Income Tax Deductions

Income tax deductions are a specified amount of certain expenses incurred by the taxpayer during the financial year that can be subtracted from their gross income to calculate the tax liability. Income tax deductions are specified under Section 80C to 80U of the Income Tax Act. After following these deductions, the total income of the assessee has arrived & tax is charged on it at prescribed rates.

1. Deductions are not permitted on the following incomes:

Long term capital gains
Short-term capital gains on transfer of equity shares and units of the equity-oriented fund through a recognized stock exchange.
Winning from lotteries & races.

2. The deduction cannot exceed Gross total Income

3. No deduction shall be allowed if the deduction is not claimed in the return of income.

Various Types of Tax Deductions in India

You can reduce your taxable income by increasing your deductions. There are many investment options and forms of expenditure which can help you get reductions on your taxable income. The Indian Income Tax Act provides many provisions for this. Mentioned below are several different tax deduction options.

1. Section 80C

For	Payment of LIC, PF, NSC, etc
Eligible Assessee	Individual or HUF
Conditions	Deposit or investment in any one or more of the listed items during the previous year
Amount of deduction	The amount deposited/invested or RS 1,50,000 whichever is less
Eligible deposits	Life Insurance Premium paid on the life of the individual, spouse, any child, or any member of HUF Public Provident Fund (PPF) Unit Linked Insurance Plan (ULIP) of UTI or LIC Payment to a notified annuity plan of LIC Recognized Provident Fund Tuition fees paid (max 2 children) Repayment of House Loan (excluding interest on the loan) Superannuation fund Sukanya Samriddhi Account Scheme National Saving Certificates (VIII issue) UTI or Mutual Fund Notified pension fund of Mutual Fund Notified deposit scheme or pension fund of housing finance companies or housing boards Notified deposit scheme of housing finance companies or housing boards Equity shares, debentures, units, etc of Infrastructure undertakings Fixed deposit of 5 years more with a scheduled bank Fixed deposit of 5 years more with a post office Notified Bonds of NABARD Deposit in an account under Senior Citizen Saving Scheme

2. Section 80CCC

For	A contribution made to annuity plans of LIC & other insurers
Eligible Assessee	Individual
Conditions	Deposit during the previous year a sum under an annuity plan of LIC for receiving a pension from the fund
Amount of deduction	The amount deposited/invested or Rs 1,50,000 whichever is less

3. Section 80CCD

For	Contribution toward approved pension scheme
Eligible Assessee	Central Government employee or any other individual assessee
Conditions	Employer & Employee contribution to approved pension scheme of the central government & any amount deposited by any other individual assessee to such scheme
Amount of deduction	In case of salaried employee: Employers contribution: Amount paid in assessee’s account or 10%of salary, whichever is lower; Employee’s Contribution: Amount paid or 10% of salary, whichever is lower; In case of any other individual assessee: The amount deposited in an approved pension scheme or 20% of gross total income in the previous year, whichever is lower
Additional deduction	Up to Rs 50,000 in respect of contribution to NPS of the central government.

Section 80C + Section 80CCC+ Section 80CCD ≤ Rs 1,50,000

4. Section 80D

Eligible Assessee: Individual or HUF

In respect of Payment of Medical Insurance Premia Section 80CCC

Particulars	Individual		HUF
For the benefit of -	Family	Parents	Any member
Medical Insurance Premium	✔	✔	✔
Payment of Preventive Health Checkup	✔	✔	✘
Contribution to CGHS/ Notified Scheme	✔	✘	✘
Maximum Deduction- General Deduction Additional deduction (Policy taken on the life of senior citizen)	Rs 25,000 Rs 25,000	Rs 25,000 Rs 25,000	Rs 25,000 Rs 25,000

5. Section 80DD

For	Medical treatment of disabled dependent
Eligible Assessee	Resident Individual or HUF
Conditions	Expenditure incurred for medical treatment, training, and rehabilitation of a dependent being a person with a disability The amount deposited under any scheme of LIC, UTI, or any other insurer for maintenance of a dependent, being a person with a disability
Amount of deduction	Fixed deduction of Rs 75,000 (Rs 1,25,000 in case a dependent is a person with a severe disability)
Disability Certificate	To furnish along with the return of income

