Most Common Deductions are categorized in the following Categories for better and easy understanding-
- Income Based Deductions
- Standard Amount of Deductions
- Investment Based Deductions
- Expenses Based Deductions
Let us see the Basic Rules for claiming Deductions under ITR:-
Section 80A– Basic Rules of Deductions
- Deductions has to be claimed from Gross Total Income after giving effect to Set off & Clubbing Provisions
- Deductions cannot exceed Gross Total Income
- Any Unabsorbed Deductions cannot carry forward to next AY
- Deductions are not applicable from the these Income :-
- LTCG under section 112
- STCG under section 111A
- Specified Business Income under section 35AD
- Casual Income
1. Income Based Deduction
Section 80TTA- Interest on Savings Bank Account
| Who can Claim | Individual (Other than Senior Citizen) or HUF |
| On what Income | Interest received on Savings Bank Account |
| How much to Claim | Actual Interest Received or 10,000 whichever is lower |
| What Conditions to Fulfilled | Savings Bank Account should be in Bank, Co-Op Bank, Post office |
Section 80TTB– Interest on Deposits
| Who can Claim | Individual (Senior Citizen) |
| On what Income | Interest on Savings Bank Account or Fixed Deposit Income |
| How much to Claim | Actual Interest Received or 50,000 whichever is Lower |
| What Conditions to Fulfilled | Savings 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 Claim | Individual (Resident) |
| How much to Claim | Standard Deduction- Severe disability-1,25,000, Non-Severe- 75,000 |
| What Conditions to Fulfilled | Certificate of Disability is Required |
Section 80DD- Maintenance/ Medical Treatment of Disabled Dependent
| Who can Claim | Individual or HUF (Resident) |
| How much to Claim | Standard 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 Fulfilled | 1. 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 Claim | Individual or HUF (Resident) |
| On what Investment | Refer Illustrative List given Below |
| How much to Claim | INR 1,50,000 or Actual whichever is lower (Limit is Including Section 80CCD & 80CCC) |
| What Conditions to Fulfilled | 1. 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 :-
- Investment in PPF
- Employee’s share of PF contribution
- NSCs
- Life Insurance Premium payment
- Tuition Fee of Children
- Repayment of Principal home loan
- Investment in Sukanya Samrudhi Account
- ULIPS and ELSS
- Sum paid to purchase deferred annuity
- Subscription to notified securities/notified deposits scheme
- Contribution to notified Pension Fund set up by UTI.
- Subscription to Home Loan Account scheme of the National Housing Bank
- Contribution to notified annuity Plan of LIC
- Subscription to equity shares of an approved eligible issue
- Subscription to notified bonds of NABARD
Section 80CCC- Contribution to certain Pension Funds
| Who can Claim | Individual (Resident or Non Resident) | |
| On what Investment | Investment in Annuity Plan for receiving Pension in Future | |
| How much to Claim | Actual or 1,50,000 . Note- INR 1.5 lacs limit is inclusive of limit of Section 80C & 80CCD | |
| What Conditions to Fulfilled | Investment has to be made only from Taxable Income |
Section 80CCD- This section leads to Contribution to Pension Scheme of Central Government
| Who can Claim | Individual- Employed or Self Employed |
| On what Investment | Investment in Pension Scheme |
| How much to Claim | Refer Below (A) Point |
| What After Closure of Scheme | 1. 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 Claim | Section 80GGB- Indian Co. 80GGC- Any Assessee |
| On what | Contribution to Political Party/ Electoral Trust |
| How much to Claim | 100% |
| Conditions | Not to be made in cash |
Section 80DDB- Deduction with respect to Medical Treatment of Specific Diseases
| Who can Claim | Individual or HUF (Resident) |
| On what Expenses | Medical Treatment for Specific Diseases for Self or Dependent |
| How much to Claim | If Dependent is Senior Citizen- Actual or INR 1 lacs whichever is lower. Other Cases- Actual or INR 40 thousands whichever is higher |
| Conditions | In 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 Claim | Individual or HUF (Resident) |
| On what Expenses | Refer Below (A) Point |
| How much to Claim | Refer Below (B) Point |
| Conditions | 1.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
- Medical Insurance Premium
- Payment to Central Govt Approved Health Scheme
- Preventive Health Checkup
- 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 Claim | Individual |
| On what Expenses | Interest on Loan taken for Purchase of Electric Vehicle |
| How much to Claim | Actual Interest Paid or INR 1,50,000 whichever is lower |
| Conditions | 1. 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 Claim | Individual |
| On what Expenses | Interest on Educational Loan taken for himself, Relative or as Guardian |
| How much to Claim | 100% up to 8 AY |
| Who are Relatives | Spouse &Children’s |