What is Tax Deduction

Tax deduction helps in reducing your taxable income. It decreases your overall tax liabilities and helps you save tax. However, depending on the type of tax deduction you claim, the amount of deduction varies. You can claim tax deduction for amounts spent in tuition fees, medical expenses and charitable contributions. Also, you can invest in various schemes such as life insurance plans, retirement savings schemes, and national savings schemes etc. to get tax deductions. The government of India offers tax exemptions for various expenses incurred in different activities to encourage individuals and commercial institutions take part in activities having social benefits.  

Tax Deduction under Section 80C:  

Under section 80C of the Indian Income Tax Act, 1961, you can get tax deductions on premiums paid towards life insurance, annuity received through deferred annuity plans , contributions made to provident fund schemes , investments in certain equity stocks /debentures etc. Section 80C has the following subsections:

• 80CCC: Deduction arising from contributions to certain pension funds of LIC or any other insurer. Deduction is allowed up to Rs. 1, 00,000.

 

• 80CCD: Deduction arising from contribution to pension scheme notified by Central Government. You can get tax deduction up to 10% of your salary. 

 

• 80CCF: Tax deduction for subscription to notified long-term infrastructure bonds. You can get tax deduction up to Rs.20,000. 

• 80CCG: Deduction up to Rs. 25,000 for investing in notified equity savings scheme. Individuals and members of Hindu undivided family (HUF) can avail this deduction. 

Tax Deduction under Section 80D:  

Under this section, get tax deduction for medical premiums paid for self, spouse and children by using any other means of payment other than cash to LIC or other insurance providers. Both individuals and members of HUF can benefit from this section. 80D includes the following sub-sections: 

• 80DD: Deduction of Rs. 50,000 is allowed to resident individual and members of HUF for the expense incurred in medical treatment of a dependent, or in training and rehabilitation of a dependent. 

 

• 80DDB: Deduction is offered for expenses spent in medical treatment of specified diseases and ailments. 

Tax Deductions under Section 80E:  

Under section 80E , get tax deduction for taking educational loan from financial institutions or approved charitable institutions. Deduction under this section is applicable for individuals only. 80E has the below mentioned subsection: 

• 80EE: Deduction is allowed on the interest payable on loan taken from any financial institution for purchasing residential property. Maximum deduction allowed is Rs. 3, 00,000. Deduction under both the sections (80E and 80EE) can be availed by individuals.  

Tax Deductions under Section 80G:  

Tax deduction under this section can be availed by all assesses. Donations to certain approved funds, trusts, charitable institutions, and donations for renovation or repairing of notified temples qualify for tax deduction under this section. 80G has four subsections which include: 

• 80GG: Rent paid in excess of 10% of total income for furnished or unfurnished residential accommodation qualifies for tax deduction.

 

• 80GGA: Donations for scientific, social or statistical research or rural development program qualifies for tax deduction under this section.  

• 80GGB: Amount contributed to any political party or electoral trust is eligible for tax deduction.

 

• 80GGC: Sum contributed to any political party or electoral trust is eligible for tax deduction.

Tax Deductions under Section 80 IA:  

You can get tax deductions for profits and gains from industrial undertakings or enterprises engaged in infrastructure development. 80 IA has the following subsections: 

• 80-IAB: Deduction for profits and gains derived from the business of developing a Special Economic Zone (SEZ) notified on or after 1/4/2005. This deduction can be availed by the developers of SEZ.

 

• 80-IB: Profits and gains from industrial undertakings, hotel, scientific research & development, mineral oil concern, cold storage plant, housing projects, cold chain facility, convention centers, multiplex theatres etc. qualify for tax deduction under this section. All assesses can avail this deduction.

• 80-IC: Profits and gains derived by an enterprise in the special category states including Himachal Pradesh, Uttaranchal, Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura, qualify for tax deduction. All assesses can avail this deduction.

 

• 80-ID: Deduction arising from profits and gains from business of hotels and convention centers in certain areas. All assesses can avail this deduction.

• 80-IE: Get tax deduction for taking up certain activities in Northeastern states. All assesses can avail this deduction. 

Tax Deductions under Section 80J:  

Section 80J has been amended and it includes the following subsections: 80JJA and 80JJAA: 

• 80JJA: Deduction arising from profits and gains from the business of collecting and processing bio-degradable waste. All assesses can avail this deduction.

• 80JJAA: 30% additional wages paid to new regular workmen employed in the previous year qualifies for tax deduction. Indian company having profits and gains derived from manufacturing of goods can avail tax deductions under this section.

Tax Deduction under Section 80LA 

Incomes of Scheduled banks and banks incorporated outside India having offshore banking units in a Special Economic Zone qualify for tax deduction. Scheduled banks, banks incorporated outside India, units of International Financial Services Centre can get tax deductions under this act.  

Tax Deduction under Section 80P 

Deductions arising from specified incomes qualify for tax deduction. Co-operative societies can avail this deduction. 

Tax Deduction under Section 80QQB:  

Tax deduction under this section applies to the royalty income of an author of certain category of books. Maximum tax deduction allowed is up to Rs. 3, 00,000. Resident individual authors can avail tax deduction under it. 

Tax Deduction under Section 80RRB:  

You can get tax deduction on royalty on patents. Maximum deduction allowed is up to Rs. 3, 00,000. Such deduction can be availed any resident individual who is a patentee and receives the income by way of royalty for patent registered on or after 1/4/2003. 

Tax Deduction under Section 80TTA:  

Interest on deposits in savings bank accounts qualifies for tax deduction under this section. Maximum deduction offered is Rs. 10,000 p.a. Individuals and members of HUF can avail tax deduction under this section.  

Tax Deduction under 80U:  

Under this section, tax deduction of Rs. 50,000 is allowed to a resident individual who is certified by the medical authority to be a person with disabilities in the previous year. Autism, cerebral palsy etc. are included under multiple disabilities in this section.