Important deductions under Income Tax Act- avail to get maximum tax saving

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  • Aug 16,2020
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To reduce your tax liability to a maximum extent, you can use certain deductions allowed under the income tax act. Deductions are only allowed if you have made eligible tax-saving investments or spend eligible expenses. There are a number of deductions available under various sections that will bring down your taxable income. Most of the covered under section 80C. Other preferred deductions are 80D, 80E, 80G or 80GG, etc. In this article, let us discuss some of the important deductions under chapter VIA that a taxpayer can claim.

S. No. Amount Limit Section Description Remark/Condition
1 1,50,000 80C National Savings Certificate (Accrued Interest)  
2 80C National Savings Certificate (New Invest)  
3 80C Repayment of Housing Loan (Principal Part)  
4 80C Payment towards Life Insurance Premium  
5 80C Unit Linked Insurance Premium (ULIP)  
6 80C Contribution in Provident Fund  
7 80C Investments made in Debentures/Shares of Companies (Eligible)  
8 80C Tuition Fees  
9 80C Equity Linked Savings Scheme (Eligible)  
10 80CCC Deduction in respect of contribution to eligible pension funds (Private)  
11 80CCD (1) Deduction in respect of contribution to eligible pension funds- NPS, OTher (Govt.) Up to 10% of the salary (Basic+D.A) [Salaried] or 20% of the GTI [Self Emp.].
12 80CCD (2) Employer contribution to pension scheme of Govt. on behalf of the employee Only for a salaried person up to 10% of Basic Salary plus Dear Allowance
13 50,000 80CCD (1B) Additional Deduction for National Pension System Contribution Over Rs 150,000
14 25,000 80D Deduction in respect of Medical Insurance Premium For self, Spouse, and Children
15 25,000 80D Deduction in respect of Medical Insurance Premium For parents less than 60 years of age (Additional Rs 25,000 for parents above 60 years of age)
16 5,000 80D    
17 75,000 80DD Deduction in respect of maintenance including medical treatment of handicapped dependent For a person with disability and amount increased Rs.1,25,000 for a person with severe disability
18 Rs 40,000/ 100,000 or Actual- Lower 80DDB Medical treatment of specific diseases or ailments for himself/herself or for a dependent. Rs. 40,000 for taxpayers less than 60 years of age and Rs.1,00,000 for Senior Citizens.
19 No Limit 80E Deduction in respect of interest on loan taken for higher education Can be availed for a maximum period of 8 years
20 150,000 p.a. 80EEA Deduction in respect of interest on loan taken for residential house property under affordable housing scheme purchased in the Financial Year 2019-20 This deduction is over and above the deduction of Rs.2 Lakhs u/s 24 in head HP.
21 Any Amount 80G Deduction in respect of donation to certain funds, charitable institutions Cannot donate above Rs 2000 in cash.
22 Max 60,000 80GG Deduction in respect of rents paid (Non-Salaried) Deduction shall be lower of:-

1. Actual Rent paid minus 10% of ATI

2.Rs.5000 per month

3. 25% of ATI

23 Any Amount 80GGC Deduction in respect of contributions given by any person to political parties  
24 Any Amount 80O Royalties from Foreign Enterprises  
25   80P The income of Cooperative Societies 100% deduction if engaged in certain specified activities.
26 10,000 80TTA Deduction in respect of interest on deposits in a savings account  
27 50,000 80TTB Deduction in respect of interest on all types of deposits in case of senior citizens  
28 75,000/125000 80U Deduction in case of permanent physical disability 75000 for a person with 80% disability and 125000 with more than 80% disability

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