Income Tax

Income Tax Deductions List – Deductions on Section 80C, 80CCC, 80CCD and 80D- FY 2022-23 (AY 2023-24)

Income Tax Deductions List

To encourage savings and investments, the Income Tax Department has provided various deductions from taxable income. The same is provided in Chapter VI A – Deductions. There are many deductions applicable, which are beneficial for the taxpayers as they reduce their tax liability. The most famous among all the deductions is Section 80C.

Table of Contents

Section 80C – Deductions on Investments

Section 80C is a provision that allows taxpayers to lessen their taxable income by making tax-saving investments or incurring eligible expenses. Deduction under section 80C can be claimed by Individuals and HUFs. The maximum deduction allowed under section 80 C is up to INR 1.5 lakh every year. No company, partnership firm or LLP can avail the benefit of this deduction. It is also important to note that the maximum deduction of Section 80C, 80CCC and 80CCD (1) put together is INR 1.5 lakhs. However, an additional deduction of INR 50,000 can be claimed under section 80CCD (1B).

Deduction under Section 80C, 80CCC, 80CCD (1), 80CCE and 80CCD (1B)

SectionsEligible Investments for Tax DeductionsMaximum Deduction
80CInvestments in Equity Savings Schemes, Public Provident Fund/ Statutory Provident Fund/ Recognised Provident Fund payments to Life Insurance Premiums, principal sum of a Home Loan, SSY, NSC, SCSS, etc.INR 1,50,000
80CCCPayments made towards pension fundsINR 1,50,000
80CCD (1)Payments to Atal Pension Yojana or other pension schemes notified by the governmentEmployed: 10% of the basic salary + DA Self-Employed: 20% of gross total income
80CCEDeduction allowed under Section 80C, 80CCC, 80CCD (1)INR 1,50,000
80CCD (1B)Investments in NPS (outside INR 1,50,000 limit under section 80CCE)INR 50,000
80CCD (2)Employer’s contribution towards NPC (outside INR 1,50,000 limit under Section 80 CCE)Central Government Employer: 14% of basic salary + Dearness Allowance Others: 10% of basic salary + DA

Some of the investment options allowed as deductions under section 80C are given below. These deductions not only help you save your taxes but also help you grow your money. A comparison of the deductions is tabulated below:

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Investment OptionsAverage InterestLock-In periodRisk Factor
ELSS Funds12-15%3 yearsHigh
NPS Scheme8-10%Till the age of 60 yearsHigh
ULIP8-10%5 yearsMedium
Tax Saving FDUp to 8.40%5 yearsLow
PPF7.90%15 yearsLow
Senior citizen savings scheme8.60%Up to 5 years, which can be extended for a further 3 yearsLow
National Savings Certificate7.9%5 yearsLow
Sukanta Samriddhi Yojana8.50%Till the girl child is 21 years of age (partial withdrawal allowed when she reaches 18 years)Low

Section 80TTA- Interest on Savings Accounts

Deductions under section 80TTA can be claimed by Individuals and HUFs. However, resident senior citizens are barred from claiming deductions under 80TTA, but they can claim deductions under Section 80TTB. The maximum deduction allowed under this section is INR 10,000. The Section 80TTA deduction does not include interest from recurring deposits, fixed deposits, or interest income from corporate bonds.

Section 80TTB- Interest Arising from Deposits Held by Senior Citizens

Resident senior citizens of age 60 years or more can claim a deduction under section 80TTA. The highest amount of deduction allowed under section 80TTB is INR 50,000 against interest income from banks, post offices or a cooperative society engaged in the banking business. Further, bank interest can be either savings, fixed deposits, or recurring. The result would be that the upper ceiling for TDS deduction under Section 194A for senior citizens will be enhanced to INR 50,000. Hence, if the interest income is less than INR 50,000, then no TDS deduction will apply.

Section 80GG- Income Tax Deduction on House Rent Paid

Deduction under section 80GG can be claimed by those who do not receive HRA in their salary but live in rented accommodation. The conditions for claiming section 80GG are:

  1. Must be an individual taxpayer
  2. The taxpayer must be staying on rent
  3. There should be no self-occupied residential property of the taxpayer, nor should the taxpayer or their spouse or minor child or their HUF own any residential accommodation in a place where they currently reside.
  4. File Form 10BA

The deduction available under section 80GG is the least of the following:

  • Deducting rent paid from 10% of adjusted total income
  • INR 5,000 per month
  • 25% of total adjusted income

Adjusted Gross Total Income = Gross Total Income (Less) i) LTCG, if any, included in total gross income

ii) STCG u/s 111A

iii) Deductions u/s 80C to 80U except deductions under section 80GG

iv) Incomes of NRIs and foreign companies are taxed at special tax rates such as incomes u/s 115A, 115AB, 115AC or 115AD.

