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CHARTEREDCLUB

11usefulIncomeTaxDeductionsfor201516

TheIncomeTaxActprovidesforvarious incometaxdeductionswhichcanbeclaimedatthetime
offilingofincometaxreturns.Thetotaltaxableincome(afterreducingtheincometaxdeductions
thathavebeenclaimed)wouldbetaxedaspertheIncometaxslabratesoftheindividual.
RecommendedRead:
CurrentIncomeTaxSlabRatesinIndia
ProcedureforIncomeTaxReturnefiling
TheIndianIncomeTaxDepartmentencouragesitscitizenstomakeuseofthevariousIncomeTax
Deductions,IncomeTaxExemptionsandIncomeTaxrebatesallowedundertheIncomeTaxAct
whichhelpthetaxpayerstoreducetheirtaxesinIndialegally.
RecommendedRead:HowtosaveTaxlegallyinIndia

11UsefulIncomeTaxDeductionstoSaveTaxes
TherearevariousincometaxdeductionswhichareallowedtobeclaimedbyanIndividual/HUF.
Themostusefulincometaxdeductionswhichcanbeeasilyclaimedandarehelpfulinreducing
thetaxburdenhavebeenexplainedbelow.

1. INCOME TAX DEDUCTION FOR INVESTMENTS SPECIFIED

UNDERSECTION80C
ThemostpopularincometaxdeductionisthedeductionunderSection80Cwhichisallowed
for making investments in certain specified instruments. There are many instruments in which
investmentscanbemade.Someexamplesofspecifiedinstrumentsare
PPFAccount
TaxSavingMutualFund
TaxSavingFixedDeposit
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NationalSavingsCertificate
RepaymentofPrincipalonHousingLoan
PremiumonLifeInsurancePolicy
EquityOrientedMutualFunds
ContributiontoEmployeeProvidentFund

2. INCOME TAX DEDUCTIONS FOR CONTRIBUTION TO PENSION

FUNDSU/S80CCC&80CCD
DeductionunderSection80CCCandSec80CCDareincometaxdeductionswhichareallowedfor
payment of any amount to initiate or to continue any annuity plan of any insurance company for
receiving any pension, the individual would be allowed a deduction for the amount paid under
Section80CCC.
And in case the individual has made the contribution to notified pension scheme of the Central
Govti.e.theNationalPensionScheme(NPS),theindividualwouldbeallowedadeductionunder
Section80CCD.
RecommendedRead:
Section80CCC:DeductionforContributiontoPensionFunds
Section80CCD:DeductionforContributiontoNationalPensionScheme
Themaximumamountallowedtobeclaimedasadeductionunderthissection80CandSection
80CCCisRs.1,50,000foreachfinancialyear.

From financial year 201516 onwards, an additional deduction of Rs. 50,000 is allowed for
investment in NPS Account. This additional deduction of Rs. 50,000 is over and above the
deductionallowedtobeclaimedunderSection80CandSection80CCC.

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Inotherwords,thecumulativetotaloftheseshouldnotexceedRs.2,00,000.

3. INCOME TAX DEDUCTION UNDER SECTION 80TTA FOR

INTERESTONSAVINGSACCOUNT
AdeductionofRs.10,000underSection80TTA(specifiedin ChapterVIA)isalsoallowedtobe
claimed from the interest earned on Bank SavingsAccount. Such Interest Income is first added
underheadIncomefromOtherSourcesandthendeductionfromsuchincomeisallowedunder
Section80TTAsubjecttoamaximumofRs.10,000p.a.
RecommendedRead:AllaboutDeductionunderSection80TTAforInterestonSavings
Account

4. INCOME TAX DEDUCTION FOR INTEREST ON HOME LOAN

UNDERSECTION24
IfataxpayerhastakenanyHomeLoan,hewouldbeallowedtoclaimadeductionfortheinterest
levied on such a loan. It should be noted that this deduction under Section 24 is for the Interest
leviedandnotfortheinterestpaid.
TheprincipalamountofHomeLoanrepaidisallowedasadeductionunderSection80Candthe
InterestleviedisallowedasadeductionunderSection24.
RecommendedRead:AllaboutDeductionunderSection24forInterestonHomeLoan

5.SECTION80CCG:DEDUCTIONFORINVESTMENTMADEUNDER
ANEQUITYSAVINGSCHEME
This deduction is also known as the Rajiv Gandhi Equity Savings Scheme. This income tax
deductionisallowedtoanindividualwhohasinvestedinlistedsharesorlistedmutualfundsina
givenfinancialyear.Thedeductionallowedforsuchaninvestmentwouldbe50%oftheamount
investedsubjecttoamaximumofRs.25,000only.
Thisdeductionhoweverisonlyforfirsttimeinvestorsandtheinvestmentalsohasalockinperiod
of3yearsfromthedateofacquisition.
RecommendedRead:DeductionforInvestmentinRajivGandhiSavingScheme

