India Income Tax Act- Tax Deductions, Tax Exemptions 80C 80D 80DD 80E 80GG 24 80G

There are various Income tax deductions or tax exemptions as allowed by the Indian Income tax Act. These tax deductions allow you to subtract an amount from your taxable income and thus help you to save tax ! Understanding these income tax exemptions can help you save tens of thousands of rupees in income tax every year. Below I have listed all important income tax deductions in a table, and then after the table there is an explaination of each section of Indian Income tax act in detail. I hope these deduction and tax exemption limits will help you for your tax planning this year. I have also included links to the official page of Indian Income Tax so you can actually go there and verify the information yourself.

Indian Income Tax deductions, Tax exemption limits
Financial year 2008/2009 (will be updated later for 2009/2010)

Income Tax Deductions
Explaination

Maximum deduction allowed
Remarks


Income Tax deduction - Section 80C
Provident Funds, Life Insurance premia, ELSS, Bank deposits (>5 yr.), tution fees, principal part of EMI on housing loan, etc.


Maximum tax deduction
or tax exemption limit:

Rs. 1,00,000

Income Tax deduction - Section 80D
Premium in health insurance of you, your spouse, children or dependent parents

Maximum tax deduction or
tax exemption limit:

Rs. 15000
(tax exemption limit
for
senior citizen is
Rs. 20000)

Income Tax deduction - Section 80DD

Medical treatment (including insurance) of disabled dependent

Maximum tax deduction
or tax exemption limit:

Rs. 50000.
(Rs. 75000 if disability is severe,
e.g. >80%)

Income Tax deduction - Section 80E
Interest paid on educational loan taken for higher education of you, your spouse or children.


Maximum tax deduction
or tax exemption limit:

no limit !

Income Tax deduction - Section 80GG
House rent in excess of 10% of income, if no HRA is received.


Maximum tax deduction
or tax exemption limit:

Rs. 2000 per month or 25% of your gross salary, whichever less.


Income Tax deduction - Section 24
Interest paid on housing loan.


Maximum tax deduction
or tax exemption limit:

Rs. 1,50,000


Income Tax deduction - Section 80G
Donations

Maximum tax deduction
or tax exemption limit:

100% of donation amount for special funds(see below), 50% of donation amount for all other donations.

Indian Income Tax deduction - Section 80C (official page India Income Tax Act)
Section 80C of Indian Income Tax Act is the most popular because it is directly related to tax deductions for your monthly savings or life insurance. In financial years 2008/2009 and also in 2009/2010 the maximum income tax deduction allowed under section 80C is 1,00,000. The following is a list of important ways in which a taxpayer can get benefit of section 80C of Indian Income Tax Act.
  1. Provident Fund (PF): Any contributions to Provident Fund, Voluntary provident Fund (VPF) or savings made in Public Provident Fund (PPF Account) are eligible for income tax deduction under section 80C of Indian Income Tax Act.
  2. Life Insurance Premiums: Any Life Insurance premiums (for one or more insurance policies) paid by you for yourself, your spouse or your children is eligible under income tax deduction under section 80C of Indian Income Tax Act.
  3. ELSS Equity Linked Saving Schemes: Any investment made in certain Mutual Funds called equity linked saving schemes qualifies for section 80C deduction. Please note that not all mutual fund investments are eligible for this deduction. Some examples of ELSS funds are
    : SBI Magnum Tax Gain, HDFC Tax Saver, HDFC Long term advantage, etc.
  4. ULIP (Unit Linked Insurance Plan): Investments made in certain ULIPs of Unit Trust of India and LIC of India are eligible for 80C deduction.
  5. Bank Fixed deposits or Term deposits of >5 years: According to a relatively new provision amount saved in fixed deposits of term at least five years is eligible for income tax deduction under section 80C of Indian Income Tax Act.
  6. Principal part of EMI on Housing Loan: If you are paying EMI on a housing loan, note that the EMI (equated monthly installments) consists of two parts - principal part and interest part. The principal part of the EMI on your housing loan is eligible for income tax deduction under section 80C. Note that the interest part is also eligible for tax deduction, however not under section 80C but section 24. (read below). If you do not own a house but pay rent for it, see section 80GG of Indian Income Tax Act below.
  7. Tution Fees: Amount paid as tution fee for the education of two children of the assessee is eligible for deduction under section 80C of Indian Income Tax Act.
  8. Other 80C deductions: Amount saved in National Saving Certificate (NSC), Infrastructure Bonds or Infra Bonds, amount paid as stamp duty and registration charges while buying a new home are eligible for income tax deductions under section 80C of Indian Income Tax Act.
Indian Income Tax deduction - Section 80D: (official page Indian Income Tax Act)
Section 80D of Indian Income Tax Act is especially useful if your employer does not cover your health or medical expenses. It is a good idea to get medical insurance or health insurance for you, your spouse, dependent children or dependent parents, as you can claim a deduction of upto Rs. 15000/- per anum for the premia paid on this insurance. For senior citizen this limit is Rs. 20000. With effect from 1-4-2009, you can claim the total of the following items for deduction under section 80D.
  1. Total amount of premium paid for health insurance of family (meaning spouse + children), or Rs. 15,000 , whichever less.
  2. Total amount of premium paid for health insurance of your parents or Rs. 15,000, whichever less.
Thus if you are paying premiums of mediclaim policies for your spouse children and parents you can get a total tax deduction of upto Rs. 30,000.

