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

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


2. Section 80CCC

ForA contribution made to annuity plans of LIC & other insurers
Eligible AssesseeIndividual
ConditionsDeposit during the previous year a sum under an annuity plan of LIC for receiving a pension from the fund
Amount of deductionThe amount deposited/invested or Rs 1,50,000 whichever is less


3. Section 80CCD

For Contribution toward approved pension scheme
Eligible AssesseeCentral Government employee or any other individual assessee
ConditionsEmployer & Employee contribution to approved pension scheme of the central government & any amount deposited by any other individual assessee to such scheme
Amount of deductionIn 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 deductionUp 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

For the benefit of - Family ParentsAny 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

ForMedical treatment of disabled dependent
Eligible AssesseeResident Individual or HUF
  1. Expenditure incurred for medical treatment, training, and rehabilitation of a dependent being a person with a disability
  2. 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 deductionFixed deduction of Rs 75,000 (Rs 1,25,000 in case a dependent is a person with a severe disability)
Disability CertificateTo furnish along with the return of income


6. Section 80DDB

ForMedical treatment of specified disease
Eligible AssesseeResident Individual or HUF
ConditionsExpenditure 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 deductionThe actual amount paid or Rs 40,000 (Rs 1,00,000 in case of senior citizen), whichever is lower
PrescriptionShould obtain a medical prescription from a doctor


7. Section 80E

ForRepayment of interest on Education Loan
Eligible AssesseeIndividual
ConditionsInterest on loan taken from a financial or charitable institution 
Amount of deduction100% of the amount of interest on a loan
Period of deduction8 assessment years(including initial assessment year)


8. Section 80EE

ForInterest on loan taken for residential house property
Eligible AssesseeIndividual
  • 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 deductionInterest payable or Rs 50,000, whichever is lower
No double deductionThe deduction is not allowed if interest is already allowed


9. Section 80G

ForDonation to certain funds, charitable institutions, etc
Eligible AssesseeAll assessee
  • 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 deductionAs 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

ForRent paid
Eligible AssesseeIndividual
  • 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 deductionLeast of the following:

  • Rs.5,000 per month
  • 25% of the adjusted total Income
  • Rent paid - 10% of adjusted total Income


11. Section 80TTA

ForInterest on saving deposit
Eligible AssesseeIndividual or HUF
ConditionsInterest on saving deposit maintained with bank or post office
Amount of deduction100% of interest income or Rs 10,000 whichever lower


12. Section 80 TTB

ForInterest on all kinds of deposits
Eligible AssesseeResident senior citizen
ConditionsInterest on deposits maintained with bank or post office
Amount of deduction100% 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.




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