6.SECTION80D:DEDUCTIONFORPAYMENTOFMEDICAL
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INSURANCEPREMIUM&HEALTHCHECKUP
If an individual/HUF has made any payment for medical insurance premium for himself, spouse,
dependent children, he would be allowed to claim an income tax deduction for the same. The
deductionallowedunderthissectionvariesdependingonwhetherthepersoninsuredisasenior
citizenoranonseniorcitizen.
Ifanyamounthasbeenpaidforpreventivehealthcheckup,deductionwouldbeallowedforsuch
paymentaswell.
RecommendedReadSection80D:DeductionforMedicalInsurance&HealthCheckup

7.SECTION80DD&SECTION80U:INCOMETAXDEDUCTIONFOR
DISABILITY
IftheindividualhimselfisdisabledhewouldbeallowedadeductionunderSection80DDandin
caseanydependentfamilymemberoftheindividualisdisabled,hewouldbeallowedadeduction
underSection80U.
ThedisabilitiesforwhichthedeductionsunderSection80DD&Section80Uareallowedhavealso
beendefinedintheincometaxact.
RecommendedRead:AllaboutDeductionforDisabilityunderSection80DD&Section80U

8. SECTION 80DDB: INCOME TAX DEDUCTION FOR TREATMENT

OFSPECIFIEDDISEASES
IncomeTaxDeductionsarealsoallowedfortreatmentofspecifieddiseases.Ifapersonoranyof
hisdependentsisbeingtreatedforanyspecifieddisease,hewouldbeallowedadeductionunder
Section80DDBoftheamountactuallypaidorRs.40,000whicheverishigher.
RecommendedRead:AllaboutDeductionunderSection80DDBforTreatmentofDisease

9. SECTION 80E: INCOME TAX DEDUCTION FOR INTEREST ON

EDUCATIONLOAN
AnIndividualisallowedanincometaxdeductionunderSection80EforRepaymentofIntereston
HomeLoantakenfortheHigherEducationofSelf,SpouseorDependentChildren.
Itshouldbenotedthatthisdeductionisonlyfortherepaymentofinterestoneducationloanand
not for the repayment of the principal amount of the education loan. The good part about this
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income tax deduction is that there is no maximum limit on the amount of deduction that can be
claimed.
This Deduction is not only allowed for Education in India but also allowed for Education outside
Indiaaswell.
RecommendedRead:Section80E:DeductionforRepaymentofInterestonEducationLoan

10. INCOME TAX DEDUCTION FOR DONATIONS UNDER SECTION

80G,80GGA,80GGB,80GGC
If a person has made any donation during the financial year to any approved body, he shall be
allowedadeductionforthesame.
DeductionunderSection80GisageneraldeductionwhereasdeductionsunderSection80GGA,
80GGB&80GGCarespecificdeductions.
Section 80GGA is for Donation for the purpose of Scientific Research or Rural Development,
Section80GGB&Section80GGCareforDonationsgiventoPoliticalParties.
RecommendedRead:Section80G:IncomeTaxDeductionsforDonations

11.INCOMETAXDEDUCTIONFORRENTUNDERSECTION80GG
IfanIndividualhaspaidHouseRentandhehasnotclaimedincometaxdeductionsfortheRent
paid under any other sections of the income tax act, he can claim a deduction under Section
80GG.
In other words, a salaried employee who has not availed of the HRA Exemption or any other
personwhohasnotclaimedexpensesforrentpaidunderanyothersectionofIncomeTaxAct,is
allowedadeductionunderthissectionsubjecttothelimitsprescribedunderSection80GG.
RecommendedRead:AllaboutDeductionforRentpaidunderSection80GG

ABOUT THE AUTHOR

KaranBatra
APersonalFinanceenthusiast,Karanisthefounderofcharteredclub.comand
lovestodiscussaboutMoneyrelatedmatters.

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T RENDING

TaxAdvice:7Thingstodobefore31stMarch

HowtoopenNPSAccountonlinein30Minutes

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11usefulIncomeTaxDeductionsfor201516

Budget2016UpdateAddl.BenefitofRs50000forHomeLoan

KrishiKalyanCess@0.5%onalltaxableservices

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11usefulIncomeTaxDeductionsfor201516

ProcedureforServiceTaxRegistrationOnline
CHARTEREDCLUB
2 0 1 5 C H ARTER ED C L U B.AL LR IGH TSR ESERVED
ABOUTUS CLIENTS WEAREHIRING ADVERTISE CONTACTUS

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