Deductions Under Chapter VI-A
Before we start with this chapter, let us first understand a few basic and important differences between an exemption and a deduction. Exemption is an advantage provided to the assessee of not including an income in computing the gross total income. Section 10 exempts these incomes. However, section 80 comprises deductions, which are excluded post computation of gross total income subject to the maximum limit as referred to under Chapter VI-A.
Now let us quickly go through some of the most important deductions under chapter VI-A:
Starting with the three prominent sections:
Section 80C: Investment made in Life Insurance, PPF, NSC etc:
Contribution made by individual/ HUF in the following shall be allowed as deduction:
- Any contribution made to the Life Insurance premium of the self, spouse and children shall be allowed as a deduction. The deduction shall be subject to the date of the policy issued therein as per the provisions of the Act.
- Contribution made by employees to Approved Superannuation fund, Recognized provident fund (RPF), or Statutory Provident Fund (SPF).
- Contribution to Public Provident Fund (PPF) subject to the maximum limit of ₹1,50,000/-
- Contributions made in terms of deposits in NSC, mutual funds, fixed or term deposit of 5 years etc.
- Contribution for tuition fees up to 2 children for study done in India.
- Repayment of principal amount of housing loan. This deduction is available only after the construction of the house is completed).
- Any sum deposited in the Sukanya Samriddhi yojana in the name of a self or girl child.
Section 80CCC: Amount contributed by an individual for annuity plan of LIC
Amount contributed by an individual for an annuity plan of LIC or pension fund out of the taxable income. This shall be subject to the lower of the amount invested or ₹1,50,000 whichever is lower.
Section 80CCD: Amount contributed to the pension scheme by the self- employed
Amount contributed to the pension scheme by the self- employed, deduction shall be the lower of amount invested or 20% of GTI whichever is lower or by the employed, deduction shall be lower of amount invested or 10% of salary whichever is lower.
Note: The overall deduction under section 80C, 80CCC and 80CCD shall not exceed the overall limit of ₹1,50,000/- with an additional deduction of ₹50,000 under sub section 1(B) of the Income Tax Act, 1961
Section 80CCG: Amount invested under notified equity savings scheme
Amount invested under notified equity savings scheme such as Rajiv Gandhi Equity Saving Scheme or listed units in accordance with the notified scheme subject to 50% of the amount invested or ₹25000 whichever is lower.
Section 80D: Contribution to health insurance premium
This section is a very important section related to the contribution made by individual or HUF to the health insurance premium as shown below:
Deduction available under this section:
- Self, spouse and children – Up to ₹25,000/-. In case the age of assessee or his spouse or his dependent children has reached 60 years, then the amount will be ₹50,000/-
- For parents- Up to ₹25,000/-. In case if anyone’s has reached 60 years, then the amount of maximum deduction will be₹ 50,000/-
Any expenditure incurred by the resident individual/ HUF for disabled dependent relatives is fixed to ₹75,000/- and ₹1,25,000/- if the person is severely disabled.
This deduction is available only to the resident individual wherein the assessee himself is disable and is not able to incur any expenses. The amount of deduction is fixed to ₹75,000/- and ₹1,25,000/- if the person is severely disabled.
Section 80DDB: Medical treatment of specified disease
This deduction shall be available to resident individuals/ HUF on the medical treatment of specified disease of self or dependent relatives as specified under the provisions of the Act.
The deduction shall be allowed as follows:
Lower of the amount incurred or the following reduced by the insurance claim received:
Section 80E: Repayment of interest part of the loan taken for higher education
This section covers the repayment of interest part of the loan taken for higher education, taken for self or spouse or children. The interest part is allowed a deduction for the period of 8 years.
Section 80G: Donations
This section relates to deduction available to all assessee for the donations given as categorized below:
With ceiling limit:
Note: Ceiling limit here means 10% of the adjusted gross total income (AGTI).
Without ceiling Limit:
Section 80TTA: Interest on bank deposits (except senior citizen)
This is an important deduction for individuals and HUF (except senior citizens), whereby they can save tax up to ₹10,000/- p.a. for the interest earned on the deposits made in the savings bank account.
Section 80TTB: Interest on bank deposits to senior citizens
This deduction is exclusively available to senior citizens wherein interest on deposits made in either savings bank account or fixed deposit account is allowed up to ₹50,000/- p.a.