It is the high time of the year when taxpayers are looking for the options to save their income tax liability. Since they have to make the investment before 31st March, 2020 to claim the deduction in the financial year 2019-20.

People invest in various products considering the pros and cons of each and every investment. Most of the taxpayers are aware of deductions u/s 80C. The maximum limit of deduction available u/s 80C is Rs. 1,50,000/-.

In this article, we will discuss the deduction available under various other sections. You can use these tools to further reduce your taxable income.

1) Section 80CCD: Deduction in respect of Contribution to the National Pension Scheme (NPS).

To Whom: Salaried Employee or Self-Employed Individual.

Quantum of Deduction: Employer and employee contribution not exceeding 10% of Salary in each case. In any other case, twenty percent of gross total income in the previous year. The Maximum amount of deduction available is Rs. 50,000/-.

2) Section 80D: Deduction in respect of Medical Insurance Premium.

To whom: Individual or HUF whether resident or non-resident.

Quantum of Deduction: 

  • In case of the individual, Rs. 25,000 for himself and his family
  • If individual or spouse is 60 years old or more the deduction available is Rs 50,000
  • An additional deduction for insurance of parents (father or mother or both, whether dependent or not) is available to the extent of Rs. 25,000 if less than 60 years old and Rs 50,000 if parents are 60 years old or more.
  • For uninsured super senior citizens (80 years old or more) medical expenditure incurred up to Rs 50,000 shall be allowed
  • A deduction of Rs. 5000 will be allowed under this section for payment of preventive health check-up of either the individual himself or his family members which includes spouse, parents and dependent children.This deduction is NOT in addition to the deduction of Rs.25000/50000 stated above, but is included in the above deduction
  • In case of HUF, the maximum deduction is Rs. 25,000.

3) Section 80E: Deduction for interest paid on loan taken for pursuing higher education.

To whom: Individual whether resident or not.

Quantum of Deduction: Actual Amount Paid.

Note: The deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier.

4) Section 80EE: Deduction in respect of interest on loan taken for residential house property.

To Whom: Individual (Applicable to Resident as well Non Resident)

Quantum of Deduction: Interest payable on the above loan or Rs. 50,000/- whichever is less

5) Section 80G Deduction in respect of donations to certain funds, charitable institutions etc.

To whom: All assesses.

Quantum of Deduction: 100% or 50% of eligible donations. In some cases, the maximum allowable deduction is 10% of Adjusted Gross Total Income.

Important Note:

Amendment by Finance Act’2017

“No deduction shall be allowed under this section in respect of donation of any sum exceeding two thousand rupees unless such sum is paid by any mode other than cash.”

Finance Act 2017 amended section 80G so as to provide that no deduction shall be allowed under the section 80G in respect of donation of any sum exceeding Rs. 2,000/- unless such sum is paid by any mode other than cash. Earlier this limit was 10, 000/-. The Government has taken this step in order to provide cashless economy and transparency.

6) Section 80GG: Deduction in respect of rent paid.

To Whom: Individual Only.

Quantum of Deduction:

The least of the following amount:

a) Rs. 5,000 per month or

b) 25% of total income for the year or

c) The excess of actual rent paid over 10% of total income for the year

7) Section 80TTA Deduction in respect of interest on deposits in the savings account.

To Whom: Resident Individual or HUF (other than those assessee who has covered in Section 80TTB)

Quantum of Deduction: Maximum Rs. 10,000.

8) Section 80TTB: Deduction in respect of interest on deposits in case of senior citizens.

To Whom: Resident individual who is of the age of sixty years or more at any time during the relevant previous year

Quantum of Deduction: Maximum Rs. 50,000.

9) Section 24(b): Deduction of interest on housing loan.

Quantum of Deduction: The maximum tax deduction allowed is Rs. 2 Lakh. 

I hope these tax saving tools will help you in cutting down your taxes. Money saved is Money earned.

(Republished with Amendments by Team Taxguru)

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Location: DELHI, New Delhi, IN
Member Since: 25 Apr 2017 | Total Posts: 41
A passionate Chartered Accountant having practical work exposure in the area of Direct Tax. An organised and efficient person by nature who loves to take challenges of working with dynamic and fast paced environment with the help of knowledge and work experience. View Full Profile

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2 Comments

  1. Arun A k says:

    Hi Team,
    I just started my first elss fund today. I paid for two schemes ..

    I just read the new act..below..
    No deduction u/s 80CCG shall be allowed from A.Y 2018-19

    So my question is ..will my investment on tax savings schemes not be considered.

    Thank,

  2. MITHLESH KUMAR says:

    Sir/Madam
    i am a government employee & 10% deduction (employee contribution ) of my salary goes into NPS. can i get 50,000/- additional benift from above contribution.
    further i want to know that can i avail tax benift with in 150,000/-

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