Deductions at a Glance

The following deductions are permissible deductions an assessee can claim under the Income Tax Act :

Section 80C deductions

Deduction under this section is available only to an individual or HUF.

Section 80C of the Income Tax Act allows certain investments and expenditure to be deducted from total income up to the maximum of Rs.1,00,000/-

► Contribution to approved superannuation fund or public provident fund or recognized provident fund or statutory provident fund. Provident fund contributions should not exceed 1/5 of salary.

► Payment of life insurance premium. It is allowed on the premium paid on self, spouse and children even if they are not dependant on father or mother (subject to a maximum of 20% of the sum assured up to F.Y.2012-13, from F.Y.2013-14 20% has been reduced to 10%.)

► Payment in respect of non-commutable deferred annuity.

► Unit Linked Insurance Policy (ULIP) of UTI or LIC Mutual Fund Dhanraksha.

► Subscriptions to NSC – VIII issues.

► Deposits with National Housing Bank.

► Principal part of loan taken for acquiring Residential house property; provided that the house should not be transferred within 5 years. Loan for land cost for residential house is also qualified.

► Subscriptions to schemes of PSU’s providing long term finance for housing or of housing boards constituted in India for infrastructural development of cities / towns.

► Notified annuity plan of LIC or of any other approved insurer.

► Units of Mutual Fund or UTI.

► Notified pension fund by UTI or approved mutual fund.

► Tution Fees (not including donation or development fees) towards full time education including play-school activities, pre-nursery & nursery classes, of any 2 children of an individual, paid to University, College or Schools in India.

► Investments in shares or debentures with a lock-in-period of 3 years, of approved public company exclusively engaged in infrastructure facility or power sector.

► Subscriptions to the bonds issued by NABARD as specified by Central Government.

► Any sum deposited as 5 years time deposit under the Post Office Term Deposit.

► Any sum deposited in Senior Citizen Savings Scheme.

► Any sum deducted from salary of Government employee (subject to a maximum 20% of salary) towards deferred annuity plan for benefit of self, spouse or any children.

► Term deposit with a scheduled bank for a period of not less than 5 years as per scheme notified by Central Government.

► Investing in units of notifying mutual fund investing in approved public companies engaged in infrastructure facility or power sector.

Section 80CCC

Payments made to LIC or to any other approved insurer under an approved pension plan is admissible for deduction under this section. Then the pension plan policy should be for the individual himself out of his taxed income, The deduction is least of the amount paid or Rs.1, 00,000/-.

Section 80CCD

The contribution made by the assessee and by employers to a Notified Pension Scheme is admissible for deduction under this section. The assessee should be an individual who is employed on or after 1.1.2004. The deduction shall be equal to the amount contributed by the assessee and/or by the employer, not exceeding 10% of his salary (Basic + D.A.). Even a self-employed person can claim this deduction which will be restricted to 10% of Gross Total Income. The total deduction available to an assessee under sections 80C, 80CCC & 80CCD are restricted to Rs.1, 00,000/- per annum. However, employer’s contribution to Notified Pension Scheme u/s. 80CCD is not a part of the limit of Rs.1,00,000/-.

Section 80D : Medical Insurance Premiums

Health Insurance, popularly known as Mediclaim Policies, provides a deduction of up to Rs.35,000/- (Rs.15,000/- for premium payments towards policies on self, spouse and children and Rs.15,000/- for premium payment towards non-senior citizen dependant parents or Rs.20,000/- for premium payment towards senior citizen dependent). This deduction is in addition to Rs.1,00,000/- savings under IT deductions clause 80C. For consideration under a senior citizen category, the incumbent’s age should be 60 years during any part of the current fiscal, e.g. for the fiscal year 2013-14, the incumbent should already be 60 as on 31.03.2014). This deduction is also applicable to the checks paid by proprietor firm.

Interest on housing loans

For self occupied properties, interest paid on a housing loan up to Rs.1,50,000/- per year is exempt from tax. This deduction is in addition to the deduction u/s. 80C and 80D. However, this is only applicable for a residence constructed within three financial years after the loan is taken and also for the loan taken only after 1st April, 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 u/s. 24 of the Income tax Act. However, the rent is to be shown as income from such properties. 30% of the rent received and municipal taxes paid are available for deduction of tax.

An additional deduction of Rs.1, 00,000/- would be allowed to be deducted from the payment of interest on home loan u/s. 80EE. This deduction would be allowed provided that the total value of the loan is not more than 25 lakh and the total value of the house is not more than 40 lakh and the loan should be a fresh loan taken during the F.Y. 2013-14. This deduction would be over and the Rs.1,50,000/- deduction.

The losses from all properties shall be allowed to be adjusted against salary income at the source itself.

Section 80DDB : Deduction in respect of Medical Treatment 

Deduction is allowed to resident individual or HUF in respect of expenditure actually during the previous year incurred for the medical treatment of specified disease or ailment as specified in the rules 11DD for himself or a dependant relative or a member of a HUF.

Section 80CCG : RGESS

A Deduction of 50% is allowed on investment up to Rs.50,000/- under the Rajiv Gandhi Equity Saving Scheme on select securities.


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