6. Section 80DDB

For	Medical treatment of specified disease
Eligible Assessee	Resident Individual or HUF
Conditions	Expenditure incurred on medical treatment of prescribed disease in respect of an individual, his spouse, children, parents, brothers, and sisters dependent on him and any member of HUF dependent on HUF
Amount of deduction	The actual amount paid or Rs 40,000 (Rs 1,00,000 in case of senior citizen), whichever is lower
Prescription	Should obtain a medical prescription from a doctor

7. Section 80E

For	Repayment of interest on Education Loan
Eligible Assessee	Individual
Conditions	Interest on loan taken from a financial or charitable institution
Amount of deduction	100% of the amount of interest on a loan
Period of deduction	8 assessment years(including initial assessment year)

8. Section 80EE

For	Interest on loan taken for residential house property
Eligible Assessee	Individual
Conditions	The value of the house should be Rs 50 lakhs or less The loan taken for the house must be Rs 35 lakhs or less The loan must be sanctioned by a Financial Institution or a Housing Finance Company The loan must be sanctioned between 01.04.2016 to 31.03.2017 As on the date of the sanction of the loan, no other house property must be owned by you.
Amount of deduction	Interest payable or Rs 50,000, whichever is lower
No double deduction	The deduction is not allowed if interest is already allowed

9. Section 80G

For	Donation to certain funds, charitable institutions, etc
Eligible Assessee	All assessee
Conditions	Donation in kind not eligible No deduction if the amount exceeds Rs 2,000/- unless the amount is paid by any mode other than cash.
Amount of deduction	As given below

Donations eligible for Full Deduction

National Defence Fund set by the Central Govt.
Prime Minister’s National Relief Fund
Prime Minister’s Armenia Earthquake Relief Fund
National Foundation for Communal Harmony
University/ Education Institution of National eminence approved by the prescribed authority
Maharashtra Chief Minister’s Earthquake Relief Fund
Any Fund set-up by the State Govt of Gujarat, exclusively for providing relief to the victims of the earthquake of Gujarat
Zila Saksharta Samiti constituted in any district
National Blood Transfusion Council or any State Blood Transfusion Council
Any fund set up by the state Govt to provide Medical Relief to the poor
Army Central Welfare Fund or Indian Naval Benevolent Fund or the Air Force Central Welfare Fund
National Illness Assistance Fund
Andhra Pradesh Chief Minister’s Cyclone Relief Fund
Chief Minister Relief Fund or the Lieutenant Governor’s Relief Fund in respect of any State or Territory
National Sports Fund set up by the Central Govt
National Cultural Fund set up by the Central Govt
Fund for Technology Development and Application, set up by the Central Govt
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities.

Donations eligible for 50% Deduction

Jawaharlal Nehru Memorial Fund
Prime Minister’s Drought Relief Fund
National Children’s Fund
Indira Gandhi Memorial Fund
Rajiv Gandhi Foundation

Deductions with a max limit of 10% of Adjusted Gross Total Income*

Government or any local authority, institution, or association for promoting family planning
Indian Olympic association
Renovation or repair of the temple, mosque, gurudwara, church, or other places notified by the CG
Corporation for promoting the interest of minority community

*Adjusted Gross total income= Gross total income - Long-term capital gains, Short-term capital gains subject to STT, and all deductions available u/s 80 except section 80G

10. Section 80GG

For	Rent paid
Eligible Assessee	Individual
Conditions	Must not be receipt of rent allowance Any residential accommodation must not be owned by the assessee or his spouse or minor child at the place where he originally resides or performs duties of his office or employment or carries on his business profession
Amount of deduction	Least of the following: Rs.5,000 per month 25% of the adjusted total Income Rent paid - 10% of adjusted total Income

11. Section 80TTA

For	Interest on saving deposit
Eligible Assessee	Individual or HUF
Conditions	Interest on saving deposit maintained with bank or post office
Amount of deduction	100% of interest income or Rs 10,000 whichever lower

12. Section 80 TTB

For	Interest on all kinds of deposits
Eligible Assessee	Resident senior citizen
Conditions	Interest on deposits maintained with bank or post office
Amount of deduction	100% of interest income or Rs 10,000 whichever lower

Note: Apart from all the sections discussed above under chapter VI-A, there are many other sections that have not been covered, keeping in mind the importance and relevance of the sections to the mass.