As mentioned earlier, there are some tax-free deductions and exemptions which are allowed under the Income Tax Act, 1961. These deductions reduce the gross taxable income and help in the calculation of the net taxable income. The more the deductions that you claim, the lower would be your tax liability and vice-versa. The available deductions under Section 80 of the Income Tax Act are as follows –
Income tax section |
Deduction available |
Section 80 C |
Deduction is available on eligible investments done and expenses incurred. The maximum deduction allowed under the section is INR 1.5 lakhs. It includes the following eligible investments and expenses –
- Life insurance premium
- Investment in five year fixed deposits
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Investment in EPF
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Investment in PPF
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Investment in mutual fund ELSS
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Tuition fee paid for up to two dependent children
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Principal repayment of home loan
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Investment in Senior Citizen Saving Scheme
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Investment in National Saving Certificates, etc.
|
Section 80 CCD (1B) |
This section allows an additional deduction of INR 50,000 if you invest in the National Pension Scheme offered by the Government of India |
Section 80 D |
Premiums paid for health insurance plans are allowed as a deduction under this section. The available limit of deduction is INR 25,000 which increases to INR 50,000 for senior citizens. Additionally, if premiums are paid for health insurance for parents, another INR 25,000 can be claimed as deduction which also increases to INR 50,000 if parents are senior citizens |
Section 80 DD |
Deduction for maintenance of a disabled family member. The amount of the deduction is fixed at INR 75,000 if disability is 40% to 80% and INR 1.25 lakhs if disability is more than 80% |
Section 80 DDB |
Deduction for treatment of named illnesses. The amount of deduction ranges from INR 40,000 to INR 80,000 depending on the age of the assessee |
Section 80 E |
Deduction for interest paid on an education loan. The entire amount of interest is allowed as a deduction |
Section 80 EEA |
Deduction for interest paid on home loan if you are a first time home buyer. To claim the deduction, the house should be up to INR 45 lakhs and the loan should be taken within 31st March 2020 |
Section 80 EEB |
Deduction on interest paid for a loan availed by the tax-payer to buy an electric vehicle. The deduction would be available if the loan is sanctioned between 1st April, 2019 and 31st March 2023. The maximum limit of deduction which is available is INR 1.5 lakhs |
Section 80 G |
Deduction for donations made to charitable institutions. 50% or 100% of the donation can be claimed as deduction depending on the charity donated to |
Section 80 GG |
Deduction for HRA if HRA is not a part of the salary component of an employee. The deduction would be lower of INR 5000/month, 25% of the income or rent paid over 10% of your income |
Section 80 TTA |
Deduction for interest earned from savings accounts. The maximum limit is INR 10,000 |
Section 80 TTB |
Deduction for interest earned from savings accounts, fixed deposits, post-office deposits etc. by senior citizens. The maximum limit of deduction is INR 50,000 |
Section 80 U |
If the tax-payer is disabled, this deduction can be claimed. The deduction would be INR 75,000 if disability is between 40% and 80%. For severe disabilities, the deduction would be INR 1.25 lakhs |