Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
- Guaranteed@ Income Benefit for upto 25 years
- Flexibility to choose income period
- Premium break for females on child birth or any listed specific illnesses
- Life cover for the premium payment period
- Enhance your life cover with rider offerings
ARN. No. KLI/23-24/E-BB/1201
Features
- Increasing Life Cover*
- Guaranteed^ Maturity Benefits
- Enhanced Protection Through Riders
- Tax Benefits
- Dual Benefits: Guaranteed^Maturity + Death benefits
Ref. No. KLI/22-23/E-BB/999
Income Tax Deductions List - Deductions on Section 80C, 80CCC, 80CCD & 80D - FY 2023-24 (AY 2024-25)
Exploring income tax deductions empowers individuals to make informed financial decisions, minimizing tax burdens while maximizing savings potential.
- 688,983 Views | Updated on: Jul 23, 2024
It is necessary to understand the tax deduction on salary to maximize the savings on tax. While many are familiar with Section 80C, numerous other allowances can significantly reduce your tax liability. This extensive blog post takes you through various deductions available under the Income Tax Act in a simple manner and makes it easy to do tax planning.
What are Tax Deductions?
Tax deductions are specific expenses or investments that reduce an individual’s taxable income, thus lowering the amount of income tax they are required to pay. The government allows these deductions to encourage individuals to save and invest, purchase insurance policies, and contribute to specific funds and schemes.
Income Tax Deductions on Investments Under Section 80C
Investment instruments offer tax-saving opportunities under the provisions of the Income Tax Act of 1961. Every financial year, taxpayers can potentially reduce their taxable income by up to ₹1.5 lakh through deductions available under Section 80C.
Section 80C deductions apply to individuals and Hindu Undivided Families (HUFs), allowing them to claim a maximum deduction of ₹1.5 lakh from their total income. As per the latest budget reforms, individuals adhering to the old tax regime can continue to benefit from deductions amounting to ₹1.5 lakhs under Section 80C.
It Is important to note that these deduction rules do not apply if taxpayers have opted for the new tax regime.
Income Tax Deductions List in India
Understanding the various deductions available under the Income Tax Act is essential for taxpayers to optimize their tax planning strategies effectively. Here is the list of income tax deductions available in India:
Income Tax Deduction under Section 80C
Section 80C is one of the most popular tax-saving provisions in India. Under this section, taxpayers can claim deductions up to ₹1.5 lakhs in a financial year. Some eligible investments and expenditures under Section 80C include:
a. Employee Provident Fund (EPF)
b. Public Provident Fund (PPF)
c. Equity-Linked Savings Scheme (ELSS)
d. National Savings Certificate (NSC)
Income Tax Deduction under Section 80CCC
Under Section 80CCC of the Income Tax Act, individuals can claim annual deductions of up to ₹1.5 lakh for contributions to designated pension plans offered by term life insurance companies. However, this deduction is subject to the overall limit specified under Section 80C of the Act.
Income Tax Deduction under section 80CCD
This section includes the contribution to the Atal Pension Yojana. It allows a contribution of up to 10% of the total salary of salaried employees and 20% of the gross income of non-salaried employees to the government-notified pension schemes. The contribution can be deducted from the taxable income under Section 80 CCD (1). If the employer also contributes to the scheme, the entire contribution amount can be claimed as a tax deduction under Section 80CCD (2).
It is important to remember that the complete deduction under Section 80C, Section 80CCC, and Section 80CCD (1) cannot exceed ₹15,00,000 in aggregate. However, the additional tax deduction amounting to ₹50,000 under Section 80CCD (1B) is above this limit.
Income Tax Deduction under Section 80DD
A deduction of ₹75,000 in income tax may be claimed for spending on medical treatments for dependents with a 40% disability. This limit is ₹1,25,000 in case of severe disability.
Income Tax Deduction under Section 80DD
A deduction of ₹75,000 in income tax may be claimed for spending on medical treatments for dependents with a 40% disability. This limit is ₹1,25,000 in case of severe disability.
