Due Date Extended !!

Due date for Income Tax Return filing has been extended from 31st July 2019 to 31st August 2019 by the Income Tax Department

So, what exactly is an Income Tax Deduction?


A deduction from an Income Tax point of view, is the investment / expenditure made by you that help you save taxes. So, the income tax deduction reduce your gross income (means the income on which, tax has to be paid).Thereby, reducing your tax on your total income.

Let's see how Income Tax Deductions reduces your Tax Liability:

Particulars Income Tax Deduction of Rs. 1,50,000 No Income Tax Deduction
Gross Income before deduction Rs. 15,00,000 Rs. 15,00,000
Income Tax Deductions Rs. 1,50,000 NIL
Net taxable Income Rs. 13,50,000 Rs. 15,00,000
Tax Liability before Rebate and Cess Rs. 2,17,500* Rs. 2,62,500*
*All the calculations are done based on F.Y. 2018-19 Income Tax Slab.

For knowing deduction impact and tax amount for F.Y. 2019-20, F.Y. 2018-19, F.Y. 2017-18 use this free Income Tax Calculator.


Types of Income Tax Deduction are :-


Income tax department allows deductions specified in the Chapter VI-A of the Income Tax Act. So, here’s the complete list of all the Income Tax Deductions for AY 2019-20 and 2020-21 as per the Income Tax that you can use to reduce your tax outgo (depending on your tax situation):

80C Deductions: LIC, PF, PPF etc.

80C deduction are the most popular Income Tax Deductions. The 80C deduction limit for AY 2018-19, 2019-20 and 2020-21 is ? 1,50,000. The various options of investments and payments that qualify for deduction under this section are:

  • Life Insurance Premium (LIP) Deduction is allowed in respect of life insurance premium that you pay on your Life insurance policy but policy must be in the name of:

    1. In case of an individual:Individual, spouse or any child of such individual.
    2. In case of HUF: Any member of HUF.
  • Do note that before making the payment towards the premium, first check with agent or read the policy description whether it is eligible for deduction for income tax purpose.

  • Public Provident Fund (PPF) Deduction is allowed in respect of Contribution made by you towards your PPF. The limit for minimum deposit in PPF A/C is Rs. 500 and limit for maximum deposit is Rs 1,50,000 during a year. PPF can be in the name of:

    1. In case of an individual: Individual, spouse or any child of such individual.
    2. In case of HUF: Any member of HUF.

    The best part about PPF is that the interest you receive on your PPF account and receipts on maturity or withdrawals is fully tax free. The PPF account matures after 15 years but part of the money can be withdrawn after 5 years.

  • Unit Linked Insurance Plan (ULIP) Deduction is allowed in respect of Contribution made by you towards your ULIP . You can make investments in the name of:

    1. In case of an individual: Individual, spouse or any child of such individual.
    2. In case of HUF: Any member of HUF.
  • Children's Tuition Fees You can claim deduction for the payment of tuition fees of your children to any university, college, school or other educational institution situated within India for the purpose of education. However, deduction would not be allowed for payment towards any development fees or donation or payment of similar nature. This deduction is allowed for a maximum of two children.

  • Principal Repayment of Housing Loan You can claim the deduction of principal repayment of your housing loan taken for purchase or construction of residential house property. Deduction can also be availed in respect of stamp duty charges, registration fee and other expenses paid for purchase of your house. This deduction is available for both individuals and HUF.

    But keep in mind that if you sell/transfer such house property in respect of which such deduction was taken before expiry of 5 years from the end of financial year in which possession was taken, then the deduction availed in the earlier years will be taxable for you in that year.

    Example: If you have taken home loan of Rs. 50,000 /- at the rate of interest is 10%, the bifurcation of installment is as follows:
    Year Financial Year Installment Interest Principal paid
    1 2015-16 Rs. 15,773.54 Rs. 5,000.00 Rs. 10,773.54
    2 2016-17 Rs. 15,773.54 Rs. 3,922.65 Rs. 11,850.89
    3 2017-18 Rs. 15,773.54 Rs. 2,737.56 Rs. 13,035.98
    4 2018-19 Rs. 15,773.54 Rs. 1,433.96 Rs. 14,339.58
  • Sukanya Samriddhi Scheme In lines with the Beti Bachao, Beti Padhao campaign, this scheme was launched on 22nd January, 2015 by Prime Minister Narendra Modi. You claim deduction under this scheme for any sum deposited by you in the Sukanya Samriddhi Account of your girl child or any girl child for whom you’re her legal guardian. The minimum limit of deposit under this account is Rs 1000 annually and maximum Rs 1,50,000. Interest earned and money withdrawals from this account are tax free.

