Income Tax Deduction List: Explore Deductions under Section 80C, 80CCC, 80CCD and 80D, for F.Y. 2023-24
Updated: Jun 12
Income tax deductions are very complicated, and understanding each of them can make a big difference in the amount of taxes you pay. For the tax filing Financial Year 2023-24, it becomes all the more important to know the different sections that offer deductions under the Income Tax Act, ranging from Section 80C to 80U. These sections provide deductions on an extensive range of investments and expenses, thus enabling taxpayers to save more by reducing the amount of taxable income from their pockets through legal means.
Table of Contents
Brief Overview of Income Tax Deductions List
Income tax deductions are one of the most important financial tools that reduce the taxable income and, therefore, lower the total tax liability. These deductions, ranging from Section 80C to 80U of the Income Tax Act of India, cover a large variety of expenses and investments. Few key deductions include those on investments in provident funds, life insurance premiums, and equity-linked savings scheme under Section 80C, health insurance premiums under Section 80D, and interest on housing loans under Sections 80E and 80EE. Other important sections provide for deductions for donations to charitable organizations, rent paid if HRA is not received, and expenses related to medical treatment of specified diseases. Each of these sections has its own rules and limits, meant not only to provide tax relief but to motivate individual spending in areas that contribute to economic growth and support societal welfare. Understanding and utilizing these deductions can greatly help in efficient financial planning and substantial tax savings.
Understanding Section 80C Deductions
Section 80C of the Income Tax Act is one of the most popular sections used by taxpayers in India to reduce their taxable income through various investments and expenditures. The deductions under Section 80C cover a wide range of financial instruments and expenses that promote savings and financial planning, besides being a means to achieve specific financial goals, such as education and homeownership.
Section 80C allows deductions up to a maximum limit of INR 1.5 lakh per annum from a taxpayer's gross total income. The deduction is available to individuals and HUFs and covers a variety of investments and payments.
List of Eligible Investments and Expenditures
Public Provident Fund (PPF): Government-sponsored, long-term savings with a maturity of 15 years and tax-free interest.
Equity Linked Savings Scheme (ELSS): These are mutual funds that primarily invest in equities with a lock-in period of 3 years, offering the potential for higher returns along with tax benefits.
National Savings Certificate (NSC): A fixed income investment scheme that one can open with any post office. It is a secure, low-risk investment with a maturity period of 5 years.
Life Insurance Premiums: Premiums paid for life insurance policies for self, spouse, or child/children are eligible for deduction under this section.
Principal Repayment on Home Loan: The principal component of a housing loan EMI paid for the purchase or construction of a residential house property.
Tuition Fees: Fees paid to any school, college, university, or other educational institution situated within India for full-time education of any two children.
Additional Eligible Investments
Sukanya Samriddhi Yojana (SSY): It is a government-backed savings scheme targeted at the parents of girl children, aiming at their education and marriage expenses.
Senior Citizens Savings Scheme (SCSS): It is a reliable and risk-free return investment option available to senior citizens, providing regular income with tax-saving benefits.
5-Year Fixed Deposits with Banks and Post Office: Such fixed deposit schemes for a term of 5 years with a bank or post office are also eligible for tax deduction under this section.
Maximum Deduction Limit
The maximum limit available under Section 80C is INR 1.5 lakh per financial year. The mentioned investments and expenditures are summed up towards such a limit. It must be noted that the aggregate amount of deduction across the mentioned instruments cannot exceed the given limit of INR 1.5 lakh in a single financial year.
Income Tax Deductions List: Other Key Deductions Under Section 80
Apart from the popular Section 80C, the Income Tax Act has two more important deductions under Section 80CCC and 80CCD, specifically designed to encourage savings for retirement under various pension schemes. Here is the detailed look at these sections:
Section 80CCC: Pension Funds
Section 80CCC provides a deduction to individuals for any amount paid to deposit in certain pension funds. This section is aimed to encourage the assessee to make provisions for their retirement through the purchase of annuity plans of life insurance companies.
Eligibility:
Any individual who pays any amount to deposit in certain pension funds, specifically those provided by life insurance companies.
The pension policy must be taken in the taxpayer's own name.
Deduction Limits:
The maximum deduction allowed under Section 80CCC is capped at INR 1.5 lakh per annum.
This limit is inclusive of the INR 1.5 lakh limit under Section 80C. In other words, the combined limit of deduction under Section 80C, 80CCC, and 80CCD(1) is INR 1.5 lakh.
Section 80CCD: National Pension System (NPS)
Section 80CCD deals with contributions to the National Pension System (NPS), a government-sponsored pension scheme. This section is divided into three sub-sections, each offering specific tax benefits.
80CCD(1): Deduction for Employee's Contribution
Eligibility: Applies to salaried employees as well as self-employed individuals contributing to NPS.
