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Allowable Deductions from Income while Filing Return of Income

Most Common Deductions are categorized in the following Categories for better and easy understanding-

  1. Income Based Deductions
  2. Standard Amount of Deductions
  3. Investment Based Deductions
  4. Expenses Based Deductions

Let us see the Basic Rules for claiming Deductions under ITR:-

Section 80A– Basic Rules of Deductions

  1. Deductions has to be claimed from Gross Total Income after giving effect to Set off & Clubbing Provisions
  2. Deductions cannot exceed Gross Total Income
  3. Any Unabsorbed Deductions cannot carry forward to next AY
  4. Deductions are not applicable from the these Income :-
  5. LTCG under section 112
  6. STCG under section 111A
  7. Specified Business Income under section 35AD
  8. Casual Income

1. Income Based Deduction

Section 80TTA- Interest on Savings Bank Account

Who can ClaimIndividual (Other than Senior Citizen) or HUF
On what IncomeInterest received on Savings Bank Account
How much to ClaimActual Interest Received or 10,000 whichever is lower
What Conditions to FulfilledSavings Bank Account should be in Bank, Co-Op Bank, Post office

Section 80TTB– Interest on Deposits

Who can ClaimIndividual (Senior Citizen)
On what IncomeInterest on Savings Bank Account or Fixed Deposit Income
How much to ClaimActual Interest Received or 50,000 whichever is Lower
What Conditions to FulfilledSavings Bank Account or F.D. should be in Bank, Co-Op Bank, Post office

2. Standard Amount of Deduction

Section 80U- Person with Disability

Who can ClaimIndividual (Resident)
How much to ClaimStandard Deduction- Severe disability-1,25,000,  
Non-Severe- 75,000
What Conditions to FulfilledCertificate of Disability is Required

Section 80DD- Maintenance/ Medical Treatment of Disabled Dependent

Who can ClaimIndividual or HUF (Resident)
How much to ClaimStandard Deduction- Severe Disability- INR 1, 25,000.
Non-Severe- 75,000
Note- Amount must be spent for Medical Treatment of Dependent or can be deposited in Scheme.
However standard Deduction is allowed irrespective of Amount Expended.
What Conditions to Fulfilled1. In case of Individual Assessee-Dependent can be Parents, Spouse Brother, Sister or Children.
In case of HUF- Any Member of HUF
2. Dependent should not claim the deduction in section 80C in their ROI

3. Investment Based Deduction

Section 80C- Deduction of Various Investments

Who can ClaimIndividual or HUF (Resident)
On what InvestmentRefer Illustrative List given Below
How much to ClaimINR 1,50,000 or Actual whichever is lower
(Limit is Including Section 80CCD & 80CCC)
What Conditions to Fulfilled1. Payment to be made to Approved Schemes
2. Exemption is available on payment basis only

Below are the list of Investment to be made under section 80C :-

  1. Investment in PPF
  2. Employee’s share of PF contribution
  3. NSCs
  4. Life Insurance Premium payment
  5. Tuition Fee of Children
  6. Repayment of Principal home loan
  7. Investment in Sukanya Samrudhi Account
  8. ULIPS and ELSS
  9. Sum paid to purchase deferred annuity
  10. Subscription to notified securities/notified deposits scheme
  11. Contribution to notified Pension Fund set up by UTI.
  12. Subscription to Home Loan Account scheme of the National Housing Bank
  13. Contribution to notified annuity Plan of LIC
  14. Subscription to equity shares of an approved eligible issue
  15. Subscription to notified bonds of NABARD

Section 80CCC- Contribution to certain Pension Funds

Who can ClaimIndividual (Resident or Non Resident)
On what InvestmentInvestment in Annuity Plan for receiving Pension in Future
How much to ClaimActual or 1,50,000 .
Note- INR 1.5 lacs limit is inclusive of limit of Section 80C & 80CCD
What Conditions to FulfilledInvestment has to be made only from Taxable Income

