• vikranth muthyala

Deductions Under Chapter VI-A

Updated: Aug 7, 2019

What do deductions mean? Who is eligible to claim these deductions? Is there a limit on the maximum amount that we can claim? Let’s try to answer all these questions in the simplest way possible!



To start with, Deductions are the amounts that are deducted from our Gross Total Income (GTI). People often make the mistake of assuming that Exemptions and Deductions are one and the same, but that is not true. Let us make it easy for us to understand.


EXEMPTIONS: These are the amounts that are not taken into consideration while calculating our Gross Total Income (GTI).


DEDUCTIONS: Deductions on the other hand are the amounts that are subtracted from our gross total income, which subsequently reduce our tax liability. Deductions are, in a way, discounts that can be availed if specific expenses or investments satisfy certain conditions.


Now let us try and get some GYAAN on DEDUCTIONS, because we all want to reduce our tax burden, don't we?


There are a few GENERAL DEDUCTIONS that are important for us to know. It is important to note that the deductions are to be claimed in the year in which the expense was incurred or the investment was made. We will try to cover all of them in this blog post, so that you can make smart investments and have a proper track of expenses that can be claimed as a deduction while filing taxes next year.


Section 80C Deduction


Deduction in respect of life insurance premium paid, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, and other similar items are covered under this section.

While computing the total income deductions can be claimed in respect of the amounts deposited in

  • Life Insurance Premium

  • Public Provident Fund (PPF)

  • Employee’s Contribution to a Statutory Provident Fund or a Recognized Provident Fund

  • Principal component of the amount paid towards Housing Loan during the year

  • Tuition fees paid for the Education of Children (maximum 2) to a university, college, school or any other educational institution in India.

  • Deposits made in Sukanya Samriddhi Scheme account.

  • Stamp Duty paid towards acquisition of house property.

Section 80CCC Deduction


Contributions made towards annuity plans of LIC or any other insurance company is allowed as a deduction under this section. This deduction is available only to Individual assessees.

The annuity plan must be for receiving a pension from a fund referred to in Section 10(23AAB).


Section 80CCD Deduction


This Deduction too is available only for individuals in respect of contributions made to the National Pension Scheme (NPS) and Atal Pension Yojana (APY). This section also covers the employers contribution towards NPS.



Contributions to NPS are covered under 80CCD!

The Maximum Deduction you can claim under 80C, 80CCC and 80CCD is Rs.1,50,000.

However an additional deduction of Rs.50,000 is available under section 80CCD.

Therefore you can claim deductions up to Rs.2,00,000 under sections 80C,80CCC and 80CCD.


Section 80D Deduction:


In this section we will see Health Insurance Premium Paid and expenses incurred towards Preventive Health Checkup.


If an assessee pays any amount towards Health/Medical Insurance it is allowed as deduction.

What if it is a Family plan? Deduction can be claimed for such insurance taken for Self, spouse, dependent children and parents.


How much can be claimed as a deduction?


You (as an individual or HUF) can claim deduction up to Rs.25,000 under section 80D on insurance for self, spouse and dependent children. However, An additional deduction of Rs.25,000 can be claimed for parents less than 60 years of age. If they are older than 60 Years, the limit doubles to Rs.50,000.

Take a look at the chart below!



Follow the flow chart to see how much deduction you can claim under section 80D!


Apart from the insurance expenditure, a deduction upto Rs.5,000 is also allowed under this section. This amount shall also be considered while calculating the maximum amount (Rs.25,000/Rs.50,000 as applicable) we discussed above.


Section 80DDB Deduction


To claim deduction under this section, one must satisfy the following conditions:

  • Taxpayer must be a Resident Individual/HUF.

  • The taxpayer has actually incurred expenditure for medical treatment of a specified disease or ailment as prescribed by the board.

  • The expenditure is incurred for the treatment of the assessee himself/herself, spouse, children, parents, brothers and sisters. For HUFs, expenditure incurred for any member of the family shall be eligible for deduction.


Expenditure on Specific Diseases only!

What are the diseases that are covered under section 80DDB?

  • Neurological diseases (where the disability has been certified to be 40% or more)

  • Malignant Cancers

  • Full Blown Acquired Immuno Deficiency Syndrome (AIDS)

  • Chronic Renal Failure

  • Hematological Disorders

What is the quantum of deduction that is allowed under this section?


All taxpayers, other than senior citizens(60 years and older), can claim tax deduction upto Rs.40,000 or the actual amount expended, whichever is lower.


For senior citizens (60 years and older), with effect from 1st April 2018, the maximum amount that can be claimed as a deduction under this section Rs.1,00,000. Which means, Rs.1,00,000 or actual expense incurred whichever is lower shall be allowed as a deduction.


Section 80DD Deduction


Deduction under this section is available to a resident Individual or HUF.for expenses incurred on medical treatment, training and rehabilitation of any physically challenged dependent relative.