Deduction Limit: The maximum deduction is 10% of salary (for employees) or 20% of gross total income (for self-employed individuals), up to the combined Section 80C, 80CCC, and 80CCD(1) limit of INR 1.5 lakh.
80CCD(1B): Deduction for Additional NPS Contribution
Eligibility: All individuals contributing to NPS.
Deduction Limit: Offers an additional deduction for investment up to INR 50,000 in NPS, which is over and above the ceiling limit of INR 1.5 lakh under Section 80C, 80CCC, and 80CCD(1).
80CCD(2): Deduction for Employer's Contribution (For Salaried Employees Only)
Eligibility: The deduction is available only to employees, not to self-employed people. The employer must contribute to the employee's NPS account.
Deduction Limit: The least of the following three is deductible:
The actual employer's contribution.
10% of the employee's salary (14% if the employer is the government).
Gross total income.
Deduction limits under Section 80C, 80CCC, 80CCD(1), 80CCD(1B), 80CCE
The following table presents the deduction limits under Section 80C, 80CCC, 80CCD(1), 80CCD(1B), 80CCE:
Health and Disability-Related Deductions
Deductions for health and disability are two very important parts of tax planning, and the benefits from this could result in substantial savings in tax liabilities as well. Following are the sections for an overview of these two aspects.
Section 80D: Deduction for Medical Insurance
Section 80D lays down the law for deductions on the premium paid on medical insurance. The deduction is available on health insurance premium payments for self, spouse, children, and parents and can considerably reduce the tax liability.
Premium Amounts and Limits:
Self and Family (including spouse and dependent children): Up to INR 25,000 per annum.
For a senior citizen, the limit is enhanced to INR 50,000.
For Parents: The insurance amount of parents (father or mother or both, whether dependent or not) can additionally be allowed up to INR 25,000.
For senior citizens, this limit is enhanced to INR 50,000.
Preventive Health Check-Up: Expenses up to INR 5,000 for preventive health check-ups can be claimed within the above limits.
Section 80DD: Deduction for Maintenance Including Medical Treatment of a Dependent with a Disability
Section 80DD offers deductions for expenses on the maintenance, including medical treatment, of a disabled dependent.
Eligibility: Dependent person has to be suffering from a disability defined under the Persons with Disabilities Act.
Deduction Limit:
INR 75,000 for disability (disability of 40% or more but less than 80%).
INR 1,25,000 for severe disability (disability of 80% or more).
Includes: Expenses for nursing, rehabilitation, and purchase of specified aids and appliances.
Section 80DDB: Deduction for Expense incurred towards Specified Diseases
This deduction is for expenses incurred for the treatment of specified diseases or ailments for oneself or dependents.
Eligibility: Taxpayer or dependent has been diagnosed with certain specified diseases listed in Rule 11DD of the Income Tax Act.
Diseases Covered: Include neurological diseases, malignant cancers, AIDS, chronic renal failure, and hemophilia, among others.
Deduction Limit:
Up to INR 40,000 for individuals below 60 years of age.
Up to INR 1,00,000 for senior citizens aged 60 years and above.
Documentation Required: Medical treatment must be verified by a specialist as specified in the rules, depending on the disease.
Interest and Education Related Deductions
Section 80E deals with the deductions for interests paid for loans, particularly education and home loans, available under the Income Tax Act. These deductions help mitigate the burden on account of higher education and home ownership.
Section 80E: Deduction for Interest on Education Loan
Duration of Deduction:
The deduction is available for a maximum of 8 years or until the interest is paid in full, whichever is earlier.
There is no cap on the amount that can be claimed. The taxpayer can deduct the entire interest amount paid during the year.
Eligible Loans:
The loan must be taken from a financial institution or any approved charitable institution for pursuing higher education.
Higher education includes all fields of study pursued after passing the senior secondary examination or its equivalent exam, covering both vocational courses and regular courses.
Section 80EE: Deduction for Interest on Home Loan
Introduced to encourage home ownership among first-time home buyers in the affordable housing segment.
Eligible Criteria:
The loan must have been sanctioned by a Financial Institution or a Housing Finance Company.
The value of the house should not exceed INR 50 lakh and the loan amount should be INR 35 lakh or less.
The taxpayer should not own any other residential house property on the date of loan sanction.
Deduction Limit:
Additional interest deduction of up to INR 50,000 over and above the deduction of INR 2 lakh under section 24 of the Income Tax Act.
This deduction is available until the loan is repaid.
Section 80EEA: Additional Deduction for Home Loan Interest
Extends benefits similar to Section 80EE, aimed at promoting affordable housing under the government's Housing for All initiative.
Eligible Criteria:
The stamp duty value of the house should not exceed INR 45 lakh.
