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’2018 to claim the deduction in the financial year 2017-18.

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 80CCG: Deduction in respect of investment in equity Savings Scheme.

To Whom: Individual who is resident in India.

Quantum of Deduction: 50% of the amount invested or Rs. 25,000 whichever is less.

Important Note:

Amendment by Finance Act’2017

No deduction u/s 80CCG shall be allowed from A.Y 2018-19. However, an assessee who has claimed deduction under this section for A.Y 2017-18 and earlier assessment years shall be allowed deduction under this section till the A.Y 2019-20 if he is otherwise eligible to claim the deduction as per the provisions of this section.

3) 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 + Rs. 25,000 for parents. In case of HUF, the maximum deduction is Rs. 25,000. This limit is Rs. 30,000 where the policyholder is the senior citizen.

4) 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.

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

To Whom: Individual.

Quantum of Deduction: Maximum deduction is Rs. 50,000/- for the assessment year beginning on the 1st day of April 2017 and subsequent assessment years

6) 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.

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

To Whom: Individual Only.

Quantum of Deduction: Maximum Rs. 5,000 per month.

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

To Whom: Individual or HUF.

Quantum of Deduction: Maximum Rs. 10,000.

9) Section 24B: 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.

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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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