Income Tax Deductions Section 80C to 80U for Tax Saving in India [Updated]

What is Income Tax Deduction as per Income Tax Act?

A deduction from an Income Tax point of view is the benefit given for the investment made /expenditure incurred. Such deductions help in reducing the tax payable. Therefore, the income tax deduction reduces your gross total income (means the income on which tax has to be paid). Thereby reducing the tax on your total income, which we all learn for.

Who can claim Income Tax deductions?

Only eligible taxpayers can claim these deductions in their income tax returns. Such eligible taxpayers have been specified under various sections of the Act. In some cases, it is individual in some companies, HUF, etc.

It is pertinent to note that the taxpayers who opt to pay tax under the new tax regime can claim only deductions under section 80CCD(2) and 80JJAA.

Income tax deduction needs to be claimed at the time of filing your Income Tax Return and no separate disclosure compliances are required for claiming such deductions. The amount of deductions should be reduced from the gross income to reach the taxable amount.

Let's see how Income Tax deductions reduce your tax liability:

As seen in the above example, eligible investment/payments made can save you a tax of Rs. 45,000

Income Tax Deductions in India

Section 80C: Deduction in respect of life insurance premium, contribution to PF, children tuition fees, PPF etc.

A list of other investments that are eligible for deduction under section 80C. are enumerated below:

• 1) Premium paid for life insurance policy Premium paid on insurance policies of self, spouse or child (minor or major). In the case of HUF, the premium paid for any member. It can be either a life policy or an endowment policy. The deduction limit shall be as follows:

  Particulars	Deduction u/s 80C
  Policies issued before 1.4.2003	20% of actual capital sum assured Here, capital sum assured shall include the minimum sum assured but exclude: the bonus over and above the amount of sum assured the premium agreed to be returned
  Policies issued between 1.4.2012 and 1.4.2013	10% of actual capital sum assured
  Policies that are issued on or after 1.4.2013	Where the insurance is taken on the life of a person with any disability or disease as mentioned in section 80U or 80DDB, respectively: 15% of actual capital sum assured Others: 10% of actual capital sum assured

• 2) Premium paid for a contract of deferred annuity taken on the life of the self, spouse or any child, provided such contract does not contain any terms for the exercise of an option to receive cash payments instead of the payment of the annuity. It is pertinent to note here that a contract for a deferred annuity can be entered into with any person and not necessarily with an insurance company.

• 3) Any amount invested in the Sukanya Samriddhi Scheme in the name of your daughter or any girl child for whom you are a legal guardian.

• 4) Contribution to:

  - Public Provident Fund
  - Approved superannuation fund
  - Unit-linked Insurance Plan, 1971
  - Unit-linked Insurance Plan of LIC Mutual Fund
  - Approved annuity plan of LIC
  - Pension fund which is set up by mutual fund or by the administrator or the specified company
  - National Housing Bank Term Deposit Scheme, 2008
  - additional account under NPS
  - Senior Citizens Savings Scheme Rules, 2004
  

• 5) Subscription to:

  - National Savings Certificates (VIII issue)
  - units of any mutual fund or from the administrator or the specified company
  - notified deposit scheme of a public sector company that provides long-term finance for construction or purchase or construction of houses for residential purposes in India or any other deposit scheme concerned with housing accommodation or planning, improvement or development of cities, towns and villages or both.
  - specified equity shares or debentures or units of mutual fund
  - notified bonds issued by NABARD

• 6) Investment in five-year fixed deposit (FD) of Scheduled Bank or Post Office

• 7) Repayment of housing loan principal amount(including stamp duty, registration fee and other expenses)

• 8) Payment of tuition fees to any college, school, university or other educational institutions within India for full-time education for maximum 2 children

Check the detailed guide on section 80 C deduction.

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Section 80CCC: Income Tax Deduction for Contributions to Pension Funds

Under section 80CCC income tax deduction for the contributions made in specified pension plans can be claimed. The tax deduction can be claimed by individuals (whether resident or non-resident). Maximum permissible deduction under sections 80C, 80CCC and 80CCD(1) put together is Rs. 1,50,000

Section 80CCD(1): Income tax deduction for contributions made by individuals to eligible NPS

The contribution made to eligible NPS account is tax-deductible upto Rs 1.5 lakhs under section 80CCD(1). The deductions shall be restricted to the amount contributed or the below-given percentage, whichever is less. However, this tax benefit is within the overall ceiling limits of section 80CCE, i.e. Rs. 1,50,000. To know the computation of the exempt amount, eligibility and much more. Read more

Section 80CCD(1B): Additional Income tax deduction for contributions made by Individual to eligible NPS

Section 80CCD(1B) gives you the additional tax saving benefit of upto Rs 50,000 for contributions to the NPS account. It is over and above the limits of section 80CCE,i.e. It shall not be subjected to the ceiling limit of Rs. 1,50,000. This section 80CCD has gained so much attention as you can invest up to Rs. 2 lakh in an NPS account and claim a deduction of the full amount, i.e. Rs. 1.50 lakh under Sec 80CCD(1) and Rs. 50,000 under Section 80CCD(1B). Click to know more.

