Important TAX Saving Deduction Under Income Tax Act

The Assessee Individual and HUF can get the benefits of deductions by investing and depositing there money in the different section of Income Tax act. There is section which we discussed today:

A. SECTION 80C: The Assessee can take the maximum benefit of Rs.150000/- under Section 80C by investing in following categories:

• Tution Fees of Child
• Life Insurance Premium
• Repayment of Housing Loan (Only Installments)
• Sukanya Samridhi Yojna
• Investment in Fixed Deposit for 5 years
• Investment in NPS (National Pension Scheme)
• Investment in National Saving Certificates (NSC)
• Contribution to Approved Superannuation Fund
• Investment in PPF
• Investment in Equity Linked Saving Scheme (ELSS)

B. SECTION 80CCC:  The Assessee can take the maximum benefit of Rs.150000/- under Section 80CCC alongwith Section 80C. Only Individual can take the benefit of this section if he deposited any amount in annuity plan of LIC and any other insurer. (The deposited amount will be taxable when assessee received this amount as Pension or on Maturity with interest.)

C. SECTION 80CCD:  This section benefits to Individual (Salaried / Non-Salaried) when he contribute certain amount in Governments approved pension Schemes.

This section Divided into three subsection:

1. SECTION 80CCD(1): Under this section Individual (Salaried / Non-Salaried) can take benefits by depositing amount in there pension fund account. There is a limit for this section:
1. Salaried:  10% of Salary (Subject to Section 80CCE)
2. Non-Salaried: 20% of Gross Total Income (Subject to Section 80CCE)
2. SECTION 80CCD(1B): Under this section Individual (Salaried / Non-Salaried) can take  additional benefits of Rs.50000/- over and above Rs.150000/-.
3. SECTION 80CCD(2): Under this section only Salaried person can get the benefit, because in this section we take the Employer's Contribution to Employee's pension account. (Only 10% of Salary)

D. SECTION 80CCE: From AY 2018-19 the assessee can get total benefits of Rs.150000/- under Section 80C, 80CCC and 80CCD(1). i.e. Section 80C+80CCC+80CCD(1) = Rs.150000/-.

E. SECTION 80D: Premium paid by Individual for Medical Claim Insurance. In which include:

• Medical Expenditure on Very Senior Citizen
• Preventive Health Check-up (Limited to Rs.5000/-)
• Contribution to Central Govt Health Scheme
• Premium of Medical Insurance

These expenditure incurred by assessee on Self, Spouse Dependent Children and Parents. and By HUF for Karta & Co parceners.

The limit of deduction under this Section is Rs.25000/- (for Self, Spouse, Children ) and additional Rs.25000/- (For Parents) & Rs.30000/- (For Parents is a Senior Citizen)

 F. SECTION 80DD: Deduction available if expenditure incurred on maintenance and medical treatment of dependent disabled (Dependent Include Spouse, Children, parents, brothers or sisters and in case of HUF wholly depended member of HUF).

The deduction amount is Rs.75000/- and It may increased to Rs.125000/- in case of Severe disability in which person is disabled 80% or more due to disease includes Cerebral Palsy, Autism and Multiple disability disorder.


There is some requirement for Claiming deduction under Section 80DD:

• Copy of Certificate Issued by Medical authority
• Assessee will not able claim deduction under Section 80U
• Amount paid for medical treatment which includes nursing, training as well as rehabilitation of dependent disabled 
• Amount paid towards LIC, Unit Trust of India or any other insurers for buying special scheme or insurance policy to help in the maintenance of a dependent disabled.

G. SECTION 80DDB: Expenditure on medical treatment of specified diseases and ailments as per Rule 11DD of Income Tax Act. These diseases includes Neurological Disease where the disability level has been certified to be 40% or more (i.e. Dementia, Dystonia Musculorum Deformans, Motor Neuron disease, Ataxia, Chorea, Hemiballismus, Aphasia, Parkinson's Disease), Malignant Cancers, AIDS, Chronic Renal Failure, Hematological disorders.

H. SECTION 80E: Higher Education loan by individual for his spouse and children from any Financial Institution or approved charitable Institute. The Deduction is available for minimum 8 years or repayment of loan which ever is earlier. 

