Deductions of Section 80 under Chapter VIA of Income Tax Act

Income tax department have provided various deductions with a view to encourage savings and investments amongst the taxpayers from the taxable income under chapter VI A deductions. Let us discuss these deductions in detail:  

Table of Content Section 80C – Deductions on Investments Section 80CCC – Insurance Premium /Section 80CCD – Pension Contribution Section 80 TTA – Interest on Savings Account Section 80GG – House Rent Paid Section 80E – Interest on Education Loan Section 80EE – Interest on Home Loan Section 80D – Medical Insurance Section 80DD – Disabled Dependent Section 80DDB – Medical Expenditure Section 80U – Physical Disability Section 80GGB – Company Contribution Section 80GGC – Contribution to Political Parties Section 80RRB – Royalty of a Patent Section 80 TTB – Interest Income

Section 80C – Deductions on Investments

Section 80C is one of the most important and favorite sections amongst the taxpayers because it permits reducing taxable income by creating tax saving investments or acquisition eligible expenses. It permits a maximum deduction of Rs 1.5 lakh per annum from the taxpayer’s total financial gain.
The advantage of this deduction is often availed by people and HUFs. Companies, partnership companies, LLPs cannot avail the advantage of this deduction.
Section 80C covers subsections, 80CCC, 80CCD (1), 80CCD (1b) and 80CCD (2).

It is necessary to notice that overall limit as well as the subsections for claiming deduction is Rs 1.5 lakh except an extra deduction of Rs 50,000 allowed u/s 80CCD(1b)

Section 80CCC – Insurance Premium /Section 80CCD – Pension Contribution :

Sections	Eligible investments for tax deductions
80 C	80C permits deduction for investment created in PPF , EPF, LIC premium , Equity linked saving theme, principal amount payment towards home loan, stamp duty and registration charges for purchase of property , National saving certificate (NSC), Sukanya Samriddhi Yojana (SSY), tax saving FD for 5 years, Senior citizen savings scheme (SCSS), ULIP, tax saving FD for 5 years, Infrastructure bonds etc
80CCC Deduction for Life Insurance Annuity Plan.	80CCC permits deduction for payment towards annuity pension plans Pension received from the annuity or amount received upon surrender of the annuity, including interest or bonus accrued on the annuity which is taxable in the year of receipt.
80CCD (1) Deduction for NPS	Employee’s contribution under section 80CCD (1) Maximum deduction can be availed is least of the following: 10% of salary (where taxpayer is employee) 20& of gross total income (where taxpayer is self employed) Rs 1.5 Lakh ( limit allowed u/s 80C)
80CCD (1b) Deduction for NPS	Additional deduction of Rs 50,000 is permitted for amount deposited to NPS account and Contributions to Atal Pension Yojana is also covered under this section.
80CCD (2) Deduction for NPS	Employer’s contribution is allowed for deduction upto 10% of basic salary plus dearness allowance under this section. Advantage under this section is permitted only to salaried individuals and not self employed.

Section 80 TTA – Interest on Savings Account

• Applicability- This section is applicable on individual or an HUF.
• Deduction amount- A deduction of maximum Rs 10,000 against interest income from your savings account with a bank, co-operative society, or post office can be availed.
• Non applicability- This section does not permit deduction on interest income from fixed deposits, recurring deposits, or interest income from corporate bonds.

Section 80GG – House Rent Paid

Conditions for claiming this deduction:

• Section 80GG deduction is available for rent paid when HRA is not received.
• The taxpayer, spouse or minor child should not own residential accommodation at the place of employment
• One should not have self-occupied residential property in any other place
• He must be living on rent and paying rent
• The deduction can be claimed by all individuals

The amount of deduction under section 80GG will be lower of the following:

• Rent paid minus 10% of adjusted total income
• Rs 5,000/- per month
• 25% of adjusted total income*

*Adjusted GTI is arrived at after adjusting the Gross Total Income for certain deductions, exempt income, long-term capital gains and income related to non-residents and foreign companies.

Section 80E – Interest on Education Loan

A deduction is provided to an individual for interest on loans taken for following higher studies. This loan can be taken for the taxpayer, spouse or children or for a student for whom the taxpayer is a legal guardian.

Under this section, deduction can be availed by an individual for a most of 8 years (beginning the year in which the interest starts getting repaid) or till the entire interest is repaid, whichever is earlier. There’s no restriction on the amount that can be claimed.

Section 80EE – Interest on Home Loan

• FY 2017-18 and FY 2016-17: This deduction is availed in FY 2017-18 if the loan has been taken in FY 2016-17. This deduction is only available to home-owners (individuals) having only 1 house property on the date of sanction of the loan and the value of the property must be lower than Rs 50 lakh and the loan taken for home must be less than Rs 35 lakh. The loan taken from a financial institution is required to be sanctioned between 1 April 2016 and 31 March 2017. There is an extra deduction of Rs 50,000 available on your home loan interest on top of deduction of Rs 2 lakh (on interest component of home loan EMI) permitted under section 24.