The individual must not be eligible to claim deduction under the existing Section 80EE.
The loan must have been sanctioned between 1st April 2019 and 31st March 2022.
Deduction Limit: Up to INR 1.5 lakh can be claimed under this section. This is in addition to the INR 2 lakh interest deduction under Section 24.
Income and Charity-Related Deductions
This section of the Income Tax Act opens avenues for taxpayers to reduce their taxable income by contributing towards various causes and for those paying rent without receiving HRA. Let's look at those provisions in some detail:
Section 80G: Donations to Charitable Institutions
Section 80G allows for deductions on contributions to particular prescribed funds and charitable institutions. The rates of deduction may vary depending on the type of organization and type of donation.
Percentage of Deduction Depending on the Type of Donation:
Donations to the National Defence Fund, Prime Minister's National Relief Fund, and certain national funds notified by the government are entitled to 100% deduction without any limit.
50% Deduction Without any Limit Donations to entities like the Indira Gandhi Memorial Trust, Rajiv Gandhi Foundation.
100% Deduction subject to a limit: Donations for which 10% of adjusted total income is available like Government or local authority or any approved institution for promoting family planning.
50% Deduction with Limit: Donations to any other government or any authorized entities for charitable purposes other than for promoting family planning.
Conditions: Cash donations in excess of INR 2,000 will not be eligible for deduction; so, ideally, donations should be given by cheque, draft, or other digital modes to qualify for the deduction.
Section 80GG: Rent Paid
Section 80GG is for those who do not receive house rent allowance from their employer but pay for their own accommodation.
Eligibility and Benefits:
The taxpayer, spouse, or minor child should not own residential accommodation at the place of employment.
The taxpayer should not have self-occupied residential property in any other place.
The taxpayer must be living on rent and paying rent.
Deduction Details: The deduction is the least of the following:
Rent paid minus 10% of adjusted total income.
INR 5,000 per month.
25% of the adjusted total income.
Section 80GGA: Donations for Scientific Research or Rural Development
Section 80GGA allows deductions for donations made for scientific research or rural development.
Eligibility and Deduction Rates:
This deduction is available to all assessees except those who have income (or loss) from a business or profession.
100% Deduction: For amounts donated to approved scientific research associations, universities, colleges, or other institutions that undertake scientific research, and for donations to rural development organizations.
Conditions: Donations should be made to entities specified under this section. Similar to Section 80G, any cash donations over INR 2,000 will not qualify for a deduction.
Section 80GGB: Donations by Companies to Political Parties
Section 80GGB states that donations made by companies to political parties or an electoral trust can be deducted.
Eligibility: Any Indian company making contributions
Deduction Limit: 100% of the amount contributed
Conditions: There would be no deduction of cash contributions
Section 80GGC: Donations to Political Parties by an Assessee
Section 80GGC states that any contribution made by an assessee to a political party or an electoral trust would be deductible.
Eligibility: Any taxpayer individual; not available for companies, local authorities, or artificial judicial person.
Deduction Limit: 100% of the amount donated
Conditions: The contribution should not be in the form of cash to claim deduction.
Deductions for Special Income
This part of the Income Tax Act provides deductions only for people earning income from special sources in the form of royalties. The aim of such deductions is to promote creative and innovative work and to reduce the tax that people must pay from such kinds of income.
Section 80QQB: Royalty Income of Authors
Section 80GGB provides a deduction for authors from the sales of their books. 'Books' include books of a literary, artistic, or scientific nature. It does not include brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, and other periodicals.
Eligible Authors and Deduction Limits: This deduction is allowable to individual resident authors and also to joint authors.
Limit on Deduction:
Lower of the following two amounts is allowable as deduction:
Royalty received up to a maximum of INR 3,00,000.
Actual royalty received during the year.
Conditions: The author will furnish a certificate in the prescribed form (Form 10CCD) from the person making the payment to the assessee to the effect that the amount of royalty payable is in accordance with the terms of the agreement.
Section 80RRB: Royalty on Patents
Section 80RRB is directed towards encouraging innovation and intellectual property creation by offering a deduction on income from royalty received by patentees.
Eligibility and Benefits: The deduction shall be available to the individual resident in India who is a patentee, i.e., the person registered as the patentee as per the Patents Act, 1970.
Deduction Limit: A deduction of up to INR 3,00,000 on income by way of royalty in respect of a patent registered on or after April 1, 2003, under the Patents Act, 1970.
Conditions: The taxpayer shall furnish a certificate in Form 10CCD from the payer, stating that the royalty is on account of a patent and the amount is computed as per the terms of the agreement between the payer and the patentee.
