Tax Deductions [Updated] : A Quick Summary

Every Person wants to SAVE TAXES..!! Isn’t it..?? But how could anyone do that?? How and where to Invest? What is the most tax-efficient investment? Pretty much Confused. Right..??

These are some of the very common questions which can easily be seen floating around. To achieve that purpose we need to understand the concept of TAX DEDUCTIONS. Tax Deductions are the reduction in your overall tax liability when you invest in some of the specified investments.
So, today we are gonna have a quick summary of the entire deductions. So, Let’s understand them:
* Deduction u/s 80C [Most Popular Deduction]
Eligible Assessee: Individual & HUF
Deduction for: Various Type of INVESTMENTS. Some of the most common investments are as follows:-
– Payments made Toward Life Insurance Premium (for Self, Spouse, and Children)
– Payments made towards Provident Fund with a Lock in Period – 15 years
– Equity Linked Saving Scheme (ELSS) with a min. lock-in period of 3 years
– Tuition Fees paid maximum for Two Children.
– Payment made towards the Principal amount of Housing Loan
– Having a Fixed Deposit/Deposit in Post Office (Now IPPB) with a min. lock-in of 5 Years
– Amount Deposited in Sukanya Samridhi Account
– National Saving Certificate
– Purchasing Bonds of NABARD.

Max. Deduction: Rs. 1,50,000/-

 

* Deduction u/s 80CCC:
Eligible Assessee: Individual Only.
Deduction for: Premium Paid for Annuity Plan of LIC or Any other Insurer.

Max. Deduction: Rs. 1,50,000 (combined with 80C)

 

Deduction u/s 80CCD: 

There is a further classification of this particular Section.

Section 80CCD(1)
Eligible Assessee: Individual Only (whether Employed or Not).
Deduction for: Payment towards the NPS Pension Account.
Max. Deduction: 10% of Salary (Basic+DA only) /20% of GTI (in case of Self Employed) [but deduction allowed in combination with 80C]

[Imp. Note- The AGGREGATE of Deductions u/s 80C, 80CCC, 80CCD(1) shall not exceed Rs. 1,50,000]

Section 80CCD(1B)
Eligible Assessee: Individual Only (whether Employed or Not).
Deduction For: Payment toward the NPS Account made by the Employee/Self Employed person can be diverted to this section when 80CCD(1) limit has exhausted
Max. Deduction: Rs. 50,000 – THIS IS AN ADDITIONAL DEDUCTION i.e. allowed without combining with 80C.
Section 80CCD(2)
Eligible Assessee: Individual Only (must be Employed)
Deduction For: Employer contribution towards the NPS account of Employee.

Max. Deduction: 10% of Salary (Basic+DA only) – THIS IS AN ADDITIONAL DEDUCTION  i.e. allowed without combining with 80C.

 

Deduction u/s 80D:
Eligible Assessee: Individual & HUF
Deduction For: Amount paid for Medical Insurance Premium  / Medical Expenditure / Preventive Health Check.
[Note: But if the Payment has been made ONLY FOR Preventive health checkup then the max. deduction allowed would be only Rs. 5,000].

Max. Deduction: Rs. 25,000 (For Self, Spouse, Children) + Rs. 25,000 (For Parents)
[Note: If the Person toward whom the above payments are being made is SENIOR CITIZEN (60 years or more) then the limit of Rs. 25,000 would be increased to Rs. 30,000. 
This limit has been further increased to Rs. 50,000 from Finance Act, 2018 i.e. Maximum Deduction under this Section can be availed from A.Y. 2019-20 would be Rs. 1,00,000.]

* Deduction u/s 80DD:
Eligible Assessee: Individual & HUF (Resident Only)
Deduction For: Expenditure incurred on Medical treatment (including nursing), Training, or Rehabilitation of disabled (Divyang) DEPENDANT.
Note-1: Dependant means Spouse, Children, Parents, Brother, and Sister / Any Member (in case of HUF). And to claim this deduction Certificate of Disability is Required from the Prescribed medical authority.
Note-2: This Deduction is allowed when the payment is made for Dependant. If the Assessee himself is Divyang Person then he will be allowed deduction u/s 80U and not u/s 80DD.
 
Max. Deduction: Fixed Deduction of Rs. 75,000 (if Disability is 40% or More) / Rs. 1,25,000 (If Disability is 80% or more)
* Deduction u/s 80DDB:
Eligible Assessee: Individual & HUF (Resident Only)
Deduction For: Expenses incurred for the treatment of the specified diseases. Any reimbursement (if any) from Insurance Company shall be deducted and balance expense amount shall be allowed as deduction.
Max. Deduction: Rs. 40,000 / Rs. 60,000 (for Senior Citizen ie. 60 yrs. or more) / Rs. 80,000 (For Very Senior Citizen i.e. 80 yrs. or more) 
[Important Note: From Finance Act, 2018 (i.e. From A.Y. 2019-20) the Deduction for Senior Citizen i.e. 60 years or more would be allowed up to Rs. 1,00,000. The category of Very Senior Citizen has been eliminited]. 
 