Indian Income Tax deduction - Section 80DD: (official page India Income Tax Act)
Section 80DD of Indian Income Tax Act provides provision for tax deduction if you incurred medical expenditure for a dependents who are disabled. Here dependent means spouse, children, brothers, sisters or any one of them. The maximum tax deduction provided by section 80DD is Rs. 50000 in case of ordinary disability and Rs. 75000 if the disability is severe. The definition of severe disability is as defined in the official page of Indian Income tax Act.

Indian Income Tax deduction - Section 24
: (official page India Income Tax Act)
Whenever you take a housing loan build or buy a new home, the interest payable on this home loan is eligible for income tax deduction under section 24. Maximum deductible amount, i.e. maximum interest you can claim for income tax deduction under section 24 is Rs. 1,50,000. In case you are paying interest on money borrowed for renovation of your home, even this may qualify for tax deduction under section 24 of Indian Income Tax Act. (see official page or ask in a comment).

Indian Income Tax deduction - Section 80GG: (official page - India Income Tax Act)
If you pay rent for the house that you are staying in and do not get HRA, any rent you pay in excess of 10 percent of your salary is eligible for income tax deduction under section 80GG of Indian Income Tax Act. The income tax deduction you can claim is the minimum of the following amounts.
  1. Rent you pay minus 10% of your salary.
  2. 25% of your gross total income.
  3. Rs. 2000/- per month.
Indian Income Tax deduction - Section 80E: (official page India Income Tax Act)
Under section 80E of Indian Income Tax Act, any amount of interest paid on educational loan taken for your higher education or higher education of your husband / wife or children is deductible from your taxable income. Here higher eduction means - studies for any graduate or post-graduate course in engineering, medicine, management or for post-graduate course in applied sciences or pure sciences including mathematics and statistics.

Indian Income Tax deduction - Section 80G: (official page India Income Tax Act)
Donations made to funds like Prime Minister's Relief Fund, National Children Foundation, any University or educational institution of 'national eminence', etc. (see official page for complete list) are deductible from your taxable income according to section 80G of Indian Income Tax Act. For any other donations you are eligible to take income tax deduction for 50% of the donation amount. See the offical page of Indian Income Tax Act.


  • Income Tax Slabs India - Financial Year 2008/2009 and 2009/2010. The IT slabs for 2009/2010 are the same as the slabs in 2008/2009.
  • Income Tax Calculator - 2008/2009 (also good for A.Y. 2009/2010 since the tax slabs are unchanged for 2009/2010). This Income Tax Calculator is in Excel Spreadsheet format.
  • India Income Tax deductions - Various Income Tax deductions under section 80C, section 80D, section 80DD, section 80G, section 80GG, section 80E, section 24, etc. and their max. tax exemption limits allowed under the Indian Income Tax Act discussed in this post. All Indian IT deductions in one single post.
  • Tax deduction under Section 80C: The most common income tax deduction for Indians discussed in detail. Use this for your personal tax planning and save upto Rs. 33,000 Income Tax.
  • How to pay your Indian Income Tax online?
  • How to check your Income Tax Refund Status online?
  • Feb 24, 2009

    22 comments:

    iinvestor February 26, 2009 at 3:47 AM  

    list of some mutual funds eligible for tax deduction under section 80C - ELSS 80C


