severe disability it is Rs. 75,000.
• The assessee should furnish a certificate from a medical board
constituted by either the Central or the State Government, along
with the return of income for the year for which the deduction is
claimed.
