Income Tax Deductions List
Income tax department with a view to encourage savings and investments amongst the taxpayers have provided various Income Tax deductions from the taxable income under chapter VI A deductions. 80C being the most famous, there are other income tax deductions which are beneficial for the taxpayers to reduce their tax liability.
Salaried workers account for the majority of all taxpayers in the nation and have a sizable tax collection contribution to make. For those in the salaried class, income tax deductions present a variety of chances for tax savings. These exemptions and deductions allow one to significantly lower their tax liability.
In this blog, we attempt to outline the main income tax deductions and allowances that are available to salaried individuals to help them lower their tax bills.
What is Income Tax Deductions?
As defined by Chapter VIA of the Income Tax Act, an income tax deduction reduces an individual or business entity’s taxable income, thereby reducing its tax liability. Under the Indian Income Tax Act, individuals and businesses can claim various deductions when calculating their taxable income under various sections.
Section 80C: Investment Deductions
One of the most well-liked and well-known sections for taxpayers is Section 80C, which enables individuals to lower their taxable income by investing in tax-saving opportunities or paying qualified expenses.
Who is eligible to deduct under Section 80C?
HUFs and individuals can both claim the Section 80C deduction.
What is the maximum deduction permitted by section 80C? It is possible to deduct up to Rs. 150,000 from gross total income annually. The deduction is not available to companies, partnership firms, or limited liability companies (LLPs).
Sections 80C, 80CCC, 80CCD(1), 80CCE, 80CCD(1B), and 80CCD offer deduction limits for investments made in pension plans, either via your own contributions or through employer contributions.
The combined maximum deduction allowed by Sections 80C, 80CCC, and 80CCD(1) is Rs 1.5 lakhs. However, if you make payments to the NPS, you are eligible to deduct an additional Rs 50,000 under Section 80CCD(1B). Accordingly, under Section 80C + 80CCC + 80CCD(1) + Section 80CCD(1B), the maximum deduction limit is Rs 2 lakhs.
Sections | Eligible investments for tax deductions | Maximum Deduction |
80C | Investment made in Equity Linked Saving Schemes, PPF/SPF/RPF, payments made towards Life Insurance Premiums, principal sum of a home loan, SSY, NSC, SCSS, etc. | Rs 1,50,000 |
80CCC | Payment made towards pension funds | Rs 1,50,000 |
80CCD(1) | Payments made towards Atal Pension Yojana or other pension schemes notified by government | Employed: 10% of basic salary + DA Self-employed: 20% of gross total income |
80CCE | Total deduction under Section 80C, 80CCC, 80CCD(1) | Rs 1,50,000 |
80CCD(1B) | Investments in NPS (outside Rs 1,50,000 limit under Section 80CCE) | Rs 50,000 |
80CCD(2) | Employer’s contribution towards NPS (outside Rs 1,50,000 limit under Section 80CCE) | Central government employer: 14% of basic salary +DA Others: 10% of basic salary +DA |
List of Section 80C Deductions
Investment options | Average Interest | Lock-in period for | Risk factor |
ELSS funds | 12% – 15% | 3 years | High |
NPS Scheme | 8% – 10% | Till 60 years of age | High |
ULIP | 8% – 10% | 5 years | Medium |
Tax saving FD | Up to 8.40% | 5 years | Low |
PPF | 7.90% | 15 years | Low |
Senior citizen savings scheme | 8.60% | 5 years (can be extended for other 3 years) | Low |
National Savings Certificate | 7.9% | 5 years | Low |
Sukanya Samriddhi Yojana | 8.50% | Till girl child reaches 21 years of age (partial withdrawal allowed when she reached 18 years) | Low |
Savings Account Interest under Section 80TTA
Who is eligible to deduct under Section 80TTA?
What is the maximum deduction allowed under section 80TTA that can be claimed? Interest from recurring deposits, fixed deposits, or interest on corporate bonds is not included in the Rs 10,000 amount.
Interest on Senior Citizen Deposits Under Section 80TTB
Who is eligible to deduct under Section 80TTB? What is the maximum deduction permitted under section 80TTB for section 80TTA? Rs. 50,000 Consequently, the upper limit of Rs. 50,000 has been added to the threshold for TDS deduction under Section 194A for elderly citizens. TDS will not be withheld if their interest income is less than Rs 50,000.
Section 80D: Medical Insurance Premium Deduction
Policy for? | Deduction for self & family | Deduction for parents | Preventive Health check-up | Maximum Deduction |
Self & Family (below 60 years) | 25,000 | – | 5,000 | 25,000 |
Self & Family + Parents (all of them below 60 years) | 25,000 | 25,000 | 5,000 | 50,000 |
Self & Family (below 60 years) + Parents (above 60 years) | 25,000 | 50,000 | 5,000 | 75,000 |
Self & Family + Parents (above 60 years) | 50,000 | 50,000 | 5,000 | 1,00,000 |
Section 80DD: Medical Treatment Deduction for Dependents with Disabilities
Residents individually or as a HUF are eligible for the Section 80DD deduction.