Income Tax Deduction under Section 80DDB
Deduction for Medical Expenditure on Self or Dependent Relative:
- Deduction for Medical Expenditure for individuals and HUFs below age 60 Income Tax.
- Deduction under Section 80DDB, a deduction of up to ₹40,000 is available to an individual or a HUF below 60 years of age. It is for any expenses towards treating specified critical ailments for self and dependents.
- Deduction for Medical Expenditure for senior citizens and super senior citizens.
- Previously, for FY 2017-18, the limit was ₹60,000 for senior citizens and ₹80,000 for super senior citizens. It has been changed to ₹1,00,000 for all senior citizens, including super senior citizens.
Income Tax Deduction under Section 80CCG
This section, which offered the tax benefits of the Rajiv Gandhi Equity Savings Scheme, has been withdrawn. Still, if an individual has claimed a deduction in the previous financial year, you are eligible to continue with the same for the next two financial years.
Income Tax Deduction under Section 80EE
Individuals buying a home for the first time may claim an additional deduction of ₹50,000 on the home loan interest paid. This includes a clause that the loan should be sanctioned in or after FY 2016-17, and the loan amount should be less than ₹35,00,000. Furthermore, the house’s value should not exceed ₹50,00,000, and the individual should not own any other residential house under his name.
Income Tax Deduction under Section 80EEA
The Indian Income Tax Act provides a tax deduction of up to ₹1.5 lakhs per financial year for interest paid on home loans taken for purchasing or constructing an affordable house. This deduction is available under Section 80EEA of the Income Tax Act and is in addition to the existing tax benefits available under Section 80C and Section 24.
Income Tax Deduction under Section 80EEB
Section 80EEB of the Income Tax Act enables taxpayers to claim tax savings on interest paid for loans to purchase electric vehicles, up to ₹1.5 lakh. Eligibility criteria, including conditions related to the loan issuer and the electric vehicle, must be met to avail of the deduction.
Income Tax Deduction under Section 80GG
The deduction amount for this section is ₹60,000 per annum, which applies to only those who neither own a residential house nor receive a House Rent Allowance. Therefore, the amount of deduction will be the least of the following:
25% of the total income ₹5,000 per month amounts to 10% of the adjusted total income deducted from the rent paid.
Income Tax Deduction under Section 80GGC
Section 80GGC allows individuals to claim tax deductions for donations made to political parties or electoral trusts. It promotes transparency in electoral funding, encourages financial support to the political system, and helps individuals reduce their tax liability by claiming deductions against such contributions.
Income Tax Deduction under Section 80U
This section allows a deduction for individuals who are physically and mentally challenged. Individuals with at least 40% disability (as certified by a medical authority) can claim a deduction of up to ₹75,000. Individuals with a severe disability (at least 80% disability) can claim a deduction of up to ₹1,25,000.
Income Tax Deduction under Section 80D
Section 80D provides deductions on health insurance premiums individuals and HUFs (Hindu Undivided Families) pay. The eligible deduction amount varies based on the insured’s age and the number of family members covered under the policy. Additionally, deductions for preventive health check-ups are available.
Income Tax Deduction under Section 24(b)
Section 24(b) deals with deductions on the interest paid on home loans. Taxpayers can claim up to ₹2 lakhs per annum for self-occupied properties. In the case of let-out properties, there is no upper limit on claiming the interest paid on the home loan.
Income Tax Deduction under Section 80E
This section allows taxpayers to claim deductions on the interest paid on education loans. These loans must be taken for higher education, either for the taxpayer, spouse, children or a student the taxpayer is the legal guardian of.
Income Tax Deduction under Section 10(14)
Section 10(14) offers deductions on various allowances salaried individuals receive, such as House Rent Allowance (HRA), conveyance allowance, and medical allowance.
Income Tax Deduction under Section 80G
Donations made to specified funds and charitable institutions are eligible for deductions under Section 80G. The deduction varies from 50% to 100% of the donated amount, depending on the nature of the recipient organization.