Section 80D – Medical Insurance

• Applicability: This section is applicable on individual or an HUF.
• Under this section, an individual or HUF can claim a deduction of Rs.25,000 on insurance for self, spouse and dependent children. An extra deduction for insurance of parents is available up to Rs 25,000 subject to a condition that they are less than 60 years of age. If the age of parents is above 60, the deduction amount is Rs 50,000, which has been raised in Budget 2018 from Rs 30,000.
• If both taxpayer and parent(s) are 60 years or above then the maximum deduction that can be availed under this section is up to Rs.1 lakh.
  Example: Manan’s age is 62 and his mother’s age is 80. In this case, the maximum deduction Manan can claim under section 80D is Rs. 100,000.
  From FY 2015-16 an extra deduction of Rs. 5,000 is permitted for preventive health check.  

Section 80DD – Disabled Dependent

• Applicability: This section is applicable on individual or an HUF.
• This section is available on:
  • Expense incurred on medical treatment (including nursing), training and rehabilitation of handicapped dependent relative
  • Payment or deposit to specified scheme for maintenance of handicapped dependent relative.

• Amount of deduction that can be claimed:
  • In case of 40% or more but less than 80% disability – fixed deduction of Rs 75,000.
  • In case of severe disability i.e., disability is 80% or more – fixed deduction of Rs 1,25,000.

Section 80DDB – Medical Expenditure

• A deduction of amount up to Rs.40,000 can be claimed by a resident individual or a HUF with respect to any expense incurred towards treatment of specified medical diseases or ailments for himself or any person  dependent on him.
• A deduction of amount up to Rs.100,000 can be claimed by a resident individual or a HUF who is a senior citizen.
• Any amount received for medical expenses by an insurer or employer shall be declined from the quantum of deduction the taxpayer can claim under this section.
• A taxpayer is needed to get a prescription for such medical treatment from the concerned specialist in order to avail such deduction. 

Section 80U – Physical Disability

• An individual suffering from physical disability (including blindness) or mental retardation can claim a deduction of Rs. 75000 and in case of severe disability, one can avail a deduction of Rs 1,25,000.

Section 80G – Donations

The varied donations laid down u/s 80G are eligible for deduction up to either 100% or 50% with or without restriction.

From Financial Year 2017-18, any donations created in cash of Rs 2,000 won’t be claimed as deduction. The donations higher than Rs 2000 should be created in any mode apart from cash to avail deduction in this section.

a. Donations with 100% deduction with none qualifying limit

• National Defence Fund established by the Central Government
• Prime Minister’s National Relief Fund
• National Foundation for Communal Harmony
• An approved university/educational establishment of National eminence
• Zila Saksharta Samiti recognized in any district beneath the chairmanship of the Collector of that district
• Fund established by authorities for the medical relief to the poor
• National
• Blood Transfusion Illness Assistance Fund
• National Council or to any State Blood Transfusion Council
• National Trust for Welfare of Persons with Syndrome, brain disease, slowness 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 relevance 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 established by the authorities of Gujarat completely for providing relief to the victims of earthquake in Gujarat
• Any trust, establishment or fund to that 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 financial year 2014-15)
• Clean Ganga Fund (applicable from financial year 2014-15)
• National Fund for Control of Drug Abuse (applicable from financial year 2015-16)

 b. Donations with 50% deduction with none qualifying limit

• Jawaharlal Nehru Memorial Fund
• Prime Minister’s Drought Relief Fund
• Indira Gandhi Memorial Trust
• The Rajiv Gandhi Foundation

c. Donations to the subsequent square measure are eligible for 100% deduction subject to 10% of adjusted gross total income

• Government or any approved local authority, establishment or association to be utilised for the aim of promoting birth control
• Donation by an organization to the Indian Olympic Association or to any other notified association or establishment established in India for the development of infrastructure for sports and games in India or the support of sports and games in India

d. Donations to the subsequent square measure eligible for 50% deduction subject to 10% of adjusted gross total income

• Any different fund or any establishment that satisfies conditions mentioned in Section 80G(5)
• Government or any bureau to be utilised for any charitable purpose apart from the aim of promoting birth control
• Any authority recognized in India for the aim of managing and satisfying the necessity for housing accommodation or for the aim of planning, development or improvement of cities, towns, villages or both
• Any corporation referred in Section 10(26BB) for promoting the interest of minority community
• For repairs or renovation of any notified temple, mosque, gurudwara, church or different places. 

Section 80GGB – Company Contribution

• This section can be availed by an Indian company.
• Under this section, the amount contributed by an Indian company to any political party or an electoral trust. Deduction is allowed for contribution done by any way other than cash.

Section 80GGC – Contribution to Political Parties

• This section is allowed to an individual taxpayer.
• Under this section, the deduction can be availed for an amount contributed to a political party or an electoral trust. It is not available for companies, local authorities and an artificial juridical person wholly or partly funded by the government. Deduction is allowed for contribution done by any way other than cash.

Section 80RRB – Royalty of a Patent

• This section is allowed to an individual patentee.
• 80RRB Deduction can be availed for any income by way of royalty for a patent, registered on or after 1 April 2003 under the Patents Act 1970. Deduction can be claimed for an amount up to Rs.3 lakh or the income received, whichever is less. The taxpayer is required to furnish a certificate in the prescribed form duly signed by the prescribed authority.

Section 80 TTB – Interest Income

• Applicability: This section is applicable with respect to interest income from deposits held by senior citizens.
• The maximum limit for this deduction is Rs.50,000.

Conclusion

Various deductions provided under the Income Tax for claiming the tax benefits are discussed in the blog. For more information our team of Income Tax experts are always available for consultancy. You can approach the Legal Window team for filing Income Tax Returns at admin@legalwindow.in

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