Section 80CCD(2): Income tax deduction for contributions by an employer to eligible NPS

Your contribution to NPS is deductible under 80CCD(1), and 80CCD(1B), and the amount contributed by your employer towards your NPS account is also tax-deductible under section 80CCD(2). The maximum deduction limit is Rs 1,50,000. Read to know more details. The deduction amount shall be restricted to 14% of salary(Basic salary + DA) in case of central Govt. employees and 10% in any other employees.

Section 80D: Income Tax benefit for medical insurance premium

Section 80D is amongst the most popular tax saving options. Under this tax benefit is admissible for

1. Medical Insurance Premiums
2. Expenditure on Preventive Health Check-up
3. Other Medical Expenditure

The admissible deductions under this section are as under:

1. Case I – If your self / spouse or dependent children are below 60 Years of age, then the maximum deduction is Rs. 25,000, and if your parents are also below 60 years of age, then the maximum deduction is Rs. 25,000. Therefore, the aggregate deduction shall be a maximum of Rs. 50,000.
2. Case II – If your self / spouse or dependent children are below 60 Years of age, then the maximum deduction is Rs. 25,000, and if parents are 60 years or above, then the maximum deduction is Rs. 75,000 50,000. Therefore, the aggregate deduction shall be a maximum of Rs. 75,000.
3. Case III – If your self / spouse or dependent children are 60 years or above, then the maximum deduction is Rs. 50,000, and if your parents are also 60 years or above, then the maximum deduction is Rs. 75,000 50,000. Therefore, the aggregate deduction shall be a maximum of Rs. 1,00,000.
4. Deduction upto Rs. 5,000 shall be allowed in respect of payment made towards preventive health check-up of self, spouse, dependant children or dependant parents made during the previous year. However, the said deduction of Rs. 5,000 shall be within the overall limit of Rs. 25,000 or Rs. 50,000, specified above.

The maximum deduction available to a HUF in respect of premium paid to insure the health of any member of the family would be Rs. 25,000, and in case any member is a senior citizen, then Rs. 50,000.

1. You can also claim a deduction of upto Rs. 50,000 under section 80D even if you do not have any health insurance policy provided any amount is incurred towards:
   - medical treatment expenditure of self, spouse and dependent children (who is of the age of sixty years or more and not having medical insurance cover)
   - medical treatment expenditure of any parent(s) (who is of the age of sixty years or more and not having medical insurance cover)
2. Deduction where the health insurance premium is paid in lump sum: Deduction shall be apportioned towards all the years for which the premium is paid.

Section 80DD: Income Tax Deduction for Medical Treatment of a Dependent with Disability

Section 80DD provides an income tax benefit to the extent of Rs 75,000 (Where disability is 40% or more but less than 80%) & Rs 1,25,000 (Where there is severe disability (disability is 80% or more) respectively. The benefit can be availed for incurring medical expenditures for a disabled dependent relative. For diseases covered, documents required and other information, please refer to the detailed guide.

Section 80DDB: Income Tax Deduction for Specified Diseases

The income tax deduction under section 80DDB serves as financial help for those suffering from a severe disease or are taking care of such dependent family members. The deduction is allowed in respect of the amount actually paid for the medical treatment of such disease or ailment of the specified persons. The maximum deduction is summarized hereunder:

No such deduction shall be allowed unless a prescription is obtained for such medical treatment from a neurologist, oncologist, urologist, haematologist, immunologist, or other specialists, as may be prescribed. Read more to know the eligibility and other qualifying criteria.

Section 80E: Income Tax Deduction for Interest paid on Higher Education Loan

The interest paid on higher education loan taken for self, spouse, child or student of whom you are a legal guardian is eligible for income tax deduction under section 80E. The tax benefit is available for the 8 Assessment Years. i.e., The current year and the next 7 years, without any maximum limits. Read to know more.

Section 80EE: Income Tax Deduction for Home Loan

Section 80EE provides an additional deduction of upto Rs. 50,000 in respect of the interest on loan taken by an individual to acquire residential house property from any financial institution. Read insights here. 80EE deduction is in addition to the deduction available under section 24 while computing ‘income from house property’. The conditions for availing deduction of interest are: here.

