Income Tax Deduction

Deduction in relation to certain Expenditures/Payments Section 80D TO 80GGC

Income Tax Deductions specified in Sections 80D TO 80GGC, shall be allowed from the Gross Total Income of the assessee[Section 80A(1)]

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Income Tax Deductions in respect of Health Insurance Premium Payments

Sec. Ref.

80D

Eligible Assessee

Individual and HUF

Nature of Payment

Any payment, otherwise than by cash, for insurance on health in accordance with a scheme framed

  • By General Insurance Corporation of India approved by the Central Government, or

  • Any other insurer and approved by the Insurance Regulatory and Development Authority established under the Insurance Regulatory and Development Authority Act, 1999.

In the case of an individual, such sum is paid to effect or to keep in force insurance on the health of the assessee, his spouse, dependant parents or dependant children of the assessee.

Where the assessee is a Hindu Undivided Family, any such sum paid to effect or to keep in force insurance on the health of any member of the family.

The premium should be paid in respect of health insurance of the assessee or his family members, or, w.e.f. 01.04.2011, as contributions made to the Central Government Health Scheme

Quantum of Income Tax Deduction

Least of the following: -

  • Actual Contribution.
  • Rs.15,000.

However, if it includes policy on senior citizen, the total ceiling is raised to Rs.20,000

Moreover, in the case of an Individual the deduction can be availed for two separate insurance policies each on: -

  • Individual, Spouse and Children
  • Parents

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Income Tax Deductions in respect of Medical Treatment

Sec. Ref.

80DD

Eligible Assessee

Individual and HUF

Nature of Payment

Where the assessee has -

  1. Incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability/severe disability (such dependant); or

  2. Paid or deposited any amount under a scheme framed in this behalf by LIC or any other Insurer or Unit Trust of India and approved in this behalf by the Board for the maintenance of such dependant.

The deduction shall be allowed only if -

  • The scheme referred to provides for payment of annuity or lump sum amount for the benefit of such dependant in the event of the death of the individual or the member of the HUF in whose name the subscription to the scheme has been made.

  • The assessee nominates either such dependant or any other person or a trust to receive the payment on his behalf, for such dependant's benefit.

Copy of Certificate issued by the Medical Authority in the prescribed form, and is valid as on that date of furnishing, along with the return of income for each Assessment Year for which deduction is claimed.

If such dependant predeceases the individual or the member of the HUF, an amount equal to the amount paid or deposited shall be deemed to be the income of the assessee of the previous year in which such amount is received by the assessee.

Dependant means -

In the case of Individual,

  • the spouse,
  • children,
  • parents,
  • brothers and sisters of the individual, or
  • any of them.

In the case of HUF, a member of HUF wholly or mainly dependant on such individual or HUF for his support or maintenance.

Disability means -

  • blindness,

  • low vision,

  • leprosy cured,

  • hearing impairment,

  • locomotor disability,

  • mental retardation or mental illness and includes Autism, Cerebral Palsy and Multiple Disability referred to in section 2(a), 2(c) and 2(h) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999.

Dependant with disability means -

  • a person suffering from not less than 40% of any of the disability as certified by Medical Authority, as referred to in section 2(p) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, or

  • a person referred to in section 2(j) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999.

Dependant with severe disability means

  • a person with 80% or more of one or more disabilities as referred to in section 56(4) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, or

  • a person with sever disability referred to in section 2(o) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999.

Medical Authority means -

  • Medical Authority notified under section 2(p) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, or

  • Any other Medical Authority notified under section 2(a), 2(c), 2(h), 2(j) and 2(o) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999.

Quantum of Income Tax Deduction

Standard deduction of

  • Rs.50,000 for a dependant with disability, or
  • Rs.1,00,000 for a dependant with severe disability.

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Income Tax Deductions in respect of Specified Disease Treatment

Sec. Ref.

80DDB

Eligible Assessee

Individual and HUF

Nature of Payment

Actually incurs any expenditure for medical treatment of such disease or ailment as may be specified in the rules made in this behalf by the Board -

For himself or a dependant relative, in case the assessee is an individual.