Income Tax Deduction under Section 80TTA and 80TTB
Under Section 80TTA, individuals can claim deductions of up to ₹10,000 on interest earned from savings accounts. For senior citizens, Section 80TTB provides deductions of up to ₹50,000 on interest earned from savings accounts, fixed deposits, and recurring deposits.
Income Tax Deduction under Section 80RRB
Section 80RRB of the Income Tax Act allows individuals to claim deductions for royalty payments received. Royalty is compensation received for the use of intellectual property like books, art, or inventions. The deduction is either Rs. 3 lakh or the royalty received, whichever is lower.
Income Tax Deduction under Section 80QQB
Under Section 80QQB of the Income Tax Act, royalties earned from specific publications like journals, newspapers, or textbooks are ineligible for deductions. Additionally, any royalty income from abroad must be repatriated within a specified time frame to qualify for deductions. Authors can claim deductions under Section 80QQB, wherein they can avail the lower of Rs. 3 lakh or the actual royalty received as an income tax deduction.
Benefits of Tax Deductions
While tax deductions may seem complex and overwhelming, understanding their benefits can lead to more strategic financial planning and responsible decision-making.
Reduced Tax Liability
One of the most apparent benefits of tax deductions is that they help reduce an individual’s or business’s overall tax liability. Taxpayers can lower the portion of their income subject to taxation by deducting eligible expenses and investments from their taxable income. This results in more money staying in the hands of individuals and businesses, enabling them to reinvest in their ventures, purchase goods and services, or save for the future.
Encouragement of Charitable Contributions
Tax deductions play a significant role in encouraging charitable giving. Many governments offer tax deductions to individuals who donate to registered charities or non-profit organizations. By providing this incentive, governments hope to promote philanthropy and support the vital work carried out by charitable entities. Not only does this benefit society as a whole, but it also allows individuals to contribute to causes they are passionate about while simultaneously reducing their tax burden.
Stimulating Investment and Economic Growth
Tax deductions targeted at businesses can be powerful tools for stimulating investment and economic growth. Governments often grant deductions for capital expenditures, research and development, and other business-related expenses. By doing so, they encourage businesses to reinvest their earnings into the economy, leading to job creation, innovation, and increased productivity.
Promoting Homeownership and Real Estate Investments
Many countries offer tax deductions related to homeownership and real estate investments. Deductions for mortgage interest, property taxes, and certain home improvements aim to make homeownership more accessible and affordable. These incentives can motivate individuals to invest in real estate, fostering a stable housing market and supporting the construction industry. Moreover, homeownership often builds equity for individuals, helping them build wealth over time.
Facilitating Education and Skill Development
Tax deductions can also be advantageous in education and skill development. Various governments provide tax breaks for expenses related to higher education, including tuition fees and interest on student loans. Additionally, certain professional development expenses may be deductible for individuals seeking to enhance their skills and expertise. Tax deductions contribute to a more skilled and competitive workforce in the country by encouraging investment in education and continuous learning.
Income Tax Exemptions for Salaried Employees 2023-24
Here is the income tax exemption list for 2023-24:
- House Rent Allowance
- Leave Travel Allowance (LTA)
- Food coupons
- Salary component
- Reimbursements
- Proof
- House rent allowance (HRA)
- Rent amount for residential housing
- Rent receipts, PAN of the employer (mandatory for rent > ₹1 Lakh annually)
- Leave travel allowance (LTA)
- Traveling costs within India, such as air and rail fare
- Air and train tickets, bus or cab receipts/bills
- Telephone reimbursement
- Landline, inclusive of broadband, mobile phone
- Telephone bills
- Books and periodicals
- Cost of books and periodicals
- Bills or invoices for the books and periodicals
Key Takeaways
- Salaried employees are eligible for a deduction. This deduction reduces the taxable income and, in turn, the overall tax liability.
- The transport allowance and medical reimbursement components, which were previously tax-exempt, have been replaced with the new regime.
- The tax exemption limit for employee contributions to the National Pension System (NPS) and Employee Provident Fund (EPF) has been increased.