What disabilities are covered under this section?

  • Blindness;

  • Low Vision;

  • Leprosy-Cured;

  • Hearing-Impairment

  • Locomotor Disability

  • Mental Retardation

  • Mental illness

This section has bifurcated disabilities into two categories,

  • Without severe disability - 40-80%

  • With severe disability - 80% or more(also includes multiple disabilities)

Deduction is available as a fixed/flat deduction depending on the extent of disability.

  • If the disability is 40-80%, then Rs.75,000 is allowed as a deduction

  • If the disability is 80% or more, then Rs.1,25,000 is allowed as a deduction

For being eligible to claim deduction under this section, a certification from prescribed medical authority in Form-10IA must be obtained. The nature and the extent of disability is specified in this certificate.


Section 80E Deduction


Deduction under this section is in respect of Interest paid on Loan taken for higher education in India or outside India.

Where the assessee takes a loan for the purpose of higher education for self, spouse,children or any child for whom assessee is a legal guardian, he/she shall be eligible to claim deduction under this section.



Remember that only interest component is allowed and there is no limit!

There is no limit on the amount that can be claimed as a deduction. However, this deduction can be claimed only for 8 years or till the entire interest is repaid, whichever happens first.


Section 80G Deduction


Amounts that were contributed as donations to specific funds or towards social causes are covered under Section 80G. This section covers a wide variety of donations broadly categorized into 50% or 100% deductions.


There is an exhaustive list of donations that let you claim 100% of the contribution as a deduction. Deduction shall be restricted to 50% of the amount so donated, for any donation made that is not covered in that list.


Note: However, donations made in cash exceeding Rs.2,000 can not be claimed as a deduction. So, for any donation in excess of this figure ensure that you choose any mode other than cash!

Section 80GG Deduction:

This section is exclusively for individuals who don’t receive House Rental Allowance (HRA) from their employers.

Are there any conditions that have to be satisfied for claiming deduction under this section? If yes, what are they?

  • You must be either self-employed or a salaried employee

  • You have not received any amount as HRA from your employer during the year.

  • You, your spouse, your minor child or HUF (you are a member in) must not own any residential accommodation in or outside India.

  • You, your spouse, your minor child or HUF (you are a member in) must not own any residential accommodation where the taxpayer (the assessee) resides, performs duties of office, or employment or carries on his business/profession.

  • To claim deduction under this section, submit Form-10BA with details of payments made as rent on the income tax portal.


Don't forget to submit Form-10BA on the portal!

The maximum amount that can be claimed as a deduction under this section can be calculated in the following manner:

Least of the following is allowed as a deduction:

  • RS.5,000 per month or Rs.60,000 per annum

  • 25% of Adjusted Gross Total Income

  • Rent paid (less) 10% of Adjusted Gross Total Income

What is Adjusted Gross Total Income and how can we calculate it?

Section 80TTA Deduction


This Deduction is available for Individuals and HUFs for interests earned from savings accounts.


Interest received from savings account with a bank, with a co-operative society carrying the business of banking or with a post office are covered in this section.

It is important to remember that interest earned on term deposits is not covered under this section.


This interest from savings account must be shown as an income under the head Income from other sources, and then should be deducted under 80TTA.

The maximum amount that can be claimed as a deduction under this section is Rs.10,000.


For senior citizens, 60 years or older, section 80TTA is not applicable. Refer Section 80TTB for them.

Section 80TTB Deduction


A resident senior citizen, aged 60 years and above, is eligible to claim deduction under this section.

Deduction under this section covers Interest income from

  • Bank Deposits (Savings or Fixed)

  • Deposits held with a co-operative society carrying the business of banking

  • Interest on post office deposits

Deduction under this section, for senior citizens, is limited to Rs.50,000. Which means aggregate of Interest incomes we’ve seen above or Rs.50,000, whichever is less, shall be allowed as a deduction under 80TTB.


Section 80U Deduction


This section is for an individual who is a resident in the relevant assessment year.

As we have seen before under Section 80DD, which covers expenditure incurred on dependents of the assessee, who are physically challenged.


Here in section 80U, we discuss about tax benefits that are available for an individual who is himself, physically challenged.


This section has bifurcated disabilities into two categories,

  • Without severe disability - 40-80%

  • With severe disability - 80% or more(also includes multiple disabilities)

Deduction is available as a fixed/flat deduction depending on the extent of disability.

  • If the disability is 40-80%, then Rs.75,000 is allowed as a deduction

  • If the disability is 80% or more, then Rs.1,25,000 is allowed as a deduction

For being eligible to claim deduction under this section, a certification from prescribed medical authority in Form-10IA must be obtained. The nature and the extent of disability is specified in this certificate.

The medical certificate could look something like this!


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