For any member of HUF, in the case of HUF.

Certificate in Form 10-I from a Neurologist, Oncologist, Urologist, Haematologist, Immunologist or such other notified specialists working in a Government Hospital.

Deduction shall be reduced by the amount received, if any, under insurance from the insurer or his employer.

Government Hospital includes -

Departmental Dispensary whether full-time or part-time established and run by a Department of Government for the medical attendance and treatment of a class or classes of Government Servants and members of their families

Hospital maintained by Local Authority

Any other Hospital with which arrangements have been made by Government for the treatment of Government Servants.

Dependant means -

  • In the case of Individual, the spouse, children, parents, brothers and sisters of the individual or any of them wholly or mainly dependant on such individual for his support or maintenance

  • In the case of HUF, a member of HUF, wholly or mainly dependant on such HUF for his support or maintenance

Quantum of Income Tax Deduction

Least of the following: -

  • Actual Expenditure.
  • Rs.40,000.

However, if it includes policy on senior citizen, the total ceiling is raised to Rs.60,000.

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Income Tax Deductions for Interest on Higher Education Loan

Sec. Ref.

80E

Eligible Assessee

Individual

Nature of Payment

Amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan taken from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his relative.

The Income Tax deduction shall be available for the

  • eight years commencing with the year in which the payment of interest starts or

  • until the interest is repaid in full,

whichever is earlier.

Approved Charitable Institution

means an institution specified in, or, as the case may be: -

  • an institution established for charitable purposes and approved by the prescribed authority under section 10(23C), or

  • an institution referred to in section 80G(2)(a)

Financial Institution

means
  • a banking company to which the Banking Regulation Act, 1949 (including any bank or banking institution referred to in section 51 of that Act); or

  • any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf

Higher Education

means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognised by the Central Government or State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority to do so.

Relative in relation to an Individual

means

  • the spouse and children of that individual or

  • the student for whom the individual is the legal guardian.

Quantum of Deduction

Whole Interest paid during the previous year.

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Income Tax Deductions for Donations

Sec. Ref.

80G

Eligible Assessee

Any assessee

Nature of Payment

Donations of money to certain funds, charitable institutions, etc., are eligible for deduction under this section.

For the purpose of claiming deduction, the assets are classified into four categories: -

Items that qualify for 100% of Total Income: -

Category A: -

Technology: -
Fund for Technology Department and Application set up by the Central Government.
Security: -
  • The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependants.

  • National Defence Fund.
Education: -
  • A university or any educational institution of national eminence as may be approved by the prescribed authority, viz.,

    • in relation to a university or any non-technical institution of national eminence, the Director-General (Income-tax Exemption) in concurrence with the Secretary, University Grants Commission;

    • in relation to any technical institution of national eminence, the Director-General (Income-tax Exemption) in concurrence with the Secretary, All India Council of Technical Education.

  • Any Zila Saksharta Samiti constituted in any district for the purposes of improvement of primary education in villages and towns in such district and for literacy and post-literacy activities.

Medical: -
  • The National Illness Assistance Fund

  • The National Blood Transfusion Council or to any State Blood Transfusion Council which has its sole object the control, supervision, regulation or encouragement in India of the services related to the services related to operation and requirements of blood banks.

  • Any fund set up by a State Government to provide medical relief to the poor.

  • The National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities.

Relief: -
  • The Prime Minister's National Relief Fund.

  • The Prime Minister's Armenia Earthquake Relief Fund.

  • The Africa (Public Contributions India) Fund.

  • The Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund in respect of any State or the Union Territory.

Others: -
  • The National Sports Fund.

  • The National Cultural Fund.

  • The National Foundation for Communal Harmony.

Category B: -

  • The Prime Minister's Drought Relief Fund.

  • The National Children's Fund.

  • The Jawaharlal Memorial Fund.

  • The Indira Gandhi Memorial Trust.

  • The Rajiv Gandhi Foundation.