  • Mutual Funds (Equity Linked Saving Scheme) You can claim deduction in respect of subscription to units of UTI or mutual funds specified u/s 10(23D) of Income Tax India, 1961.

  • Provident Fund If you're an employee, then you can claim deduction in respect of contribution towards your Statutory Provident Fund or Recognized Provident Fund Account.

  • Bank FDR’s (Known as 5 Year Tax Saving FDR’s) Almost everyone invests in Bank FDR’s but did you know that you can claim deduction for it too. Investment must be made in tax saving term deposit for a lock in period of 5 years or more with scheduled banks to avail the deduction.

  • Post Office Tax Saving FDR’s (Post Office Time Deposit Scheme) Similar to Bank FDR’s, 5 year FDRs of Post Offices are also eligible for deduction under section 80C.

  • National Saving Certificate (NSC) Subscribe to NSC and you’ll be eligible for deduction for the amount you contribute. These can be purchased from Post Office. Read more.

  • Deferred Annuity Plan You can claim deduction in respect of payment made by you under Deferred Annuity Plan. This annuity may be in your name, your spouse's name or in the name of any of your child. But to claim deduction under this annuity plan, there should be no provision of receiving cash in lieu of annuity.
    And, if you're a government employee and any sum is deducted from your salary under deferred annuity plan, then deduction is restricted to only 1/5th of your salary.

  • Others
    1. Contribution towards Approved Superannuation Fund.
    2. Subscription to any deposit scheme/pension fund of National Housing Bank (NHB)
    3. Subscription to bonds issued by National Bank for Agriculture and Rural Development (NABARD)
    4. Deposit in an account under the Senior Citizen Savings Scheme.
    5. Subscription to notified deposit scheme of:
    6. Public Sector Housing Finance Company
    7. Housing Development Authority of cities, towns and villages
    8. Contribution towards annuity plans of LIC like Jeevan Dhara, Jeevan Akshay etc. or any other insurer as approved by Central Government.
    9. Subscription to equity shares or debentures of Public Company or any Public financial institution forming part of any eligible issue of capital approved by Board where proceeds are utilized for infrastructure company.
    10. Stamp duty, registration fee incurred for the purpose of transfer of such house property to the assessee.

For more details about this deduction Read More.

80CCC: Pension Plan

Deposit/Payment made by you towards LIC or any other insurer in the approved annuity plan for receiving pension from the fund referred to in section 10(23AAB) can be claimed as deduction under this section being lower of the following:

  • 100% of the amount paid
  • Rs 1,50,000

However, as per section 80CCE, you can claim deduction of only Rs 1,50,000 under section 80C, 80CCC, and 80CCD (1) cumulatively.

Case No. Investment u\s 80C Investment u\s 80CCC Limit Available for 80CCC (Refer Note) Deduction u\s 80CCC
1 60,000 40,000 90,000 40,000
2 1,20,000 60,000 30,000 30,000
3 40,000 90,000 1,10,000 90,000
4 1,40,000 1,50,000 10,000 10,000
5 0 1,70,000 1,50,000 1,50,000

Note: Limit available means: Rs 1,50,000 - Investment u\s 80C = Limit Available for 80CCC

Section 80CCD: [Deduction in respect of contribution to pension scheme of Central Government]

The 80CCD deduction for AY 2019-20 can be divided into three different categories:
  • 80CCD (1): You can avail this deduction irrespective of whether you're in employment or self-employed on the amount deposited under pension scheme notified by the Central Government (NPS deduction for AY 2018-19). The deduction allowed in this section is lower of the following 3 amounts:
    1. 10% of your Salary (Basic salary+D.A) (in case you're in employment) or 20 % of your Gross Total Income (in case you're self-employed)
    2. Limit left under section 80CCE i.e. Rs 1,50,000 - deduction u\s 80C - deduction u\s 80CCC.
    3. Actual Amount paid under eligible NPS.
  • 80CCD(1B): You can claim an additional deduction of up to Rs. 50,000 under this section for investment in NPS Scheme. This is in addition to 80CCD (1).

