Tax Reduction

Following are the some of the tax reductions.

Deductions under 80C

The total deduction under this section (along with section 80CCC and 80CCD) is limited to Rs. 1 lakh only. Following are some of the deductions permissible under 80C.

  • Life Insurance Premium For individual, policy must be in self or spouse’s or any child’s name. For HUF, it may be on life of any member of HUF.
  • Sum paid under contract for deferred annuity for individual, on life of self, spouse or any child.
  • Sum deducted from salary payable to Govt. Servant for securing deferred annuity for self-spouse or child Payment limited to 20% of salary.
  • Contribution made under Employee’s Provident Fund Scheme.
  • Contribution to PPF For individual can be in the name of self/spouse, any child & for HUF, it can be in the name of any member of the family.
  • Contribution by employee to a Recognized Provident Fund.
  • Sum deposited in 10 year/15 year account of Post Office Saving Bank
  • Subscription to any notified securities/notified deposits scheme. e.g. NSS
  • Subscription to any notified savings certificate, Unit Linked Savings certificates. e.g. NSC VIII issue.
  • Contribution to Unit Linked Insurance Plan of LIC Mutual Fund e.g. Dhanrakhsa 1989
  • Contribution to notified deposit scheme/Pension fund set up by the National Housing Scheme.
  • Certain payment made by way of installment or part payment of loan taken for purchase/construction of residential house property.
  • Condition has been laid that in case the property is transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year.
  • Contribution to notified annuity Plan of LIC(e.g. Jeevan Dhara) or Units of UTI/notified Mutual Fund. If in respect of such contribution, deduction u/s 80CCC has been availed of rebate u/s 88 would not be allowable.
  • Subscription to units of a Mutual Fund notified u/s 10(23D).
  • Subscription to deposit scheme of a public sector, company engaged in providing housing finance.
  • Subscription to equity shares/ debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions.
  • Tuition fees paid at the time of admission or otherwise to any school, college, university or other educational institution situated within India for the purpose of full time education of any two children. Available in respect of any two children

Deductions under 80CCC:  Deduction in respect of Premium Paid for Annuity Plan of LIC or Other Insurer

Payment of premium for annuity plan of LIC or any other insurer Deduction is available upto a maximum of Rs. 100,000/-. (This limit has been increased from Rs. 10,000/- to Rs. 1,00,000/- w.e.f. 01.04.2007).

The premium must be deposited to keep in force a contract for an annuity plan of the LIC or any other insurer for receiving pension from the fund.

Deductions under 80CCD: Deduction in respect of Contribution to Pension Account (by Assessee}

Deduction available for the amount paid or deposited in a pension scheme notified or as may be notified by the Central Government subject to a maximum of :

  • 10% of salary in the previous year in the case of an employee (b) 10% of gross total income in any other case.

Deduction under 80CCD: Deduction in respect of Contribution to Pension Account (by Employer}

Deduction available for the amount paid or deposited by the employer of the assessee in a pension scheme notified or as may be notified by the Central Government subject to a maximum of 10% of salary in the previous year:

Deductions under 80CCG: Rajiv Gandhi Equity Saving Scheme (RGESS)

As per the Budget 2012 anouncements, a new scheme Rajiv Gandhi Equity Saving Scheme (RGESS) will be launched. Those investors whose annual income is less than Rs. 10 lakh (proposed Rs. 12 lakh from A.Y. 2014-15) can invest in this scheme up to Rs. 50,000 and get a deduction of 50% of the investment. So if you invest Rs. 50,000 (maximum amount eligible for income tax rebate is Rs. 50,000), you can claim a tax deduction of Rs. 25,000 (50% of Rs. 50,000). View key features of Rajiv Gandhi Equity Saving Scheme (RGESS).

Deductions under 80D: Deduction in respect of Medical Insurance

Deduction is available upto Rs. 20,000/- for senior citizens and upto Rs. 15,000/ in other cases for insurance of self, spouse and dependent children. Additionally, a deduction for insurance of parents (father or mother or both) is available to the extent of Rs. 20,000/- if parents are senior Citizen and Rs. 15,000/- in other cases. Therefore, the maximum deduction available under this section is to the extent of Rs. 40,000/-. From AY 2013-14, within the existing limit a deduction of upto Rs. 5,000 for preventive health check-up is available.

Deduction under 80DD: Deduction in respect of Rehabilitation of Handicapped Dependent Relative

Deduction of Rs. 50,000/- w.e.f. 01.04.2004 in respect of

Expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent relative.

Payment or deposit to specified scheme for maintenance of dependent handicapped relative.

Deductions under 80DDB: Deduction in respect of Medical Expenditure on Self or Dependent Relative

A deduction to the extent of Rs. 40,000/- or the amount actually paid, whichever is less is available for expenditure actually incurred by resident assessee on himself or dependent relative for medical treatment of specified disease or ailment. The diseases have been specified in Rule 11DD. A certificate in form 10 I is to be furnished by the assessee from any Registered Doctor.

Deductions under 80E: Deduction in respect of Interest on Loan for Higher Studies

Deductions under 80G: Deduction in respect of Various Donations

The various donations specified in Sec. 80G are eligible for deduction upto either 100% or 50% with or without restriction as provided in Sec. 80G

Deductions under 80GG: Deduction in respect of House Rent Paid

Deduction available is the least of

Rent paid less 10% of total income

Rs. 2000/- per month i.e. Maximum Deduction available is 24,000/-

25% of total income, provided

Deductions under 80GGA: Deduction in respect of certain donations for scientific research or rural development

Deductions under 80GGC: Deduction in respect of contributions given by any person to political parties

Deductions under 80QQB: Royalty Income on patents.

Maximum deduction Rs. 3,00,000/-

Deductions under 80RRB: Royalty Income to author of certain books other than text books.

Maximum deduction Rs. 3,00,000/-

Deductions under 80 TTA: Deduction from gross total income in respect of any Income by way of Interest on Savings account

Deductions under 80U: Deduction in respect of Person suffering from Physical Disability

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