Inference: The costs associated with providing medical care (including nursing care), education, and rehabilitation for a dependent member who is specially-abled
Disability | Level of Disability | Amount of Deduction |
Normal Disability | 40% – 79% | Rs 75,000 |
Severe Disability | 80% or more | Rs 1,25,000 |
Any payment given to a designated program that offers a lump sum or annuity benefit for the upkeep of a dependent member who is disabled, in addition to the cost of medical care.
A certificate of disability from the designated medical authority is necessary in order to be eligible for this deduction.
Note: A dependant is someone who is not eligible to claim a deduction under section 80U in his or her income tax return. A dependent includes a husband, children, parents, siblings, and sisters in the case of an individual, and a member of a Hindu undivided family in the case of a HUF.
Section 80DDB
Medical Treatment Deduction, etc.
Who can make a claim for the Section 80DDB deduction? A resident individual or a HUF is eligible for an 80DDB deduction each year. Any money you spend on medical care for yourself or your dependents is deductible.
How much is deducted under 80DDB?
Age | Amount of deduction |
< 60 years | Amount paid or 40,000, whichever is less |
60 and above | Amount paid or 1,00,000, whichever is less |
Section 80U: Individuals with Disabilities Tax Deduction
Disability | Level of Disability | Amount of Deduction |
Normal Disability | up to 80% | Rs 75,000 |
Severe Disability | 80% or more | Rs 1,25,000 |
Table of Summary Deductions for Section 80
Section | Deduction on | Allowed Limit (maximum) FY 2022-23 |
80C | Investment in PPF – Employee’s share of PF contribution – NSCs – Life Insurance Premium payment – Children’s Tuition Fee – Principal Repayment of home loan – Investment in Sukanya Samridhi Account – ULIPS – ELSS – Sum paid to purchase deferred annuity – Five year deposit scheme – Senior Citizens savings scheme – Subscription to notified securities/notified deposits scheme – Contribution to notified Pension Fund set up by Mutual Fund or UTI. – Subscription to Home Loan Account scheme of the National Housing Bank – Subscription to deposit scheme of a public sector or company engaged in providing housing finance – Contribution to notified annuity Plan of LIC – Subscription to equity shares/ debentures of an approved eligible issue – Subscription to notified bonds of NABARD | Rs. 1,50,000 |
80CCC | For amount deposited in annuity plan of LIC or any other insurer for a pension from a fund referred to in Section 10(23AAB) | |
80CCD(1) | Employee’s contribution to NPS account (maximum up to Rs 1,50,000) | |
80CCD(2) | Employer’s contribution to NPS account | Maximum up to 10% of salary |
80CCD(1B) | Additional contribution to NPS | Rs. 50,000 |
80TTA(1) | Interest Income from Savings account | Maximum up to 10,000 |
80TTB | Exemption of interest from banks, post office, etc. Applicable only to senior citizens | Maximum up to 50,000 |
80GG | For rent paid when HRA is not received from employer | Least of : – Rent paid minus 10% of total income – Rs. 5000/- per month – 25% of total income |
80E | Interest on education loan | Interest paid for a period of 8 years |
80EE | Interest on home loan for first time home owners | Rs 50,000 |
80D | Medical Insurance – Self, spouse, children Medical Insurance – Parents more than 60 years old or (from FY 2015-16) uninsured parents more than 80 years old | – Rs. 25,000 – Rs. 50,000 |
80DD | Medical treatment for handicapped dependent or payment to specified scheme for maintenance of handicapped dependent – Disability is 40% or more but less than 80% – Disability is 80% or more | – Rs. 75,000 – Rs. 1,25,000 |
80DDB | Medical Expenditure on Self or Dependent Relative for diseases specified in Rule 11DD – For less than 60 years old – For more than 60 years old | – Lower of Rs 40,000 or the amount actually paid – Lower of Rs 1,00,000 or the amount actually paid |
80U | Self-suffering from disability: – An individual suffering from a physical disability (including blindness) or mental retardation. – An individual suffering from severe disability | – Rs. 75,000 – Rs. 1,25,000 |
80GGB | Contribution by companies to political parties | Amount contributed (not allowed if paid in cash) |
80GGC | Contribution by individuals to political parties | Amount contributed (not allowed if paid in cash) |
80RRB | Deductions on Income by way of Royalty of a Patent | Lower of Rs 3,00,000 or income received |