  • 80CCD (2): Sec 80CCD(2) deduction for AY 2019-20 can be availed by you if you're an employee and your employer makes contribution under NPS Scheme for employees. It is allowed only to the extent of 10% of your salary (Basic salary+D.A).

For AY 2018-19, 2019-20 & 2020-21 the deduction limits under section 80CCD are same.

Example:
Case No. Amount Deposited By Salary Including DA Gross Total Income (in case of self-employment) Deduction under section
Employee himself 80CCD (1) Individual himself 80CCD (1) Employer u\s 80CCD (2) 80CCD (1) max 150000/- 80CCD (2)
1 10,000 20,000 5,00,000 Not Applicable 10,000 20,000
2 20,000 3,00,000 Not Applicable 20,000 0
3 30,000 5,00,000 Not Applicable 0 30,000
4 15,000 4,50,000 Not Applicable 0 15,000
5 15,000 2,50,000 Not Applicable 15,000 0
6 15,000 Not Applicable 4,50,000 15,000 0
7 1,50,000 2,50,000 Not Applicable 25,000 0
8 20,000 3,00,000 Not Applicable 0 20,000
9 1,30,000 3,50,000 Not Applicable 0 35,000
10 1,12,500 4,25,000 85,000

Note: In the above example, Deduction u\s 80CCD(1B) is not considered because deduction u/s 80CCD(1B) is available without any additional condition. The deduction is available lower of Amount invested or Rs 50,000/-.

For more details about this deduction Read More.

80 CCG: Rajiv Gandhi Equity Scheme for Investments in Equities

If you make any investment in the listed equity shares or listed units of an equity oriented fund specified under the above-mentioned scheme during the previous year, then you can avail deduction under this scheme being lower of the following:

  1. 50% of the amount invested in equity shares or units
  2. Rs 25,000
However, there are certain conditions for availing deduction under this scheme:
  1. Your gross total income for relevant financial year should not exceed Rs 12 Lakhs.
  2. You should be a new retail investor as specified under notified scheme.
  3. Minimum Lock-in period for claiming deduction under this scheme is 3 years from the date of acquisition. So, if you sell/transfer such listed equity shares/listed units of equity oriented funds then deduction allowed earlier will become taxable.

This deduction option is not available now for new investors from A.Y. 2018-19. However, an assessee who has claimed deduction under this section for assessment year 2017-18 and earlier assessment years shall be allowed deduction under this section till the assessment year 2019-20 if he is otherwise eligible to claim the deduction as per the provisions of this section.

No deductions shall be available u/s 80CCG for AY 2018-19, 2019-20 & onwards

80 RRB: Deduction in respect of Royalty on Patents

If you're a resident of India and a patentee (true and first inventor of invention including co-patentee), then you can claim deduction under this section being lower of the following:

  1. 100% of Royalty Income from patent
  2. Rs 3,00,000

For AY 2018-19, 2019-20 & 2020-21 the deduction limits under section 80CCD are same.

80 QQB: Deduction on Royalty income to Author of certain books

If you're an author (Resident of India or resident but not ordinarily resident in India) (including joint author) of a book, then you can claim Sec 80QQB deduction for AY 2019-20, being lower of following:

  1. Lumpsum consideration for assignment or grant of any of the interest in copyright of the book and other royalty or copyright fees in respect of such book.
  2. Rs 3,00,000

Note: For the purpose of this section, Books includes work of literary, artistic or scientific nature. However, books doesn't include brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, text books for schools, tracts and other publications of similar nature, by whatever name they are called.

For AY 2018-19, 2019-20 & 2020-21 the deduction limits under section 80CCD are same.