I. SECTION 80EE: When an Individual buy there 1st house (no other house in his name on the date of sanction) by taking loan (which does not exceeds Rs.3500000/- and House Value is less than Rs.5000000/-) in FY 2016-17. Then Interest upto Rs.50000/- can be claimed as deduction. If assessee claimed deduction under this section than the same cannot be claimed in other section.

J. SECTION 80G: No one give Donation to get consideration back. But by giving Donation to some specified categories you may get 100 % or 50% of donation as deduction.

Donations with 100% deduction without any qualifying limit:

• 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 Fund
• National 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, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
• The Maharashtra Chief Minister’s Relief Fund during October 1, 1993 and October 6, 1993
• Chief Minister’s Earthquake Relief Fund, Maharashtra
• Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat
• Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of earthquake in Gujarat 
• (contribution made during January 26, 2001 and September 30, 2001) or
• Prime Minister’s Armenia Earthquake Relief Fund
• Africa (Public Contributions – India) Fund
• Swachh Bharat Kosh (applicable from FY 2014-15)
• Clean Ganga Fund (applicable from FY 2014-15)
• National Fund for Control of Drug Abuse (applicable from FY 2015-16)

 Donations with 50% deduction without any qualifying limit:

• Jawaharlal Nehru Memorial Fund
• Prime Minister’s Drought Relief Fund
• Indira Gandhi Memorial Trust
• 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 utilised 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 community
• For repairs or renovation of any notified temple, mosque, gurudwara, church or other place.

Adjusted total income: Adjusted gross total income is the gross total income (sum of income under all heads) less the following:

• Amount deductible under Sections 80CCC to 80U (but not Section 80G)
• Exempt income
• Long-term capital gains
• Income referred to in Sections 115A, 115AB, 115AC, 115AD and 115D, relating to non-residents and foreign companies

K. SECTION 80GGA:  Section 80GGA allows deductions for donations made towards scientific research or rural development. This deduction is allowed to all assessees except those who have income (or loss) from business and profession. 

Mode of payment – Donations can be made in cheque or by draft or in cash; however cash donations in excess of Rs 10,000 are not allowed as a deduction.
100% of the amount that is donated or contributed is considered eligible for deduction.

Eligible donations under Section 80GGA:

• Sum paid to a research association which undertakes scientific research, or sum paid to a college, university or any other institution to be used for scientific research and these are all approved by the prescribed authority under section 35(1)(ii)
• Sum paid to a research association which undertakes research in social science or statistical research or sum paid to a college, university or any other institution to be used for the same purpose and these are all approved by the prescribed authority under section 35(1)(iii)
• Sum paid to approved association or institution which undertakes any program of rural development and is approved under section 35CCA
• Sum paid to an approved association or institution which undertakes trainings of persons for implementing programs of rural development
• Sum paid to a public sector company, local authority or an approved association or institution which carries out project or scheme approved under section 35AC.
• Sum paid to notified Rural Development Fund
• Sum paid to notified Fund for Afforestation
• Sum paid to notified National Poverty Eradication Fund

If a deduction has been allowed under section 80GGA, such expenses shall not be deductible under any other provision of the income tax act.

L. SECTION 80GG: Many salaried employee does not receive HRA from their employers, but still they pay rent for staying in rented accommodation. This section give him some relief from TAX. For taking benefit there is some conditions:

• Employee and there family does not own any house in place where he currently resides.
• Assessee must be paying Rent.
• He should file form 10BA alongwith ITR
• Deduction will be lowest of followings:
• Rs.5000/- p.m.
• 25% of Adjusted Total Income
• Rent Paid less Adjusted Total Income

(Adjusted Total Income does not include Long Term Capital Gain, Short Term Capital Gain (Section 111A & 115D), Deduction from 80C to 80U.)

M. SECTION 80GGC: Any person except Company, Local Authority and Artificial Judicial Person wholly partly funded by the Govt. contributing (Except Cash) to Political parties registered under Section 29A of Representation of People Act. Full amount deduction is available.

N. SECTION 80TTA: Interest from Saving bank account upto Rs.10000/- is exempt. 

O. SECTION 80U: Deduction available if expenditure incurred on maintenance and medical treatment of Individual himself is disabled.

The deduction amount is Rs.75000/- and It may increased to Rs.125000/- in case of Severe disability in which person is disabled 80% or more due to disease includes Cerebral Palsy, Autism and Multiple disability disorder.