Miscellaneous Deductions
This section under the Income Tax Act covers many other deductions which do not relate to salary, business income, or large financial obligations like home loans. Benefits under this section include interest accrued on saving accounts, additional interest benefits for senior citizens, and deductions for taxpayers with disabilities.
Section 80TTA: Savings Account Interest
Section 80TTA allows a deduction on account of interest income accruable from savings bank accounts held with banks, co-operative societies engaged in banking, or post offices.
Eligibility and Limits:
Eligible Assessee: This deduction is available to individuals and Hindu Undivided Families (HUFs).
Deduction Limit: The deduction available under this section shall not exceed INR 10,000 in a year. Such a limit shall be considered across all savings accounts that are held by the taxpayer.
Conditions: The deduction can be claimed only on the interest accrued on savings bank accounts, not on fixed deposits or recurring deposits, or any other time deposits.
Section 80TTB: Interest for Senior Citizens
Section 80TTB is similar to Section 80TTA but is specifically designed for senior citizens and carries a higher deduction limit on interest income.
Higher Limits and Qualifying Conditions:
Eligibility: Available only for senior citizens who are 60 years or above.
Deduction Limit: The maximum deduction available is INR 50,000 per annum, covering interest from savings as well as fixed deposits held with banks, post offices, or co-operative societies engaged in banking.
Conditions: The enhanced limit under Section 80TTB means that the senior citizens cannot claim any deduction under Section 80TTA.
Section 80U: Physical Disability of the Taxpayer
Section 80U provides deductions to taxpayers who are disabled, with the purpose of granting financial relief to cover any expenses arising from such a condition.
Eligibility and Fixed Deduction Amount:
Eligibility: The deduction under this section is available to resident individuals who suffer from a disability.
Deduction Amounts:
INR 75,000 in case of a person with disability (40% or more but less than 80% disability).
INR 1,25,000 in case of a person with severe disability (80% or more disability).
Conditions: The taxpayer must obtain and furnish a certificate of disability issued by a medical authority as specified in the rules for claiming this deduction.
Summary of Income Tax Deduction List from 80C to 80U
Below is the concise summary of the income tax deductions available under Sections 80C to 80U of the Income Tax Act:
FAQ
Q1. What is the maximum deduction limit under Section 80C?
The maximum deduction limit under Section 80C is INR 1.5 lakh per financial year, which also includes deductions under Section 80CCC and Section 80CCD(1).
Q2. Can I claim both HRA and Section 80GG deductions for rent paid?
No, you cannot claim both. Section 80GG is meant for taxpayers who do not receive House Rent Allowance. If you receive HRA, you may claim deductions under that provision instead.
Q3. Are donations to all charities deductible under Section 80G?
No, only donations made to specified funds and charitable institutions qualify for a deduction under Section 80G. It is important to check if the organization has the necessary approval from the Income Tax Department.
Q4. How can I claim a deduction for interest paid on an education loan under Section 80E?
You can claim a deduction under Section 80E for the interest paid on an education loan availed for higher education for yourself, spouse, or children. There is no upper limit; however, the deduction is available for a maximum of 8 years.
Q5. Is there any special tax deduction for senior citizens under the income-tax laws?
Yes, senior citizens can avail of the benefit of Section 80TTB, which allows a higher deduction up to INR 50,000 for interest earned on deposits. This is higher than the limit of INR 10,000 under Section 80TTA applicable for other taxpayers.
Q6. What are income tax deductions?
Income tax deductions decrease your taxable income. They are deductions from your gross total income and thereby reduce your overall tax liability. The most common deductions are those for investments, specific expenses, and specific types of savings.
Q7. Can I claim a deduction for tuition fees?
Tuition fees paid for the full-time education of up to 2 children qualify for deduction under Section 80C. But this only includes tuition fees and does not cover other charges like donations or development fees.
Q8. What is the difference between a tax deduction and a tax exemption?
A tax deduction decreases your taxable income, but a tax exemption completely removes specific income or parts of income from taxation. Tax deductions are those amounts that get reduced from your gross income, while exemptions are removed from it completely.
Q9. How does the deduction under Section 80TTA work?
Section 80TTA grants deduction on interest income from savings accounts to a maximum of INR 10,000 in a calendar year. This deduction is available only for individuals and HUFs.
Q10. How can I claim the deductions if I am self-employed?
In the case of self-employment, you are eligible for a deduction in health insurance under Section 80D and interest on loans taken for business purposes under other applicable sections. You also get deductions in contribution to a pension plan under Section 80CCC.
Q11. What should I do if I forget to claim any deductions while filing my taxes?
In case you have forgotten to claim a deduction in your original return while filing your return, you can file a revised return. Ensure that the revised return is filed within the timeline stipulated under the tax laws, usually before the end of the assessment year or before the completion of the assessment, whichever is earlier.
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