Deductions on Section 80C, 80CCC & 80CCD

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Section 80CCC: Deduction for Premium Paid for Annuity Plan of LIC or Other Insurer

This section provides a deduction to an Individual for any amount paid or deposited in any annuity plan of LIC or any other insurer. The plan must be for receiving a pension from a fund referred to in Section 10(23AAB).

If the annuity is surrendered before the date of its maturity, the surrender value is taxable in the year of receipt.

Section 80CCD: Deduction for Contribution to Pension Account

Employee’s contribution – Section 80CCD (1) Allowed to an individual who makes deposits to his/her pension account. Maximum deduction allowed is 10% of salary (in case the taxpayer is an employee) or 10% of gross total income (in case the taxpayer being self-employed) or Rs 1, 50,000,whichever is less.

From FY 2017-18 – In the case of a self-employed individual, maximum deduction allowed is 20% of gross salary instead of 10% (earlier subject to a maximum of Rs1, 50,000).

However, the combined maximum limit for section 80C, 80CCC and sec 80CCD (1) deduction is Rs 1, 50,000, which can be availed.

Deduction for self-contribution to NPS – section 80CCD (1B) A new section 80CCD (1B) has been introduced for an additional deduction of up to Rs 50,000 for the amount deposited by a taxpayer to their NPS account. Contributions to Atal Pension Yojana are also eligible.

Employer’s contribution to NPS – Section 80CCD (2) Additional deduction is allowed for employer’s contribution to employee’s pension account of up to 10% of the salary of the employee. There is no monetary ceiling on this deduction.

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Deductions on Interest on Savings Account

Section 80 TTA: Deduction from Gross Total Income for Interest on Savings Bank Account

A deduction of maximum Rs 10,000 can be claimed against interest income from a savings bank account. Interest from savings bank account should be first included in other income and deduction can be claimed of the total interest earned or Rs 10,000, whichever is less. This deduction is allowed to an individual or an HUF. And it can be claimed for interest on deposits in savings account with a bank, co-operative society, or post office. Section 80TTA deduction is not available on interest income from fixed deposits, recurring deposits, or interest income from corporate bonds.

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Deductions on House Rent

Section 80GG: Deduction for House Rent Paid Where HRA is not Received

• This deduction is available for rent paid when HRA is not received. The taxpayer, spouse or minor child should not own residential accommodation at the place of employment.
• The taxpayer should not have self-occupied residential property in any other place.
• The taxpayer must be living on rent and paying rent.

Deduction available is the minimum of:

1. Rent paid minus 10% of total income
2. Rs 5000/- per month
3. 25% of total income

For the financial year 2016-17 – Deduction calculation has been raised to Rs 5,000 a month from Rs 2,000 per month. Therefore a maximum of Rs 60,000 per annum can be claimed as a deduction.

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Deductions on Education Loan for Higher Studies

Section 80E: Deduction for Interest on Education Loan for Higher Studies

A deduction is allowed for interest on loan taken for pursuing higher education. This loan may have been taken for the taxpayer, spouse or children or for a student for whom the taxpayer is a legal guardian. The deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier. There is no restriction on the amount that can be claimed.

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Deduction for First Time Home Owners

Section 80EE: Deductions on Home Loan Interest for First Time Home Owners
For Financial Year 2013-14 and Financial Year 2014-15

This section provides a deduction on the home loan interest paid. The education under this section is available only to individuals for the first house purchased where the value of the house is Rs 40 lakh or less. And the loan taken for the house is Rs 25 lakh or less. The loan has to be sanctioned between 01.04.2013 to 31.03.2014. The aggregate deduction allowed under this section cannot exceed Rs 1,00,000 and is allowed for financial years 2013-14 & 2014-15 (Assessment year 2014-15 and 2015-16).
This deduction is not available for the financial year 2015-16 (Assessment year 2016-17).

For Financial Year 2016-17:

This section was revived in Budget 2016 and is applicable starting FY 2016-17. The deduction under this section is available only to an individual who is a first time home owner. The value of the property purchased must be less than Rs 50 lakh and the home loan must be less than Rs 35 lakh. The loan must be taken from a financial institution and must have been sanctioned between 01.04.2016 to 31.03.2017.

Under this section, an additional deduction of Rs 50,000 can be claimed on home loan interest. This is in addition to deduction of Rs 2,00,000 allowed under section 24 of the Income Tax Act for a self-occupied house property.

If you’re claiming this deduction in FY 2016-17, then you can continue to claim this deduction till the loan is repaid.

For Financial Year 2017-18:

This deduction is not available for the running FY 2017-18.

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Deductions on Rajiv Gandhi Equity Saving Scheme (RGESS)

Section 80CCG: Rajiv Gandhi Equity Saving Scheme (RGESS)

The Rajiv Gandhi Equity Saving Scheme (RGESS) was launched after the 2012 Budget. Investors whose gross total income is less than Rs. 12 lakhs can invest in this scheme. Upon fulfillment of conditions laid down in the section, the deduction is lower of, 50% of the amount invested in equity shares or Rs 25,000 for three consecutive Assessment Years.

Rajiv Gandhi Equity Scheme has been discontinued starting from April 1, 2017. Therefore, no deduction under section 80CCG will be allowed from AY 2018-19.

However, if you have invested in the RGESS scheme in FY 2016-17 (AY 2017-18), then you can claim deduction under Section 80CCG until AY 2019-20.

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Deductions on Medical Insurance

Section 80D: Deduction for premium paid for Medical Insurance

Deduction is available up to Rs. 25,000/- to a taxpayer for insurance of self, spouse and dependent children. If individual or spouse is more than 60 years old the deduction available is Rs 30,000. An additional deduction for insurance of parents (father or mother or both) is available to the extent of Rs. 25,000/– if less than 60 years old and Rs 30,000 if parents are more than 60 years old. For uninsured super senior citizens (more than 80 years old) medical expenditure incurred up to Rs 30,000 shall be allowed as a deduction under section 80D.  Therefore, the maximum deduction available under this section is to the extent of Rs. 60,000/-. (From AY 2016-17, within the existing limit a deduction of up to Rs. 5,000 for preventive health check-up is available).