Taxes are an essential ingredient in the composition of the Indian economy. A major portion of the income incurred by the government is accounted for them. This income is the income that is used to offer certain basic provisions to the citizens. When an individual earns a certain amount, he/she is expected to pay taxes according to the existing slabs. Since these taxes could be painful to the taxpayer’s bank balance, the government also offers certain provisions through which one can save taxes. Income Tax Deductions assist you in reducing the taxable income by lowering the overall tax liability and thus aiding them on saving taxes. There are several factors affecting these deductions.
Now the question is, What is Tax Deduction?
Income Tax Deduction helps in cutting down your income subject to tax. It reduces the overall tax liabilities and helps you save tax. Nonetheless, the tax deduction depends on the kind of tax deduction claimed.
Section 80C
The maximum amount that an individual or a Hindu Undivided Family (HUF) can claim is Rs. 1,50,000. This deduction will be offered on various investments in Public Provident Funds.
• Employee’s share of PF contribution
• National savings certificate
• Life Insurance Premium payment
• Tuition Fee
• Principal Repayment of home loan
• ULIPS
• ELSS
• Sum paid to purchase a deferred annuity
• Five-year deposit scheme
• Senior Citizens Savings Scheme
• Subscription to notified securities/ notified deposits schemes
• Contribution to notified Pension Fund set up by Mutual Fund or UTI.
• Subscription to Home Loan Account Scheme of the National Housing Bank
• Subscription to deposit scheme of a public sector or company engaged in providing housing finance
• Contribution to notified annuity Plan of LIC
• Subscription to equity shares/ debentures of an approved eligible issue
• Subscription to notified bonds of NABARD
Section 80CCC
The maximum amount that an individual can claim is Rs 1,50,000. These deductions will be offered for any amount deposited in annuity plan of LIC or any other insurer for a pension from a fund referred to in Section 10(23AAB).
Section 80CCD
The maximum amount that an individual can claim is Rs. 1,50,000. These deductions will be offered based on the employee’s contribution to a National Pension System (NPS) Account.
Also, under 80CCD(1B) on an additional contribution to NPS, a maximum of Rs50,000 can be claimed.
Section 80CCG
The maximum amount that an individual can claim is Rs. 25,000. These deductions will be offered based on employee’s investments in Equities under Rajiv Gandhi Equity Scheme.
Section 80D
The maximum amount that a Resident Individual or a HUF can claim is Rs. 25,000. These deductions will be offered on paying Medical Insurance for self, spouse or children.
A maximum of Rs 50,000 will be offered on paying Medical Insurance for parents over 60 years or uninsured parents over the age of 80.
Section 80DD
The maximum amount that a Resident Individual or a HUF can claim is Rs. 75,000. These deductions will be offered on paying for Medical treatment for handicapped dependent or payment to specified scheme for maintenance of handicapped dependent. This amount will be deducted if the Disability is greater 40% but less than 80%.
Section 80DDB
The maximum amount that is Resident Individual or a HUF can claim is Rs. 1,25,000. These deductions will be offered on paying for Medical treatment for handicapped dependent or payment to specified scheme for maintenance of handicapped dependent. This amount will be deducted if the Disability is greater 80%.
Section 80E
The maximum amount that an individual can claim is the interest he/she pays for a period of 8 years. The interest paid should be specific to an educational loan he/she takes to pursue studies.
Section 80EE
The maximum amount that an individual can claim is Rs. 3,00,000. The deduction will be the interest repayment of a loan, which the individual has taken to purchase a residential property being eligible for deductions.
Section 80GG
Those individual taxpayers, by whom the house rent allowance is not received, qualify for this deduction on the rent they pay, subject to the highest deduction equal to 25% of the total income incurred or Rs 2,000 per month.
Section 80GGA
All assessee can avail income tax deductions under this section, contingent to all of them not having any earnings through gain or profit from a profession or business. Donations made towards the National Poverty Eradication Fund or to augment statistical/social scientific research is eligible for tax benefits.
Section 80GGB
Only Indian companies can avail tax deductions, with the sum they donate to an electoral trust or political parties qualify for deductions.
Section 80GGC
Only Individuals can avail tax deductions, with the sum they donate to an electoral trust or political parties qualify for deductions.
Note – Apart from the above sections, there is another section called the 80IA which houses the subsections 80IAB, 80-IB, 80-IC, 80-ID, and 80-IE. Under 80IA, tax deduction can be claimed on the gains produced via industrial activities. The subsections include the states, and every state corresponds to a particular subsection.
Section 80QQB
This section allows tax deductions on royalty received from the sale of books. Under this section, only local Indian authors qualify to claim deductions with a maximum limit of Rs. 3,00,000.
Section 80RRB
Tax incentives are provided to patent holders under this section. They can claim up to a limit of Rs 3,00,000 as a deduction, depending on the registered patent after March 31, 2003.
Section 80TTA
Individuals and HUF can claim deduction up to Rs. 10,000 every year on the interest incurred on the investment made in a bank savings account in the nation.
Section 80U
An individual suffering from a physical disability (including blindness) or mental retardation is eligible for this deduction. The maximum amount he/she can claim is Rs. 75,000.
An individual suffering from a severe disability is eligible for this deduction. The maximum amount he/she can claim is Rs. 1,25,000.
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The above is a summary of the amount and type of individual who can claim the deduction.