    +
    Baroda Pioneer ELSS '96 - Growth
    +
    Bharti AXA Tax Advantage Fund - Growth
    +
    Bharti AXA Tax Advantage Fund - Dividend
    +
    Bharti AXA Tax Advantage Fund - Eco Plan - Growth
    +
    Bharti AXA Tax Advantage Fund - Eco Plan - Dividend
    +
    Birla Sun Life Tax Plan - Dividend
    +
    Birla Sun Life Tax Plan - Growth
    +
    Birla Sun Life Tax Relief 96 - Dividend
    +
    Birla Sun Life Tax Relief 96 - Growth
    +
    Birla Sun Life Taxplan 98 - Growth
    +
    BOB ELSS '97 - Growth
    +
    Canara Robeco Equity - Tax Saver - Growth
    +
    DBS Chola Tax Advantage Fund - Series I - Growth
    +
    DBS Chola Tax Advantage Fund - Series I - Dividend
    +
    DBS Chola Tax Saver Fund - Dividend
    +
    DBS Chola Tax Saver Fund - Growth
    +
    DSP BlackRock Tax Saver Fund - Dividend
    +
    DSP BlackRock Tax Saver Fund - Growth
    +
    DWS Tax Saving Fund - Dividend
    +
    DWS Tax Saving Fund - Growth
    +
    Edelweiss ELSS Fund - Dividend
    +
    Edelweiss ELSS Fund - Growth
    +
    Escorts Mutual Fund Unclaimed Dundee Tax Saver Fund - Growth
    +
    Escorts Tax Plan - Dividend
    +
    Escorts Tax Plan - Growth
    +
    Fidelity Tax Advantage Fund - Growth
    +
    Fidelity Tax Advantage Fund - Dividend
    +
    Fortis Tax Advantage Plan (ELSS) - Dividend
    +
    Fortis Tax Advantage Plan (ELSS) - Growth
    +
    Franklin India Index Tax Fund - Growth - Growth
    +
    Franklin India Taxshield - Growth
    +
    Franklin India Taxshield - Dividend
    +
    Franklin India Taxshield 95 - Growth
    +
    Franklin India Taxshield 96 - Growth
    +
    Franklin India Taxshield 97 - Growth
    +
    Franklin India Taxshield 98 - Growth
    +
    Franklin India Taxshield 99 - Growth
    +
    HDFC Long Term Advantage Fund - Dividend
    +
    HDFC Long Term Advantage Fund - Growth
    +
    HDFC TaxSaver - Growth
    +
    HDFC TaxSaver - Dividend
    +
    HSBC Tax Saver Equity Fund - Growth
    +
    HSBC Tax Saver Equity Fund - Dividend
    +
    ICICI Prudential Tax Plan - Growth
    +
    ICICI Prudential Tax Plan - Dividend
    +
    IDFC Tax Advantage (ELSS) Fund - Growth
    +
    IDFC Tax Advantage (ELSS) Fund - Dividend
    +
    IDFC Tax Saver (ELSS) Fund - Dividend
    +
    IDFC Tax Saver (ELSS) Fund - Growth
    +
    ING Optimix Retireinvest Fund Series 1 - Dividend
    +
    ING Optimix Retireinvest Fund Series 1 - Growth
    +
    ING Tax Saving Fund - Bonus
    +
    ING Tax Saving Fund - Growth
    +
    ING Tax Saving Fund - Dividend
    +
    JM Equity Tax Saver Fund - Series 1 - Dividend
    +
    JM Equity Tax Saver Fund - Series 1 - Growth
    +
    JM Tax Gain Fund - Growth
    +
    JM Tax Gain Fund - Dividend
    +
    JPMorgan India Tax Advantage Fund - Dividend
    +
    JPMorgan India Tax Advantage Fund - Growth
    +
    Kotak Taxsaver - Growth
    +
    Kotak Taxsaver - Dividend
    +
    LIC MF Tax Plan - Dividend
    +
    LIC MF Tax Plan - Growth
    +
    Lotus India AGILE Tax Fund - Growth
    +
    Lotus India AGILE Tax Fund - Dividend
    +
    Lotus India Tax Plan - Dividend
    +
    Lotus India Tax Plan - Growth
    +
    Lotus India Tax Plan - Dividend-Quarterly
    +
    Principal Personal Taxsaver - Growth
    +
    Principal Tax Savings Fund - Dividend
    +
    Quantum Tax Saving Fund - Growth
    +
    Quantum Tax Saving Fund - Dividend
    +
    Reliance Tax Saver Fund - Growth
    +
    Reliance Tax Saver Fund - Dividend
    +
    Sahara Tax Gain - Growth
    +
    Sahara Tax Gain - Dividend
    +
    SBI Magnum Tax Gain Scheme 93 - Dividend
    +
    SBI Magnum Tax Gain Scheme 93 - Growth
    +
    SBI Tax Advantage Fund - Series 1 - Growth
    +
    SBI Tax Advantage Fund - Series 1 - Dividend
    +
    Sundaram BNP Paribas Tax Saver (Open-Ended) - Growth
    +
    Sundaram BNP Paribas Tax Saver (Open-Ended) - Dividend
    +
    Sundaram BNP Paribas Tax Saver 97 - Growth
    +
    Sundaram BNP Paribas Tax Saver 98 - Growth
    +
    Tata Infrastructure Tax Saving Fund - Growth
    +
    Tata Infrastructure Tax Saving Fund - Dividend
    +
    Tata Tax Advantage Fund 1 - Growth
    +
    Tata Tax Saving Fund - Growth
    +
    Taurus Tax Shield - Growth
    +
    Taurus Tax Shield - Dividend
    +
    UTI Equity Tax Saving Plan - Growth
    +
    UTI Equity Tax Saving Plan - Dividend
    +
    UTI Long Term Advantage Fund - Growth
    +
    UTI Long Term Advantage Fund - Dividend
    +
    UTI Long Term Advantage Fund - Series II - Growth
    +
    UTI Long Term Advantage Fund - Series II - Dividend

