20/07/2024
21 Deductions a Taxpayers can Claim while Filing Income Tax Returns
1) Section 80C is one of the most popular and favourite sections amongst taxpayers. It allows a maximum deduction of Rs 1.5 lakh every year from the taxpayer's total income.
Some Investment / Expenditure are
Life insurance premium for the policy
ELSS funds
NPS Scheme
ULIP
Tax saving FD
PPF - Public Provident Fund Account
Senior citizen savings scheme
National Savings Certificate
Sukanya Samriddhi Yojana
Certain payments for purchase/construction of residential house property
Tuition fees
Post Office Time Deposit Rules etc
2) Section 80CCD (1B) Investments of up to Rs.50,000 in NPS.
3) 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
4) Section 80GG – Income Tax Deduction on House Rent Paid
Section 80GG deduction is available for rent paid when HRA is not received.
Max Deduction can be
a. Rent paid minus 10% of adjusted total income
b. Rs 5,000/- per month
c. 25% of adjusted total income
5) Section 80E – Interest on Education Loan
An individual is allowed to deduct interest on loans taken to pursue higher education. The loan may have been taken for the taxpayer, spouse, children, or a student for whom the taxpayer is a legal guardian.
80E deduction is available for a maximum of 8 years (beginning the year in which the interest starts getting repaid) or till the entire interest is repaid, whichever is earlier. There is no restriction on the amount that can be claimed.
6) Section 80D – Deduction on Medical Insurance
Premium Claim a deduction of Rs.25,000 under on insurance for self, spouse and dependent children. An additional deduction for insurance of parents is available up to Rs 25,000, if they are less than 60 years of age. If the parents are aged above 60, the deduction amount is Rs 50,000
In case both taxpayer and parent(s) are 60 years or above, the maximum deduction available under this section is up to Rs.1 lakh. From FY 2015-16 a cumulative additional deduction of Rs. 5,000 is allowed for preventive health check.
7) Section 80DD – Deduction for Medical Treatment of a Dependent with Disability
Section 80DD deduction is available to a resident individual or a HUF and is available on:
a. Expenditure incurred on medical treatment (including nursing), training and rehabilitation of handicapped dependent relative
b. Payment or deposit is made to a specified scheme for maintenance of handicapped dependent relatives.
i. Where disability is 40% or more but less than 80% – a fixed deduction of Rs 75,000.
ii. Where there is a severe disability (disability is 80% or more) – a fixed deduction of Rs 1,25,000.
You must note that to claim a deduction under sections 80DD & 80U, you need to file form no. 10-IA where the person with a disability or severe disability is suffering from autism, cerebral palsy or multiple disabilities
8) Section 80DDB – Deduction for Specified Diseases
A deduction up to Rs.40,000 is available to a resident individual for any expense incurred towards treatment of specified medical diseases or ailments for himself or any of his dependents. In case the individual on behalf of whom such expenses are incurred is a senior citizen, the individual or HUF taxpayer can claim a deduction of up to Rs 1 lakh.
9) Section 80U – Deduction for Disabled Individuals
A deduction of Rs.75,000 is available to a resident individual who suffers from a physical disability (including blindness) or mental retardation. In case of severe disability, one can claim a deduction of Rs 1,25,000.
10) Section 80G – Income Tax Benefits Towards Donations for Social Causes
Donations with 100% deduction or 50% deduction depends upon the Trust. Donations above Rs 2000 should be made in any mode other than cash to qualify for an 80G deduction.
11) Section 80GGC – Deduction on Donations By a Person to Political Parties
Deduction under section 80GGC is allowed to an individual taxpayer for any amount contributed to a political party or an electoral trust.
12) Section 80RRB – Deduction on Income via Royalty of a Patent
80RRB Deduction for any income by way of royalty for a patent, registered on or after 1 April 2003 under the Patents Act 1970, shall be available for up to Rs.3 lakh or the income received, whichever is less.
13) Section 80TTB – Interest Income on Deposits for Senior Citizens
Deductions with respect to interest income from deposits held by senior citizens will be allowed. The limit for this deduction is Rs.50,000.
14) Section 80TTA – Interest on Savings Accounts
If you are an individual or a HUF, you may claim a deduction of a maximum Rs 10,000 against interest income from your savings account with a bank, co-operative society, or post office.
15) Section 80IA - 80JJAA - For Certain Business and Assessee
Depending upon certain conditions various deductions are available to the businessman
16) Section 16 i - Standard Deduction Rs. 50,000 or the amount of salary, whichever is lower
17) Section 16 ii - Entertainment allowance
Actual or at the rate of 1/5th of salary, whichever is less [limited to Rs. 5,000]
18) Section 23/24 - Municipal taxes on property paid when rent received
19) Section 24 - Interest on borrowed capital
Rs. 30,000/Rs. 2,00,000, subject to specified conditions
20) Section 57 - Any reasonable sum paid by way of commission or remuneration for the purpose of realising dividend
Any reasonable sum paid by way of commission or remuneration for the purpose of realising interest on securities
Any other expenditure (not being capital expenditure) expended wholly and exclusively for earning such income.
21) Section 57 ii - Family Pension
In the case of family pension, 331/3 per cent of such pension or Rs. 15,000, whichever is less
Remember to read the rules and keep evidence or proof ready before claiming any expenditure. Further, few deductions are available only in the old regime and not the new.
Happy Filing, and I Hope you can save some Tax.
Donations with a 100% deduction or 50% deduction depend upon the Trust.