Section 80D: (Medical Health Insurance)

Medical health insurance is important to cover yourself from financial crisis in case of any medical emergency. This deduction is allowed in respect of Health Insurance premium paid by you or contribution made towards CGHS or payment made for preventive health checkup of yourself, your spouse, dependent children or dependent parents. However, there are certain limits for availing deduction under this section [ Limits are given as per the changed from the A.Y. 2019-20]:

Various Cases Maximum Deduction allowed for Health Insurance Premium Total Deduction under 80D
Yourself, spouse & Dependent Children Parents
No family member is over 60 years of age Up to Rs. 25,000 Up to Rs. 25,000 Rs. 50,000
Your parents are over 60 years of age and neither you nor your wife is more than 60 years. Up to Rs. 25,000 Up to Rs. 50,000 Rs. 75,000
You or your wife has attained more than 60 years of age and also parents are over 60 years. . Up to Rs. 50,000 Up to Rs. 50,000 Rs. 1,00,000

The above-mentioned limits include a limit of Rs. 5,000 for any expenditure made for the purpose of Preventive Health Checkup.
If any medical expenses are incurred on a Senior Citizen (60 years of age & above), it will be considered a part of the limits mentioned above provided that no policy is taken for him/her.
For AY 2018-19 the limit of Rs 50,000 for senior and super senior citizens was Rs 30,000. Also, medical expenses as mentioned above were available only to those aged 80 years and above.

The payment of premium should be made other than cash. However, for preventive health checkup, it can be made in cash also.

Case Premium/Expenses for Senior citizen Amount Max available deduction Allowable deduction Total deduction in case of multiple
1 Yourself, Spouse and Dependent Childrens No 20000 25000 20000 20000
2 Yourself, Spouse and Dependent Childrens Yes 28000 50000 28000 28000
3 Yourself, Spouse and Dependent Childrens No 26000 25000 25000 48000
Parents No 23000 25000 23000
4 Yourself, Spouse and Dependent Childrens Yes 50000 50000 50000 50000
5 Yourself, Spouse and Dependent Childrens Yes 55000 50000 50000 70000
(Parents) Super senior citizen Yes 20000 50000 20000
6 Yourself, Spouse and Dependent Childrens No 25000 25000 25000 50000
Parents No 32000 25000 25000

Changes in Budget 2018 :- For Senior citizen, limit has been increased from Rs. 30,000 to Rs. 50,000 (Aggregate deduction if both parents and individual are senior citizen will be Rs. 1,00,000/-)

For more details about this deduction Read More.

Section 80E : Interest on Education Loan Only individuals are eligible for this tax deduction. It is available on the interest component of an educational loan.

It starts from the year when an individual starts repaying the loan.However, it is to be noted that the deduction can be availed only for eight years, beginning from repayment from the first year.

The provisions of this section are same for AY 2018-19, 2019-20 & 2020-21.

For more details about this deduction Read More.

Section 80EE : This deduction is a boon for the first time home buyers.

The deduction allowed under this section is over and above the deduction u/s 24. The amount of deduction is maximum Rs 50,000 per financial year and shall be allowed until the loan is repaid. However, for availing benefit under this section you have to fulfill the below conditions :

  • You are not the owner of any other house i.e. this is your 1st house
  • Value of the property should be Rs 50 lakhs or less
  • The amount of Loan shall be Rs 35 lakhs or less
  • Loan has been sanctioned between 01.04.2016 to 31.03.2017

Section 80EEA : Special Deduction for home buyers purchasing House property upto Rs.45 Lakhs

A new section has been proposed to be inserted in Chapter VI A deductions under Section 80. This section is Section 80EEA which allows additional deduction to tax payers for paying interest on a home loan availed by them. While Section 24 allowed for interest exemption on home loans up to INR 2 lakhs, this section allows an additional exemption of INR 1.5 lakhs to home buyers who avail a home loan and pay interest on the loan. The terms of this deduction are as follows –

  • The loan should be taken for buying a house property
  • The loan should be taken from a financial institution
  • Loan should be taken between 1st April 2019 and 31st March 2020
  • The stamp duty value of the house should be within INR 45 lakhs
  • The tax payer should not own any other house in his/her name prior to availing the home loan
  • The carpet area of the house should be up to 60 square metres in metro cities and 90 square metres in non-metro cities

The motto of introducing this section is to promote affordable housing for every individual by granting higher tax reliefs.

Section 80EEB: Deduction for purchase of an electric car.