Section 80EEA: Income Tax Deduction for first time home buyers

This section is Section 80EEA which allows an additional deduction to taxpayers 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 Rs 1.5 lakhs to home buyers who avail a home loan and pay interest on the loan.
Other conditions for availing deduction of interest:

Section 80EEB: Income Tax Deduction for repayment of Electronic Vehicle Loan

This section was introduced to promote the purchase of electric vehicles among individuals by giving them tax relief on the interest paid on loan taken to purchase such vehicles from any financial institution from 01/04/2019 to 31/03/2023. The limit of deduction is up to Rs 1.5 lakhs.

Section 80G: Deduction in respect of donations made to specified funds and charitable institutions etc

1. Deduction under this section is available to all types of taxpayers (individual/ firm/ LLP or any other person).
2. The deduction amount is based on the category in which the fund falls, i.e. with or without any qualifying limit.
   Where the funds are subject to qualifying limit, the formula for calculation of deduction = Gross Qualifying Amount - Net Qualifying Amount
3. The donation should be made in any mode of payment other than cash if it exceeds Rs. 2,000. Donations in kind are not eligible for deduction under this section

Check the complete list of funds under section 80G with their qualifying limit and the calculation of deduction amount, with example.

Section 80GG: Income Tax Deduction for House Rent Paid

Deduction under this section is available only to those individuals who do not receive benefits by way of HRA(House Rent Allowance) or RFA(Rent Free Accommodation). Deduction u/s 80GG can be claimed to the extent of Rs 5,000 per month for the house rent paid. Read to know more.

The admissible deduction shall be least of the following:
a. Rs. 5,000 per month
b. 25% of the adjusted total income*; or
c. Rent paid less 10% of total income*

*Adjusted Total Income = Gross total income less (short-term capital gains under section 111A, long term capital gains, income under section 115A and deductions under sections 80C to 80U (other than 80GG))

Section 80GGA: Income Tax Deduction for Donation to Scientific Research & Rural Development

Donations for Scientific Research or Rural Development can avail deduction under section 80GGA. Assessee having an income from Business/Profession cannot avail of this benefit. Under this section, the whole amount is allowed as a deduction without any upper limit. However, cash donations of more than Rs. 2,000 are not allowed. Read More about Section 80GGA

Section 80GGB: Income Tax Deduction for donation to Political Parties

Donations made by an Indian company to any political party or an electoral trust shall be eligible for deduction under this section. However, no deduction shall be permissible in respect of cash donations.

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

Any person other than an Indian Company can avail deduction under section 80GGC of the total amount paid to a political party or electoral trust, except the cash donations. However, local authorities and every artificial judicial (wholly or partly funded by the government) person cannot claim a deduction under this section.

Section 80RRB: Income Tax Deduction for Royalty on Patents

A resident of India and a patentee (true and first inventor of the invention, including co-patentee) can claim a deduction under section 80RRB in respect of patents registered on or after 01.04.2003. The deduction amount shall be the lower of:

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

For claiming the benefit under this section patent must be registered. Read More about Section 80RRB

Section 80QQB: Income Tax Deductions for Royalty Income of Authors

An author (Resident of India or resident but not ordinarily resident in India), including the joint author of a book, can claim a deduction under Sec 80QQB. The deduction amount shall be as follows:
a. In the case of lump sum payment - Total amount of royalty income subject to a maximum of Rs. 3,00,000.
b. In other cases - Total amount of such income subject to a maximum of 15% of the value of books sold during the previous year.

Read More about Section 80QQB

Section 80U: Income Tax Deduction for Disabled Individuals

resident individual certified by the medical authority or a government doctor to be a person with a disability (having a disability of 40% or more) can claim a deduction of Rs. 75,000 under this section. In the case of a person with a severe disability (having a disability of 80% or more ), the quantum of deduction allowed is Rs. 1,25,000. It is a fixed deduction and is not based on actual expenses.

For more details about this deduction, Read More.

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

Section 80TTA allows deduction in respect of interest income 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. Both individual and HUF can avail this deduction (Other than Resident Senior Citizen).

For more details about this deduction Read More.

Section 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 resident senior citizens (age 60 years or more) with a banking company, a post office, cooperative, society engaged in the banking business etc. Consequently, the limit of tds deduction u/s 194A for senior citizens has been raised to Rs. 50,000. However, no deduction under section 80TTA shall be allowed in these cases. Note that the senior citizen aged 75 years and above, earning only pension and interest income, is exempted from ITR filing as tax shall be deducted at source by the banks.
For more details about this deduction Read More.