The Income Tax Department, recognizing the significance of fostering savings and investments, has incorporated a comprehensive set of income tax deductions under Chapter VI A of the Income Tax Act. While deduction under 80C stands out as a widely known provision, several other deductions exist, providing taxpayers with opportunities to strategically reduce their tax liabilities. These deductions under section 80C to 80U serve as powerful incentives, allowing individuals to optimize their financial planning and contribute to the nation’s economic growth
What is Income Tax Deduction under Chapter VI A of Income Tax Act?
Income Tax Deduction under Chapter VIA of Income Tax Act refers to a reduction in the taxable income of an individual or a business entity, which results in a lower tax liability. The Indian Income Tax Act provides for various deductions under sections 80C to 80U, which can be claimed by an individual or a business entity while calculating their taxable income.
Tax saving calculation for yearly income-20 lakhs
| Gross Salary | 2,000,000 |
| Less: | |
| HRA | 200,000 |
| LTA | 40,000 |
| Reimbursements | 24,500 |
| Children education and hostel allowance | 9,600 |
| Standard Deduction | 50,000 |
| Professional Tax | 2400 |
| Taxable Salary Income | |
| Less: Deductions | |
| 80C (Refer Note below) | 150,000 |
| 80D | 50,000 |
| 80E | 22,000 |
| Net Taxable Income | 14,51,500 |
| Tax on the above income | 2,57,868 |
| Rebate u/s 87A | Not applicable |
| Total Tax | 2,57,868 |
| Apart from this, you can also claim these tax deductions if eligible: | |
| Interest on home loan EMIs under Section 24b | -2,00,000 |
| Principal amount of the home loan under section 80EEA | -1,50,000 |
| National Pension Scheme (NPS) investments u/s 80CCD(1B) | -50,000 |
Section 80 Deduction List - 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. It is pertinent to note that the taxpayers who opt to pay tax under the new tax regime can claim only deductions under sections 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 number of deductions should be reduced from the gross income to reach the taxable amount.
| Sections | Income Tax Deduction for FY 2023-24(AY 2024-25) | Eligible person | Maximum deduction available for FY 2023-24(AY 2024-25) |
|---|---|---|---|
| Section 80C | Investing into very common and popular investment options like LIC, PPF, Sukanya Samriddhi Account, Mutual Funds, FD, child tuition fee, ULIP, etc | Individual Or HUF | Upto Rs 1,50,000 |
| Section 80CCC | Investment in Pension Funds | Individuals | |
| Section 80CCD (1) | Atal Pension Yojana and National Pension Scheme Contribution | Individuals | |
| Section 80CCD(1B) | Atal Pension Yojana and National Pension SchemeContribution (additional deduction) | Individuals | Upto Rs 50,000 |
| Section 80CCD(2) | National Pension SchemeContribution by Employer | Individuals | Amount Contributed or 14% of Basic Salary + Dearness Allowance (in case the employer is Government) 10% of Basic Salary+ Dearness Allowance(in case of any other employer) – Whichever is lower |
| Section 80D | Medical Insurance Premium, preventive health checkup and Medical Expenditure | Individual Or HUF | Upto Rs 1,00,000 |
| Section 80DD | Medical Treatment of a Dependent with Disability | Individual Or HUF | Normal Disability (atleast 40% or more but less than 80%): Rs 75000/- Severe Disability (atleast 80% or more) : Rs 125000/- |
| Section 80DDB | Medical expenditure for treatment of Specified Diseases | Individual Or HUF | Senior Citizens: Upto Rs 1,00,000 Others: Upto Rs 40,000 |
| Section 80E | Interest paid on Loan taken for Higher Education | Individual | No limit (Any amount of interest paid on education loan)upto 8 assessment years |
| Section 80EE | Interest paid on Housing Loan | Individual | Upto Rs 50,000 subject to some conditions |
| Section 80EEA | Interest Paid on Housing Loan | Individual | Upto Rs 1,50,000/- subject to some conditions |
| Section 80EEB | Interest paid on Electric Vehicle Loan | Individual | Upto Rs 1,50,000 subject to some conditions |
| Section 80G | Donation to specified funds/institutions. Institutions | All Assessee (Individual, HUF, Company, etc) | 100% or 50% of the Donated amount or Qualifying limit, Allowed donation in cash upto Rs.2000/- |
| Section 80GG | Income Tax Deduction for House Rent Paid | Individual | Rs. 5000 per month 25% of Adjusted Total Income Rent paid – 10% of Adjusted Total Income – whichever is lower |
| Section 80GGA | Donation to Scientific Research & Rural Development | All assessees except those who have an income (or loss) from a business and/or a profession | 100% of the amount donated. Allowed donations in cash upto Rs.10,000/- |
| Section 80GGB | Contribution to Political Parties | Companies | 100% of the amount contributed No deduction available for the contribution made in cash |
| Section 80GGC | Individuals on contribution to Political Parties | Individual HUF AOP BOI Firm | 100% of the amount contributed. No deduction available for the contribution made in cash |
| Section 80RRB | Royalty on Patents | Individuals (Indian citizen or foreign citizen being resident in India) | Rs.3,00,000/- Or Specified Income – whichever is lower |
| Section 80QQB | Royalty Income of Authors | Individuals (Indian citizen or foreign citizen being resident in India) | Rs.3,00,000/- Or Specified Income – whichever is lower |
| Section 80TTA | Interest earned on Savings Accounts | Individual Or HUF (except senior citizen) | Upto Rs 10,000/- |
| Section 80TTB | Interest Income earned on deposits(Savings/ FDs) | Individual (60 yrs or above) | Upto Rs 50,000/- |
| Section 80U | Disabled Individuals | Individuals | Normal Disability: Rs. 75,000/- Severe Disability: Rs. 1,25,000/- |
Expenses that Qualify for Tax Deductions under Section 80C
- Life Insurance Premiums
- Employee Provident Fund (EPF) contributions
- Public Provident Fund (PPF) investments
- National Savings Certificate (NSC) investments
- Equity-Linked Savings Scheme (ELSS) investments
- Sukanya Samriddhi Yojana (SSY) investments
- 5-Year Fixed Deposit with Banks
- Senior Citizens Savings Scheme (SCSS) investments
- Tuition Fees for up to two children
- Home Loan Principal Repayment
- Stamp Duty and Registration Charges for a Home
Investments that Qualify for Deductions under Section 80C
Tax saving options under Section 80C
There are several options you can choose to save tax under Section 80C of the Income Tax Act. The Income Tax deduction list include:
- Equity Linked Saving Scheme (ELSS)
- National Pension Scheme (NPS)
- Unit Linked Insurance Plan (ULIP)
- Public Provident Fund (PPF)
- Sukanya Samriddhi Yojana (SSY)
- National Savings Certificate (NSC)
- Fixed Deposit (FD)
- Employee Provident Fund (EPF)
FAQs
Can I claim the 80C deductions at the time of filing the return in case I have not submitted proof to my employer?
You need to give evidence of your investments to your employer by the end of the financial year. This helps your employer calculate your taxable income and the amount of tax to deduct from your salary. If you forget to submit the proof of investments to your employer, you can still claim those investments when you file your income tax return. Just make sure the investments were made before the end of the financial year, i.e 31st March 2024
Is there any restriction or maximum limit up to which I can claim a deduction under Section 80E?
Law has not prescribed any upper limit for deduction under Section 80E. Hence, the actual interest paid during a year can be claimed as deduction.