* Deduction u/s 80E:
Eligible Assessee: Individual Only.
Deduction For: Interest on Loan for Higher Education paid during the relevant previous year.
Max. Deduction: 100% Interest amount
[Note: The deduction of Interest would be available in max. 8 years starting with the year of payment]

* Deduction u/s 80EE:
Eligible Assessee: Individual only (and only when he is purchasing First home ever)
Deduction For: Payment of Interest on Housing Loan which has been taken for the First Home Purchase.
Max. Deduction: Rs. 50,000
But deduction would be allowed subject to the following conditions:
Value of Property to be purchased should be Max. 50 Lakhs.
– Value of Loan taken should be Max. 35 Lakhs.
The Loan must have been taken between 01 April 2016 to 31st March 2017.

* Deduction u/s 80G:
Eligible Assessee: All Assessees
Deduction For: Donation made towards Certain funds, Charitable Institution etc.
Max. Deduction: 100% or 50% of donation made depending on the type of Donation.
[Imp. Note- Donation made in cash above Rs. 2,000 shall not be allowed as deduction] 

* Deduction u/s 80GG:
Eligible Assessee: Individual only (whether Employed or Self Employed)
Deduction For: Deduction in respect of Rents Paid.
Max. Deduction: It shall be allowed LEAST of the following-
                              – Rs. 5,000/- Per Month
                              – 25% of Total Income
                              – Rent Paid minus 10% of Total Income

  [Note: Total Income shall be considered before deduction under this Section]

 

* Deduction U/s 80GGA:
Eligible Assessee: All Assessee
Deduction For: Certain Donation for Scientific Research or Rural Development. 
Max. Deduction: 100% Amount of Donation made
[Imp. Note- Donation made in cash above Rs. 10,000 shall not be allowed as deduction] 

* Deduction u/s 80GGB:
Eligible Assessee: Indian Companies Only
Deduction For: Donation made by Indian companies to Political Parties or Electoral Trust.
Max. Deduction: 100% of Donation made

[Imp. Note- Any donation in cash would not be allowed as deduction.]

 

* Deduction u/s 80GGC:
Eligible Assessee: All Assessee (except; Company, Local Authority, Artificial Juridical Person)
Deduction For: Donation made by Any Assessees (except Company, Local Authority, Artificial Juridical Person) to Political Parties or Electoral Trust.
Max. Deduction: 100% of Donation made

[Imp. Note- Any donation in cash would not be allowed as deduction. ]

 

* Deduction u/s 80QQB:
Eligible Assessee: Individual (Resident Only)
Deduction For: Royalty/Copyright amount on Certain books/media etc.
Max. Deduction: Rs. 3,00,000 or Income Received, whichever is less.

Deduction u/s 80RRB:
Eligible Assessee: Individual (Resident Only)
Deduction For: Royalty amount on Patents.
Max. Deduction: Rs. 3,00,000 or Income Received, whichever is less.

* Deduction u/s 80TTA:
Eligible Assessee: Individual & HUF
Deduction For: Interest on Savings Account (not on FD/RD)
Max. Deduction: Rs. 10,000/- 

Deduction u/s 80TTB:
Eligible Assessee: Individual (Senior Citizen) Only
Deduction For: Interest on Any Account (including FD/RD)
Max. Deduction: Rs. 50,000/- 

Deduction u/s 80U:
Eligible Assessee: Individual (Resident) only
Deduction For: Flat Deduction even without any expense incurred. 
Max. Deduction: Fixed Deduction of Rs. 75,000 (if Disability is 40% or More) / Rs. 1,25,000 (If Disability is 80% or more).
And here we go..!! Now you are all set to save some good amount of tax and make some good investments as well. Make your friends and family as well a Tax Savvy by sharing this blog..!!
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12 thoughts on “Tax Deductions [Updated] : A Quick Summary

  • November 27, 2018 at 10:30 pm
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    It's always Good to see your work Mr. Nitesh. You have summarised it very well. Hopefully it would be very helpful during exam time. 🙂

    Reply
  • November 27, 2018 at 10:31 pm
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    I have seen your some of articles on Caclubindia.com and that's where i found your original blog address. I would love to receive such content. Keep doing good work.

    Thank you.!

    Reply
  • November 27, 2018 at 10:43 pm
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    Thank you Sir, for such a good summary. I am an student in CA-IPCC and this is going to be quite helpful for me.

    Reply
  • November 27, 2018 at 10:44 pm
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    I haven't heard about your blog. I came know about it when i see one of your article on Taxguru.in.

    Reply
  • November 27, 2018 at 10:45 pm
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    Please make a summary on TDS as well sir. Mujhe smjh nhi aata wo bhot confuse krta hai. Please help me.

    Reply
  • November 28, 2018 at 6:19 am
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    Great work👍. Keep it up and all the best wishes.😊

    Reply
  • December 7, 2018 at 5:38 am
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    Omg ..its hardly take more than 10 min. to read all the deductions ..its really very useful . Great work @Nitesh, Keep Going.

    Reply
  • December 12, 2018 at 5:21 pm
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    Very helpful and useful and explained everything in very simple langunge.Excellent article .

    Reply

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