Another new section of deduction introduced by the new Union Budget was Section 80EEB. This section was introduced to promote the purchase of electric vehicles among individuals by giving them tax relief on their purchase. The section states that if a loan is availed by a taxpayer to buy an electric vehicle, the interest paid on the loan would be allowed as a tax-free deduction from the taxable income. The terms of deductions under the Section include the following –

  • Deduction is available on the interest paid on a loan availed for buying an electric vehicle
  • The limit of deduction is up to INR 1.5 lakhs
  • The loan should be taken from a financial institution
  • The loan should be sanctioned between 1st April 2019 and 31st March 2023

Section 80DD: Deduction in respect of maintenance including medical treatment of a dependent with disability.

You can claim Sec 80DD deduction for AY 2019-20 in respect of a dependent person with a disability when you incur expenditure on their training, rehabilitation, medical treatment, payment made to LIC, Unit Trust of India or any other specified scheme or deposit on behalf of such dependent.

The deduction is allowed from the following two amounts:
  1. Rs. 75,000 fixed, in case the dependent has 40% or more disability but less than 80%.
  2. Rs. 1,25,000 fixed, in case the dependent has 80% or more disability.
Notes
  1. Dependent person includes your spouse, children, parents, brothers and sisters. In case of HUF, any member of HUF.
  2. Benefit under this section is available only if the dependent person has not claimed deduction u\s 80U.
  3. A certificate of disability is required from prescribed medical authority.
  4. This is a fixed deduction and not based on actual expenses.
Example
Disability Amount Incurred Allowable deduction Deduction
Normal Disability 20000 75000 75000
Normal Disability 80000 75000 75000
Severe Disability 5000 125000 125000
Severe Disability 150000 125000 125000

For more details about this deduction Read More.

Section 80DDB: Deduction in respect of medical treatment on specified disease

Deduction u/s 80DDB for AY 2019-20 can be availed by you in respect of payment for medical treatment of a specified disease or ailment (such as AIDS, cancer or other neurological diseases specified under Rule 11DD). Deduction under this section can be availed for yourself or dependent up to the amount actually paid or Rs. 40,000 (1,00,000 in case of Senior as well as super senior citizen) whichever is less.

For AY 2018-19 deduction of Rs 60,000 was available in case of a senior citizen or Rs 80,000 in case of very senior citizen.

This deduction is subject to the following two conditions:
  1. You must mandatorily obtain a prescription for such medical treatment from the prescribed specialist.
  2. The amount of deduction will be reduced by amount, if any `received, in respect of insurance or reimbursement by your employer for the treatment of the person concerned.
Note 1: Dependent person includes your spouse, children, parents, brothers and sisters. And, in case of HUF, any member of HUF. Example:
Disability Amount Incurred Allowable deduction Deduction
Normal Citizen 20000 40000 20000
Normal Citizen 50000 40000 40000
Senior Citizen 25000 100000 25000
Senior Citizen 80000 100000 80000
Super Senior Citizen 4000 100000 4000
Super Senior Citizen 82000 100000 82000

The basic difference between 80DD & 80 DDB is-
80 DD: It is for specified disability of dependent.
80 DDB: It is for treatment of specified diseases of dependent.

Changes in Budget 2018: In this budget, under deduction u/s 80DDB, the class of super senior citizen has been submerged into senior citizen raising the limit of Rs.60,000/80,000 to Rs. 100,000 or the amount incurred whichever is lower.

For more details about this deduction Read More.

80U: Deduction in case of a person with disability

If an individual, is certified by the medical authority or a government doctor to be a person with disability, then he is allowed deduction of Rs. 75,000 under this section. In case the person is certified by the medical authority to be a person with severe disability, then the quantum of deduction allowed under this section will be Rs. 1,25,000. Sec 80U deduction for AY 2019-20 is a fixed deduction and not based on actual expenses.

Example:
Disability Amount Incurred Allowable deduction Deduction
Normal Disability 20000 75000 75000
Normal Disability 80000 75000 75000
Severe Disability 5000 125000 125000
Severe Disability 150000 125000 125000

The limits under section 80U are same for the AY 2018-19 and AY 2019-20.

For more details about this deduction Read More.

