Under Section 80C, the maximum tax exemption limit is Rs 1.5 Lakhs per annum. The various investments that can be claimed as tax deductions under section 80c are listed below;
- PPF (Public Provident Fund)
- EPF (Employees’ Provident Fund)
- 5 years Bank or Post office Tax saving Deposits
- National Savings Certificates (NSC)
- ELSS Mutual Funds (Equity Linked Saving Schemes)
- Children’s Tuition Fees
- Life Insurance Premium
- Sukanya Samriddhi Account Deposit Scheme
- SCSS (Post office Senior Citizen Savings Scheme)
- Repayment of Home Loan (Principal only)
- National Pension System
- NABARD rural Bonds
- Stamp duty charges for purchase of a new house
Contributions made towards Annuity plans available with any of the Life Insurance Companies for receiving pension from the fund can be considered for tax benefit. The maximum Tax deduction allowed under this section is Rs 1.5 Lakhs.
Employees can contribute to National Pension Scheme (NPS). The maximum contributions can be up to 10% of the salary (Basic+DA) for salaried or gross income in case of self employed. From 2017-18 and additional tax deduction of up to Rs 50,000 u/s 80CCD (1b) is allowed for excess employee contributions and this is over and above the limit of Rs 1.5 Lakhs.
The definition of Salary is ‘Basic + Dearness Allowance + any other bonus’. If the employer also contributes to Pension Scheme, the entire employer contribution (maximum 10% of the salary) can be claimed as a tax deduction under Section 80CCD (2). This is over and above the limit of Rs.1.5 Lakhs.
It is to be kindly noted that the total deductions under sections 80C, 80CCD (1) and 80CCC put together cannot exceed Rs 1,50,000 for the financial year 2017-18.
Up to Rs 75,000 can be claimed for spending on medical treatments of your dependents (spouse, parents, children or siblings) who have 40% disability. The upto Rs 1.25 lakhs can be deducted in case of severe disability (80%).
Any individual below the age of 60 years can claim upto Rs 40,000 for the treatment of certain specified critical diseases. This can also be claimed for his/her dependents.
Senior Citizens (above 60 years) can claim upto Rs 60,000 and very Senior Citizens (above 80 years) can claim Rs 80,000 under this section.
It is mandatory for an individual to obtain a Medical Certificate from a specialist doctor in a Hospital, to claim Tax deductions under Section 80DDB
This section is similar to Section 80DD but here the Tax deduction is permitted for the employee himself who is physically or mentally challenged.
Upto Rs. 30,000 can be deducted towards the medical insurance premium for senior citizens (above 60 years) and upto Rs. 25,000 can be deducted towards medical insurance of self and dependents (spouse & children).
Additionally, a deduction of up to Rs. 25,000 towards medical insurance premium of parents (father/mother/both) is available. If both the parents (Father & Mother) are senior citizens, then the deduction allowed is up to Rs. 30, 000.
Section 24: Income Tax Benefit for Interest paid on Home Loan
Income tax benefit on payment of Interest paid on home loan is allowed for deduction under Section 24. The maximum deduction allowed under this Section for a self-occupied house property is upto Rs. 2 Lakhs.
In case, the home Loan has been taken for the property which is not self-occupied, there is no maximum limit prescribed and the entire interest paid is fully exempted.
If the taxpayer has availed a home loan for repair works or reconstruction, a maximum deduction of upto Rs 30,000 per financial year is permitted.
In Budget 2017-2018, a new proposal has been made in which, first time home buyers are eligible for an additional tax deduction of up to Rs 50,000 on home loan interest payments under section 80EE. For claiming tax deductions under this new section 80EE, the following criteria have to be met.
- The home loan should have been availed or sanctioned in FY 2017-2018.The Loan amount should be less than Rs 35 Lakhs
- The value of the home should not be more than Rs 50 Lakhs
- The buyer should not possess any other residential house under his/her name.
Section 80 TTA
Under this section 80TTA, upto Rs. 10,000 from the total gross income can be claimed towards income generated from interest on savings account deposits with a bank or post office or co-operative society. This deduction cannot be claimed on income generated from interest on fixed deposits.
As per the budget 2017, the permissible tax deduction under 80GG has been raised from Rs 24,000 p.a to Rs 60,000 p.a. 80GG is applicable only for those individuals who do not receive HRA from employer and do not possess a residential property.
The maximum tax deduction will be limited to the least of the following criteria;
- Rent paid minus 10 percent of the total income
- Rs 5000 per month
- 25 % of the total income
Contributions made to charitable institutions and certain relief funds are claimed as a deduction under Section 80G. This deduction can be claimed only when the contribution is made through cheque or draft. In case of cash contribution, a maximum of Rs 10,000 is allowed as deduction. Contributions such as clothes, food material, medicines, etc are not eligible for deduction under section 80G.
Section 87A Rebate
From 2017-2018, if the taxable income of a Taxpayer after various permissible income tax deductions, is below Rs 5 lakhs, he/she is eligible for upto Rs 5,000 on Tax payable as tax rebate under this section. In case, if the tax payable is less than Rs 5,000 for FY 2017-18, the rebate will be restricted to actual income tax payable only.
Interest paid towards your education loan can be claimed under Section 80E as a tax deduction. This loan should have been ideally availed by you, your spouse or children or by a student whom you are the legal guardian, for higher education purposes. Only interest paid can be claimed and not the principal.
Under section 80E, there is no specific limit on the amount of interest claimed as deduction. The deduction can be claimed for a maximum of 8 years or until the interest is fully repaid, whichever is earlier.
A taxpayer can claim deduction for the amount that he/she has contributed to a political party or an electoral trust formed to oversee the election process. The contributions made in cash are not allowed for deductions. (Political party refers to any political party registered under the section 29A of the Representation of the People Act, 1951)
Income received through Patent royalty (registered on/after 01.04.2003), under the Patents Act 1970 can be claimed upto Rs. 3 lakhs or the income actually received, whichever is less. The taxpayer must be a resident of India who holds the patent.