    Anonymous March 9, 2009 at 8:17 PM  

    i hv made a FD of 1 lac with ING vysya bank for 10 yrs. can i claim tax exemption on that.

    please advise.

    iinvestor March 9, 2009 at 10:08 PM  

    Any Fixed deposit of term greater than 5 years is eligible for income tax deduction under Section 80C. However note that the total 80C exemption limit is only Rs. 1 lac. So you can claim tax exemption for only Rs. 1 lakh of your FD. Moreover if you have already made some other 80C investments like Life insurance, ELSS etc. your total limit including all these is Rs. 1 lakh.

    Another point i would like to make is that the bank interest earned on Fixed deposits is not exempt under section 80C.

    Premji April 16, 2009 at 2:39 PM  

    income tax- mediclaim exemption limet u/s 80D. I think the correct ceiling is 15000/- for self and spouse and 15000/- more for parents mediclaim cover, even if not dependent on the assesee. Please verify.

    iinvestor April 16, 2009 at 10:53 PM  

    @premji,
    correction made, thanks

    Jagmeet April 22, 2009 at 4:53 PM  

    Thanks for the Information

    Maxwell April 29, 2009 at 10:45 AM  

    This information is very meaning full each individual to get understand about different tax excemption options.

    Thanks & Regards,
    Maxwell

    Anonymous April 30, 2009 at 9:04 AM  

    Thanks for the precise information which is very clear

    rgnokia May 2, 2009 at 8:35 PM  

    Thank you for this one-stop information on all possible queries regarding taxation for 2009-10. Very very useful and very simply explained.

    nazimuddin July 29, 2009 at 2:17 PM  

    I have 40lakhs and I want to invest in various schemes but to pay minimum income tax. Kindly guide.

    Nazimuddin

    rajesh July 31, 2009 at 3:26 PM  

    Hi ,

    I need one clarification regarding to STT.Here is the case. If i am an employee of a co.they deduct tds and issue me the FORM 16 A.I have some Income from other sources ie, Short Term Capital Gains.

    In the above case if i diidnt disclose the other source of income to my co and not appeared in SARAL for current Assessment year. how do i show my other income . can i file another return ? suggest me

    Ramesh , chennai

    Prem August 6, 2009 at 4:38 PM  

    As regards exemption under interest paid on Educational Loan taken for higher education of children, in case, if the balance interest is paid in one lump sum, can the exemption could be availed. If so, what is the limit of exemption - PREM

    pillai August 8, 2009 at 1:59 PM  

    VBPILLAI

    For the financial year 2009-10
    hat is the maximum tax deduction allowed for saving?
    Has the upper limit increased to 1.1 lakh?

    Robert August 10, 2009 at 3:48 PM  

    Thanks for the information.
    Just one clarification, please :
    The aggregate deductable amount under chapter VI A section 80C, 80CCC, 80CCD is one lac, is house rent is also covered in this this amount or we can show it seperately un sec. 80GG and claim?
    Thanks

    nookeswara February 23, 2010 at 4:58 PM  

    u have made such informative service renders social feasbility

    Raju March 10, 2010 at 1:09 AM  

    Thanks. The Information is very clear & easy to understand.

    Anonymous March 20, 2010 at 5:31 PM  

    Thanks very good information and very easy to understand. but wht about 2010-2011

    Anonymous March 27, 2010 at 1:05 PM  

    it is very useful for the fresh tax payers to plan their tax benefit in future also thank you very much

    rose March 31, 2010 at 6:22 PM  

    I HAVE RECEIVED DIVIDEND IN BIRLA TAX RELIF FUND, CAN I USE THIS FOR IT EMEMPTION.

    kisalay July 27, 2010 at 12:54 PM  

    sir, i am a physically challanged government employee. Is my tax exemption limit rs.160000 + 50000= 210000/-. Aparts of savings of rs 100000/- under section 80C. Please suggest. Under what section a physically challanged person avail the benefit of rs 50000/- as exemption for filing annual returns?

    Anonymous January 31, 2011 at 10:38 AM  

    I have gross salary about 25000 and I get HRA about 5550. How much exemption do I get for HRA for my tax return. Please explain.

    Ashish February 20, 2011 at 7:26 PM  

    hello friends
    thanks for the well explained info.
    i work in a company. in pf deduction- there are 2 components- employee's contribution and employer's contribution. only 1 of them is covered in 80C exemption. which one is that? and what will happen to another component. will it be taxable when I get the PF money at time of retirement?

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