80GG: Deduction where House rent is paid and HRA not received

You're eligible for availing deduction if you don't receive House Rent Allowance (HRA) from your employer or if you're self-employed.

However, 80GG deduction for AY 2019-20 would not be allowed in the following cases:
  1. If you, your spouse, minor child or HUF of which you're a member owns any accommodation at the place where you're employed or doing business.
  2. If you own any residential house at the place other than place of your residence, then such property should not be assessed as self-occupied property.
Deduction allowed is lower of the following amount:
  1. Rent paid minus 10% of your adjusted total income
  2. 5000/- per month (as per the amendment in law)
  3. 25% of your adjusted total income

Here, adjusted total income = Gross Total Income (From All Heads) - Long Term Capital Gain - Short Term Capital Gain - Deductions (except deduction under this section).

The limits and conditions under section 80GG are same for the AY 2018-19 & 2019-20.

For more details about this deduction Read More

80GGA: Deduction in respect of certain donations for Scientific Research or Rural Development

If you make any donation for Scientific Research or Rural Development, then you can avail deduction under this section. Under Sec 80GGA deduction for AY 2019-20, the whole amount of donation is allowed as deduction without any upper limit. However, cash donations of more than Rs. 10,000 are not allowed under this section.

This deduction is not allowed to the assessee who have an income from Business/Profession. The limits under section 80GGA are same for the AY 2018-19 & 2019-20.

80GGC: Deduction in respect of contributions given by any person to Political Parties

If you make donations towards any political party or electoral trust, then you can avail deduction under this section of the total amount you pay. However, Sec 80GGC deduction for AY 2019-20 is not allowed when donation is made in the form of cash. However, local authorities and every artificial judicial (wholly or partly funded by government) person cannot claim deduction under this section.

The limits under section 80GGC are same for the AY 2018-19 & 2019-20.

80TTA: Deduction in respect of interest on deposits in Savings Account

Under this section, you can avail deduction in respect of income by the way of interest on deposits in Savings Bank Accounts of Banks, Co-Operatives Banks or Post Office. The quantum of deduction allowed under this section is Rs. 10,000 or the actual interest earned, whichever is lower. This deduction can be availed by both individual and HUF.

For more details about this deduction Read More.

80TTB: Deduction in respect of interest from deposits held by Senior Citizens

Section 80TTB allows a deduction upto Rs 50,000/- in respect of interest income from deposits held by senior citizens. Consequently, limit of tds deduction u/s 194A for senior citizen has been raised to Rs. 50,000. However, no deduction under section 80TTA shall be allowed in these cases.

For more details about this deduction Read More.

80G: DONATIONS

The deduction under section 80G for AY 2019-20 is available in respect of donations made by you towards certain specified funds, charitable institutions etc.

For claiming donation under this section following conditions must be fulfilled:
  • The donation should be made in any mode of payment other than cash if it exceeds Rs. 10,000. (For F.Y.2016-17, from F.Y. 2017-18 the limit for cash2,000. (From F.Y. 17-18) Donations in kind are not eligible for deduction under this section.

The donation should be made only to specified funds or institutions.

Specified Funds or Institutions can be divided into 4 components for the purpose of this section. Here is a complete lists of charitable trust/institutions for which you can take the tax benefit under section 80G of the Income Tax:

Donations eligible for 100% deduction without qualifying limit:

  1. Prime Minister's National Relief Fund
  2. National Defense Fund set up the Central Government
  3. Prime Minister's Armenia Earthquake Relief Fund
  4. Africa (Public Contributions India) Fund
  5. National Foundation for Communal Harmony
  6. University/Educational Institution of National Eminence approved by Prescribed Authority
  7. Maharashtra Chief Minister's Earthquake Relief Fund
  8. Fund set up by the State Government of Gujarat, for providing relief to Gujarat earthquake victims
  9. Zila Saksharta Samiti
  10. The National Blood Transfusion Council or a State Blood Transfusion Council.
  11. Any fund to provide medical relief to the poor, set up by the State Government.
  12. The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund.
  13. The Andhra Pradesh Chief Minister's Cyclone Relief Fund, 1996
  14. National Illness Assistance Fund
  15. Chief Minister's Relief Fund or Lieutenant Governor's Relief Fund for any State or UT.
  16. National Sports Fund set up the Central Government
  17. National Cultural Fund set up the Central Government
  18. Central Government's Fund for Technology Development & Application
  19. National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities
  20. National Children's Fund (From AY 2014-15)
  21. Swachh Bharat Kosh and Clean Ganga Fund set up by Central government ( Any amount paid in pursuance of Corporate Social Responsibilities as per The Companies Act will not be eligible for deduction) (From AY 2015-16)
  22. National fund for control of drug abuse. (From AY 2016-17)