- Individuals buying a home for the first time may claim an additional deduction of ₹50,000 on the home loan interest paid.
Wrapping Up
It is advisable to plan the investment to avoid last-minute hassles. If you cannot invest in the right products, you must pay the entire tax, depending on your income. The above income tax deductions list will help you plan and achieve your financial goals.
FAQs on Income Tax Deduction List
1
What are the deductions in income tax?
Income tax deductions list, such as those under Sections 80C, 80D, 80G, and 80E, offer various benefits. Examples include deductions for investments like PPF and ELSS, medical insurance premiums, charitable donations, and interest on education loans. These options from the income tax deductions list reduce taxable income, lowering tax liabilities for individuals and businesses.
2
Can I claim the 80C deductions at the time of filing the income tax return in case I have not submitted proof to my employer?
No, you cannot claim deductions under Section 80C when filing your income tax return if you have not submitted the necessary proof of investments or expenses to your employer. To avail of the deductions, you must provide the relevant proof to your employer during the income tax declaration submission period, usually at the beginning of the financial year. Your employer will consider these proofs and adjust your TDS (Tax Deducted at Source) accordingly.
3
I have availed a loan from my employer to pursue higher education. Can I claim the interest paid on such a loan as a tax deduction under Section 80E?
Yes, you can claim the interest paid on a loan from your employer for pursuing higher education as a tax deduction under Section 80E. This deduction is available for a maximum of 8 years or until the interest is fully repaid, whichever is earlier. However, please note that this deduction is only applicable for loans taken for the individual’s own education or for the education of their spouse, children, or a student for whom they are a legal guardian.
4
Is there any restriction or maximum limit up to which I can claim a tax deduction under Section 80E?
Yes, under Section 80E, there is a restriction on the maximum amount you can claim as a tax deduction. However, the entire interest paid on the education loan is deductible without any upper limit. Please note that the deduction only applies to the loan’s interest component, not the principal amount.
5
Can a company or firm reap the benefits of Section 80C?
No, Section 80C deductions are not available to companies or firms. Section 80C provides tax-saving benefits on various investments and expenses for individual taxpayers only. Some of the eligible deductions under Section 80C include investments in Public Provident Fund (PPF), Employee Provident Fund (EPF), Equity-Linked Saving Scheme (ELSS), National Savings Certificate (NSC), and payment of life insurance premiums, among others.
6
Can a company claim a deduction for donations made under Section 80G?
Yes, companies can claim a deduction for donations made to eligible charitable institutions under Section 80G of the Income Tax Act. The deduction amount varies based on the charitable organization type and can be 50% or 100% of the donated amount. However, it is important to ensure that the charitable institution is registered under Section 80G to avail of this deduction.
7
Are the tax exemptions available under Section 80D available to corporates?
No, the tax exemptions available under Section 80D are not available to corporations. Section 80D provides deductions for medical insurance premiums paid by individual taxpayers for themselves, their spouses, children, and parents. It benefits individual taxpayers and Hindu Undivided Families (HUFs) and does not apply to companies or firms.
8
What are the tax exemptions available under Section 80DD?
Section 80DD provides tax exemptions to individual taxpayers and HUFs who incur expenses for the maintenance, medical treatment, and rehabilitation of a dependent with a disability. The deduction amount is up to ₹75,000 and can go up to ₹1,25,000 in case of severe disabilities. The disability must be at least 40% certified by a competent medical authority.
9
Are bank recurring deposits eligible for tax deduction?
No, bank recurring deposits (RDs) are not eligible for tax deduction under Section 80C. The only term deposits that qualify for tax deduction under Section 80C are Fixed Deposits (FDs) with a minimum lock-in period of 5 years in a scheduled bank.
10
Are all allowances taxable for salaried individuals?
No, all allowances are not taxable for salaried individuals. Some allowances are fully taxable, while others are partially or fully exempt from tax. For example, the House Rent Allowance (HRA) can be partially exempt if certain conditions are met. Similarly, the Leave Travel Allowance (LTA) and certain allowances for specific purposes may also be exempted up to prescribed limits.