Items that qualify for deduction to the extent of 10% of the Total Income: -

Category C: -

  • The Government or to any such local authority, institution or association as may be approved in this behalf by the Central Government, to be utilised for the purpose of promoting family planning.

  • Any sum paid by a company to the Indian Olympic Association or to any other association or institution established in India notified by the Central Government for -

    • The development of infrastructure for sports and games; or

    • The sponsorship of sports and games;

    in India.
  • any corporation referred to in section 10(26BB) established by the Central Government or any State Government for promoting the interests of the members of a minority community

Category D: -

  • Donations for the renovation or repair of any temple, mosque, gurdwara, church or other place notified by Central Government to be of historic, archaeological or artistic importance or to be a place of public worship or renown throughout any State(s).

  • The Government or Local Authority, to be utilised for charitable purpose.

  • Any other fund or any institution approved under this section.

  • Any authority constituted in India by or under any law for the purpose of dealing with and satisfying the need for housing accommodation for the purpose of planning, development or improvement of cities, towns and villages, or for both.

  • Any Corporation established by the Central Government or any State Government for promoting the interests of the members of the minority community.

Total Income = Gross Total Income - Chapter VI-A Deductions (except 80G)

Quantum of Income Tax Deduction

Category A - 100% of the Donations.

Category B - 50% of the Donations.

Category C - 100% of the Amount eligible for Deduction (i.e., restricted to 10% of Total Income).

Category D - 50% of the Amount eligible for Deduction (i.e., restricted to 10% of Total Income).

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Income Tax Deductions for Rent Paid

Sec. Ref.

80GG

Eligible Assessee

Individual

Nature of Payment

The assessee should not be in receipt of House Rent Allowance. Further, no residential accommodation shall be owned by -

  • The assessee or by his spouse or minor child or, where such assessee is a member of a HUF, by such family, at the place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession; or

  • The assessee at any other place, being accommodation in the occupation of the assessee, the value of which is determined as if it is self-occupied.

Total Income = Gross Total Income - Chapter VI-A Deductions (except 80GG).

Quantum of Income Tax Deduction

Least of the following: -

  • Rent paid in excess of 10% of Total Income.
  • 25% of Total Income
  • Rs.2,000 p.m.

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Income Tax Deductions for Research & Development

Sec. Ref.

80GGA

Eligible Assessee

Any assessee

Nature of Payment

The assessee should not have any income chargeable under the head "Profits and Gains of Business or Profession".

The following amounts paid are eligible for deduction -

  • To research association University, College or other institution [approved under section 35(1)(ii)] which has as its object the undertaking of scientific research.

  • To a research association which has as its object the undertaking of research in social science or statistical research or to a University, College or other institution [approved under section 35(1)(iii)] to be used for research in social science or statistical research.

  • To an association or institution, if the Certificate under section 35CCA(2) or 35CCA(2A) is produced with the return, which has its object -

    • the undertaking of any programme of rural development approved under section 35CCA or to a Fund for the said purpose.

    • the training of persons for implementing programmes of rural development.

  • To a public sector company or a local authority or to an association or institution approved by National Committee for carrying out eligible project or scheme [notified under section 35AC], if certificate referred to in section 35AC(2)(a) is furnished along with the return of income.

  • Rural Development Fund notified by Central Government under section 35CCA(1)(c)

  • National Urban Poverty Eradication Fund notified by Central Government under section 35CCA(1)(d)

Quantum of Deduction

Whole amount contributed.

Where income tax deduction is claimed under this section, no deduction can be claimed under any other section.

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Income Tax Deductions for Contribution to Political Party

Sec. Ref.

80GGB

Eligible Assessee

Indian Company

Nature of Payment

Contribution to Political Party

Quantum of Deduction

Whole of such Contribution

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Income Tax Deductions for Contribution to Political Party

Sec. Ref.

80GGC

Eligible Assessee

Any Person, other than -

  • Local Authority
  • Artificial Juridical Person, wholly or partly funded by Govt.

Nature of Payment

Contribution to Political Party

Quantum of Income Tax Deduction

Whole of such Contribution

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