Section 80CCD- This section leads to Contribution to Pension Scheme of Central Government

Who can ClaimIndividual- Employed or Self Employed
On what InvestmentInvestment in Pension Scheme
How much to ClaimRefer Below (A) Point
What After Closure of Scheme1. On Complete Closure- 60% of Amount is under section 10(12A)    
2. On Partial Closure- 25% of Amount is Exempt under section 10(12A)

(A) How much to Claim under 80CCD

Own Contribution 80CCD (1)

  • Employee- 10% of Salary
  • Self Employed- 20% of Gross Total Income

 Additional Deduction on Own Contribution 80CCD (1B)

  • Upto INR 50,000 (Over and above 80CCD(1)

Employer’s Contribution 80CCD (2)

  • Central Government Employee- 14% of Salary
  • Other Employee- 10% of Salary

Section 80CCE– Limit on Amount of Deduction of section 80C, 80CCD & 80CCC

This Section limit the overall Deduction of Section 80C, 80CCD & 80CCC to INR 1,50,000

4. Expenses Based Deduction

Section 80GGB & 80GGC- Contribution to Political Party or Electoral Trust

Who can ClaimSection 80GGB- Indian Co. 80GGC- Any Assessee
On whatContribution to Political Party/ Electoral Trust
How much to Claim100%
ConditionsNot to be made in cash

Section 80DDB- Deduction with respect to Medical Treatment of Specific Diseases

Who can ClaimIndividual or HUF (Resident)
On what ExpensesMedical Treatment for Specific Diseases for Self or Dependent
How much to ClaimIf Dependent is Senior Citizen- Actual or INR 1 lacs whichever is lower.
Other Cases- Actual or INR 40 thousands whichever is higher
ConditionsIn case of Individual- Dependent can be Individual himself, Parents, Brother, Sister, Spouse, Children’s.
In case of HUF- Any Member

Specified Diseases covered include ataxia, dystonia musculorum deformans, dementia, aphasia, Parkinson’s, motor neuron disease, renal failure, cancers, hematological disorders and AIDS.

Section 80D– Medical Insurance

Who can ClaimIndividual or HUF (Resident)
On what ExpensesRefer Below (A) Point
How much to ClaimRefer Below (B) Point
Conditions1.Limit includes Amount paid for Preventive Health Checkup
2.If the Premium is paid for more than one year then, it should be apportioned between respect AY
3. Payment shall be made out of Income chargeable for Tax.

(A) On What Expenses

  1. Medical Insurance Premium
  2. Payment to Central Govt Approved Health Scheme
  3. Preventive Health Checkup
  4. Medical Expenses on Super Senior Citizens

(B) How much to Claim

(a) Medical Insurance Premium & Approved Health Scheme

Paid for Assessee himself, Spouse & Dependent Children- INR 25,000 or Actual whichever is lower
Paid for Parent (Non Senior Citizens)-INR 25,000 or Actual whichever is lower
Paid for Any Person (Senior Citizen)INR 50,000 or Actual whichever is lower

(b) Preventive Health Checkup

Maximum 5,000 for whole Family

Note- Allowed as deduction even though payment is made in cash

(c) Medical Expenses for Super Senior Citizen

50000 or Actual Expenses- whichever is lower.

Section 80EEB- Tax Incentive for Electric Vehicle

Who can ClaimIndividual
On what ExpensesInterest on Loan taken for Purchase of Electric Vehicle
How much to ClaimActual Interest Paid or INR 1,50,000 whichever is lower
Conditions1. Loan should be taken between 01 April 2019 to 31 March 2020.
2. Loan should be taken from Bank, FI, NBFC.
3. Assessee should not own any EV(electric vehicle) on date of Sanction  

Section 80E- Interest on Educational Loan

Who can ClaimIndividual
On what ExpensesInterest on Educational Loan taken for himself, Relative or as Guardian
How much to Claim100% up to 8 AY
Who are RelativesSpouse &Children’s