11
Can both earning members of a family claim tax deductions for a home loan taken as co-applicants?
Yes, both earning members of a family who are co-applicants of a home loan can claim tax deductions individually. Each co-applicant can claim deductions on the principal amount under Section 80C and on the interest paid under Section 24(b) of the Income Tax Act, subject to specified limits.
12
Can self-employed individuals claim the HRA benefit?
No, the House Rent Allowance (HRA) benefit is available only to salaried individuals and not to self-employed individuals. Self-employed individuals cannot claim HRA as they do not receive a fixed salary from an employer, a prerequisite for claiming HRA deductions.
13
How can I save tax on an education loan?
You can save tax on an education loan by claiming deductions on the interest paid under Section 80E of the Income Tax Act. Ensure that the loan is taken for higher education for yourself, your spouse, children, or a student for whom you are a legal guardian. There is no upper limit on the deduction, and you can claim it for a maximum of 8 years or until the interest is fully repaid, whichever is earlier.
14
What are the examples of income tax exemptions?
Examples of income tax exemptions include the House Rent Allowance (HRA) received by salaried individuals, Leave Travel Allowance (LTA), certain agricultural income, interest earned on tax-saving bonds, income from dividends on certain mutual funds, and exemptions provided for certain allowances for specific purposes.
15
What are the examples of income tax deductions?
Examples of income tax deductions include deductions under Section 80C for investments in PPF, EPF, ELSS, NSC, and payment of life insurance premiums, deductions under Section 80D for medical insurance premiums, deductions under Section 80G for donations to charitable institutions, and deductions under Section 80E for interest paid on education loans, among others.
16
How much total deduction is allowed in income tax?
In India, the total income tax deduction allowed depends on various factors such as investments, expenses, and contributions made during the financial year. Common deductions include those under Section 80C (up to ₹1.5 lakhs), Section 80D (health insurance premiums), Section 80E (education loan interest), and others. Taxpayers can avail of deductions based on their eligibility and compliance with the Income Tax Act.
17
What is a deduction from salary in income tax?
Deduction from salary in income tax refers to the amount subtracted from an individual’s gross salary to arrive at the taxable income. This deduction includes components like provident fund contributions, professional tax, standard deduction (if applicable), and any other eligible allowance or exemption in income tax as per the Income Tax Act.
18
What is the standard deduction for income tax?
The standard deduction for income tax, set at ₹50,000, applies for the assessment year 2023-24. This fixed amount, deducted from gross salary to calculate taxable income, remains consistent under the old and new tax regimes.
19
How to calculate tax on salary?
First, determine the taxable income by subtracting allowable deductions (such as standard deduction, HRA exemption, etc.) from the gross salary to calculate tax on salary. Then, apply the applicable income tax slab rates to the taxable income to calculate the total tax liability. Finally, deduct any applicable rebates and claim tax credits to arrive at the final tax payable amount.
20
What deductions can I claim on tax?
Taxpayers can claim various deductions on tax based on investments, expenses, and contributions made during the financial year. Common deductions include those under Section 80C (for investments like PPF, ELSS, etc.), Section 80D (for health insurance premiums), Section 80E (for education loan interest), Section 80G (for donations to charitable institutions), and more. It is essential to review the eligibility criteria and compliance requirements outlined in the Income Tax Act to claim deductions accurately.
Suggested Readings
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
- Guaranteed@ Income Benefit for upto 25 years
- Flexibility to choose income period
- Premium break for females on child birth or any listed specific illnesses
- Life cover for the premium payment period
- Enhance your life cover with rider offerings
ARN. No. KLI/23-24/E-BB/1201
Features
- Increasing Life Cover*
- Guaranteed^ Maturity Benefits
- Enhanced Protection Through Riders
- Tax Benefits
- Dual Benefits: Guaranteed^Maturity + Death benefits
Ref. No. KLI/22-23/E-BB/999