Section 80E- Interest on Education Loan

An individual can seek a deduction of interest paid on an education loan taken for undertaking higher education. The loan can be taken for the purpose of the taxpayer, their spouse or children, or a student for whom the taxpayer is a legal guardian. Section 80E deduction is available for a maximum period of 8 years starting from the year the interest starts getting paid or until the entire interest is paid, whichever is earlier. There is no upper limit on the amount of interest that can be claimed.

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Section 80EEA – Interest on Home Loan for First-Time Home Owners

Section 80EEA provides taxpayers with an extra deduction for paying interest on a house loan. On the contrary, section 24 exempts interest on home loans up to INR 2 lakhs; this section exempts home buyers from taking home loans and paying interest on the loan an additional INR 1.5 lakh.

Conditions for claiming 80EEA deduction

  • The individual should not own any residential house on the date of sanction of the loan.
  • The stamp duty value of the house should be less than or equal to INR 45 lakh.
  • The individual should not be eligible for deduction under section 80EE.
  • The loan should be sanctioned between 1, 2019 and 31 March 2022.

FY 2017-18 and FY 2016-17

The deduction can be claimed in FY 2017-18 if the loan was taken in FY 2016-17. This deduction is available only to homeowners who have one house property on the date of sanction of the loan, subject to a condition that the property should be less than INR 50 lakhs and the home loan must be less than INR 35 lakh. The loan borrowed from a financial institution must have been sanctioned between 1 April 2016 and 31 March 2017. An additional deduction of INR 50,000 is available on home loan interest over and above the deduction of INR 2 lakh on the interest component of the EMI allowed under section 24.

FY 2013-14 and FY 2014-15

In the course of these fiscal years, the deduction allowed to the first-time house owners is worth INR 40 lakh or less. It could be availed only if the loan amount was INR 25 lakh or less during this period. The sanctioning of the loan should be done between 1 April 2013 and 31 March 2014. The total deduction allowed under this section cannot exceed INR 1 lakh and is allowed for FY 2013-14 and FY 2014-15.

Section 80D- Deduction on Medical Insurance Premium

Policy applicable toDeduction for self and FamilyDeduction for parentsPreventive health check-upMaximum Deduction
Self & Family (below 60 years)INR 25,000NIL5000INR 25000
Self & Family + Parents (all of them below 60 years)INR 25,000INR 25,000INR 5000INR 50000
Self & Family (below 60 years) + Parents (above 60 years)INR 25,000INR 50,000INR 5000INR 75,000
Self & Family + Parents (all above 60 years)INR 50,000INR 50,000INR 5,000INR 1,00,000

An individual or HUF can claim deduction under section 80D on insurance for self, spouse and dependent children. The deduction allowed is INR 25,000. An additional deduction for parents’ insurance is available up to INR 25,000 if they are below 60. If the age is above 60 years, the deduction amount is INR 50,000. If the taxpayer and the parents are above 60, the maximum deduction allowed is INR 1,00,000.

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Section 80DD – Deduction for Medical Treatment of a Dependent with Disability

Resident individuals or a HUF can claim a section 80DD deduction. It is a deduction that can be claimed on expenditure incurred on medical treatment, training and rehabilitation of handicapped dependent relative. This deduction can be claimed by submitting a certificate of disability issued by a prescribed medical authority.

DisabilityLevel of DisabilityAmount of Deduction
Normal Disability40-79%INR 75,000
Severe Disability80% or moreINR 1,25,000

Section 80DDB – Deduction for Medical Treatment, etc

A resident individual or a HUF can claim a section 80DDB deduction. One can get a deduction of any money you spend on medical treatment for yourself or your dependents. HUFs can get a deduction for medical expenses paid on these specific ailments for any members of the HUF. The quantum of deduction that can be claimed under section 80DDB is:

AgeAmount of deduction
< 60 yearsAmount paid or 40,000, whichever is less
60 and aboveAmount paid or 1,00,000, whichever is less

Any reimbursement by an insurance company or employer of medical expenses should be reimbursed from the amount of deduction the taxpayer can claim under this section. To claim the deduction, a prescription from the concerned specialist is required.

Section 80U – Deduction for Disabled Individuals

DisabilityLevel of DisabilityAmount of Deduction
Normal Disability40-79%INR 75,000
Severe Disability80% or moreINR 1,25,000

A resident suffering from a physical disability or mental retardation can claim a deduction of INR 75,000. If he is suffering from severe disability, then one can claim a deduction of INR 1,25,000.

Section 80G – Income Tax Benefits on Donations for Social Causes

Different donations specified u/s 80G are available for deduction up to either 100% or 50% with or without restrictions. From FY 2017-18 onwards, any donation made in cash that exceeds INR 2,000 will not be allowed a deduction subject to a condition that the donation exceeding INR 2,000 can be made in any manner other than cash to qualify for an 80G deduction.