Donations eligible for 50% deduction of donation amount without qualifying limit:

  1. Jawaharlal Nehru Memorial Fund
  2. Prime Minister's Drought Relief Fund
  3. Indira Gandhi Memorial Trust
  4. Rajiv Gandhi Foundation

Donations eligible for 100% deduction of donation amount with qualifying limit:

  1. To Government or any approved local authority/institution/association for the purposes of family planning.
  2. Donations by a company to Indian Olympic Association or other notified association or institution for the development of infrastructure or sponsorship for sports & games.

Donations eligible for 50% deductions of donation amount with qualifying limit:

  1. To Government or any approved local authority/institution/association for purposes other than family planning.
  2. Any other fund or institution which fulfills the conditions of section 80G(5)
  3. To any Indian authority for the purpose of satisfying the need for housing accommodation or for planning development of cities, towns villages.
  4. To any corporation (specified under section 10(26BB)) for promoting interest of members of a minority community
  5. Donations to any notified temple, mosque, gurdwara, church or any other place notified by the Central Government for the purpose of repair and renovation.

The limits under Section 80G are same for the AY 2018-19 & 2019-20.

Qualifying limit for the purpose of this section is 10% of Adjusted Gross Total Income which is;

Gross Total Income

  1. (-) Long Term Capital Gains and Short Term Capital Gains u/s 111A
  2. (-) Deductions from 80C to 80U (except deduction under this section)
  3. (-) Income of NRIs and Foreign companies (referred to in section 115A, 115AB, 115AC or 115AD)
  4. (-) Income on which income tax is not payable i.e. Share from AOP.
We hope our detailed guide on income tax deductions under chapter VI A has helped you to save maximum taxes and get maximum income tax refunds at the time of filing your Income Tax Return.

For more details about this deduction Read More.

Frequently Asked Questions

Q- Do recurring deposits come under section 80C of tax deduction?

No, recurring deposits does not come under the purview of section 80C. 5 years fixed deposit comes under section 80C but not recurring deposit.There are many other investments under section 80C such as ELSS, LIC, PF, principal repayment.


Q- Does the Provident Fund come under section 80C of tax exemption?

Yes, provident fund comes under 80C. There are two types of PF : Recognized provident fund and Statutory provident fund. An employee can avail deduction for the amount which has been contributed by him not by the employer.


Q- Does investing in NPS comes under section 80C?

Yes, investing in NPS comes under the purview of Section 80C.


Q- Do my SIPs qualify for tax deductions under Section 80C?

Investment in SIPs of ELSS comes under Section 80C but Section 80C do not cover investment in other mutual fund SIPs.

Q- Do 80CCC and 80CCD come under 80C or they are extra investment benefits? Are they beyond the 150000 limit of 80C?

Deduction under section section 80C, 80CCC and 80CCD(1) cannot exceed INR 1,50,000 as per section 80CCE. However, section 80CCD(1B) is an extra investment. Section 80CCD and 80CCC are beyond deduction under section 80C but together deduction under section 80C, 80CCC and 80CCD(1) cannot exceed INR 1,50,000.


Q- What is the difference between income tax exemption on NPS under section 80CCD(1B) vs NPS under section 80C?

NPS under section 80C can be claimed upto Rs 1,50,000 where deduction under section 80CCd(1B) can be claimed over and above section 80C upto Rs. 50,000.


Q- Is investment for a spouse in APY exempt under Section 80CCD(1B) ?

Investment made in Atal Pension Yojna comes under Section 80CCD(1B) and can be treated same as NPS.Therefore, deduction can be claimed for APY under 80CCD(1B).However, investment made under spouse’s name cannot be claimed under this section.