Donations allowing 100% deduction without any qualifying limit

  • The National Defence Fund was formed by the Central Government
  • Prime Minister’s National Relief Fund
  • An approved university or educational institution of National importance
  • Zila Saksharta Samiti set up in any district under the Chairmanship of the Collector of that district
  • National Illness Assistance Fund
  • National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental retardation and Multiple disabilities.
  • Fund formed by a State Government (SG) to provide medical care to the poor
  • National Sports Fund
  • National Cultural Fund
  • National Blood Transfusion Council or any State Blood Transfusion Council
  • Funds for Technology Development and Application
  • National Children’s Fund
  • Chief Minister’s Earthquake Relief Fund
  • Any fund formed by the SG of Gujarat, especially for providing relief to the victims of the earthquake in Gujarat.
  • Prime Minister’s Armenia Earthquake Relief Fund
  • Any trust, fund or institution to which Section 80G (5C) applies to provide care to the victims of the earthquake in Gujarat. The contribution should be made between 26th January 2001 and 30th September 2001
  • Swachh Bharat Kosh (applicable from the fiscal year 2014-15)
  • Africa (Public Contributions – India) Fund
  • National Fund for Control of Drug Abuse (applicable from fiscal year 2015-16)
  • Clean Ganga Fund (applicable from the fiscal year 2014-15)

Donations allowing 50% deduction without any qualifying limit

  • Prime Minister’s Drought Relief Fund
  • Jawaharlal Nehru Memorial Fund
  • The Rajiv Gandhi Foundation1
  • Indira Gandhi Memorial Trust

The following donations can avail of a 100% deduction subject to 10% of adjusted gross total income.

  • Donations approved by any Government or any local authority, Institution or association to be used for the purpose of family planning.
  • Donation by a Company to the Indian Olympic Association or any other notified association or institution established in India to develop infrastructure for sports and games in India or to sponsor sports and games in India.

The following donations can avail of a 50% deduction subject to 10% of adjusted gross total income.

  • Any other fund or any institution which fulfils the conditions prescribed under Section 80G (5)
  • Any Government or any local authority to be used for any charitable purpose except to promote family planning
  • Any corporation mentioned under Section 10 (26BB) to promote the interest of minority community.
  • Repair or renovate any notified temple, mosque, gurudwara, church, or other places.
  • Any authority formed in India to deal with and fulfil the need for housing accommodation or to plan, develop, or improve cities, towns, villages or both.

Section 80 GGB – Company Donation to Political Parties

This deduction is allowed to an Indian company for contributions to any political party or an electoral trust. This deduction is allowed for donations by any payment method other than cash.

Section 80GGC: Deductions on Donations by a Person to Political Parties

Section 80GGC deduction is allowed for any amount of donation to any political party or an electoral trust. This deduction can be availed only if the payment is made in any mode other than cash. Only individual taxpayers can claim a deduction under this section. Local authorities, companies, and an artificial juridical person wholly or partially funded by the government cannot claim a deduction under this section.

Section 80RRB – Deduction of Income via Royalty of a Patent

Deduction for any income by way of royalty for a patent, registered on or after April 1, 2023, under the Patents Act 1970, shall be available for up to INR 3 lakh or the income received, whichever is less. Only an individual patentee or an individual resident can claim this deduction. A certificate should be furnished in a prescribed form, duly signed by the prescribed authority, by the taxpayer.

Conclusion

In conclusion, it can be said that tax deductions are claims that reduce taxable income arising from various investments and expenses incurred by the taxpayer. It reduces the overall tax liability and helps save tax. However, the amount of tax one saves varies from the type of tax benefit you claim.

FAQs

  1. What is the section 80C limit?

    The section 80C limit is up to INR 1.5 lakhs.

  2. Is section 80C applicable to the new tax regime 2023?

    No, the section 80C deduction has been excluded from the new tax regime.

  3. What is the 80D limit for FY 2023-24?

    The limit under Section 80D for FY 2023–24 is INR 25,000.

  4. Can I claim both 80CCD 1B and 80CCD 2 for NPS?

    Yes, eligible individuals can claim deductions under 80CCD 1B and 80CCD 2  together.

  5. What is the limit of 80 CCD 2 tax exemption?

    The limit of section 80CCD 2 exemption is INR 2 lakh.

  6. What is the total deduction under sections 80C, 80CCC, and 80CCD?

    The total deduction, inclusive of Sections 80C, 80CCC, and 80CCD, is INR 1,50,000.

  7. What is the total deduction under Section 80CCC?

    The total deduction under section 80CCC is up to INR 1,50,000 lakhs.

References

  1. https://rgfindia.org/

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