Q- Doesn't the 80CCD(2) give the opportunity of saving tax beyond 2 lakhs per year?

No, Section 80CCD(2) can be claimed when employer contributes in NPS of the employee.There is no restriction on the amount of deduction of 80CCD(2). The same can be claimed as a deduction by the employee.However, as per section 80CCE, aggregate of 80C, 80CCC and 80CCD cannot exceed INR 1,50,00.ONly Section 80CCD(1B) can be claimed as an extra deduction of INR 50000. So, Section 80CCD(2) does not provide opportunity to save tax beyond 2 lakhs.


Q- Does Rajiv Gandhi equity saving scheme 80CCG allow extra rebates from tax deduction cap of 1.5 lakh under 80C?

Yes, deduction for investing under RGESS is allowed over and section 80C, 80CCD, and 80CCC.However, RGESS has been phased out.


Q- Can 80D deduction avail to an assessee for his father-in-law?

Section 80D can be claimed by assessee on medical insurance and health checkup of him, spouse, parents and dependent children. Hence, no amount can be availed as deduction by assessee on medical policy of father-in-law.


Q- What will be the exemption under Section 80D if I got a combined Mediclaim for my parents and myself?

Section 80D allows to claim deduction of amount spent on medical insurance and health check up of assessee, spouse , parents and dependent children. If the mediclaim is combined, then,the same deductions will be available as provided when individual policies are taken on the basis of their age as discussed above in section 80D.


Q- Is an 80D deduction available for a non-dependent parent?

Section 80D is available for parents whether dependent or not.


Q- Can the benefit of Section 80E be claimed if the assessee is pursuing higher education from abroad?

Section 80E states that deduction can be claimed under this section if any loan has been taken in India for higher education of assessee, spouse of the assessee and children of the assessee. Therefore, education can be claimed by the assessee for pursuing higher education abroad provided loan should be taken in India.


Q- Can I claim charges on premature repayment of an education loan under 80E, which results in no interest in subsequent years?

Yes, premature charges paid on early repayment of loan is treated as interest for the section 80E, hence can be claimed as a deduction for the same.


Q- I bought my first house. Can I claim a tax benefit under both section 24 and section 80EE in a single year?

Section 24 and Section 80EE can be claimed simultaneously. However, interest on housing loan should be first claimed under section 24 upto INR 2,00,00 and then only it can claim a deduction under section 80EE of INR 50,000.


Q- Are infertility treatment expenses exempt under Section 80DD of income tax?

Following are the diseases for which expenses are incurred are exempt under this section:

  • Autism
  • Blindness
  • Cerebral Palsy
  • Hearing Impairment
  • Leprosy-cured
  • Locomotor disability
  • Low vision
  • Mental illness
  • Mental retardness.

Hence, from the above list it can be concluded that any treatment expenses incurred for infertility treatment under Section 80DD of Income Tax Act,1961


Q- Can an individual claim the U/S 80DDB deductions, as well as 80U for a dependent disabled son while filling his/her ITR

Section 80DDB defines that an individual can claim a deduction for any expense incurred by them for a disabled relative where Section 80U defines that an individual if certified as disabled can claim a deduction under this section for any expenses incurred by him for his own treatment. Therefore, a parent can claim a deduction only the expenses incurred by them for the treatment of their diabled son under Section 80DDB and not under Section 80U.


Q- If I have a dependant who is mentally disabled which tax deduction suits me?

Section 80DD is best suited deduction for you as Section 80DD provides deduction for any amount incurred for the treatment of disable dependant and the mental illness is one of the diseases covered under this section.


Q- Can I take tax deduction under 80DD for my father as he is permanently hearing impaired more than 60% but he has a sum of money in his bank account?

Yes , deduction can be claimed by the assessee provided expenses have been actually incurred by him for the treatment of his father. The amount of deduction will be Rs.75000( 60% disabled), having money in bank account does not seem to count.


Q- Is interest on REC bonds exempted under 80TTB?

Interest on REC bonds is not exempt under section 80TTB.


Q- Can I find tax rebate if I have an FD account?

Tax rebate is available for all individuals who have gross total income of INR 500000 or less, source of income does not seem to matter.


CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.