Sunday , June 25 2017
Calculators

Section 80C and Other Deductions for Income Tax Rebate 2016 simplified

This article is all about how to save Income tax in India and describes means and ways mentioned under Income tax Act to reduce Income tax in India. Proper tax planning during a financial year can help in reducing Income tax while filing return. Various options of Income tax rebate are mentioned under different Sections of Income tax Act. Government launches various tax saving schemes and investment options which by way of saving & investments allow direct deduction on Income for calculation of Income tax.

We have tried to consolidate all the Income tax rebate options and tax saving schemes under different Sections from 80C to 80U in a more simplified way.  An individual can maximise investment in tax saving schemes to get more deductions from their gross total Income and save good amount of Income tax.

 

Table.1 Investment Limits and Corresponding Sections for Tax Saving in Year 2016-2017

Maximum Limits
Investment options and Section of Income tax Act
 Rs 1,50,000
Section 80C and Section 8CCC: Direct deduction from gross Income
Rs   25,000
Section 80D: Investment on Mediclaim policies
 Rs   60,000
Section 80GG: Deduction for House Rent paid and not receiving HRA
No limits 
Section 80E: Deduction for Interest on Education Loan for Higher Studies
No Limits
Section 80G: Donations towards social causes
Rs   25,000
Section 80CCG: Investment under Rajiv Gandhi Equity Saving Scheme (RGESS)
No Limits
Section 80GGC: Donations to any Political party
Rs   10,000
Section 80TTA: Deduction from Interest on Saving Account

Table.1a

Maximum Limits
Investment options and Section of Income tax Act
Rs 75,000-125,000 
Section 80DD: Deductions on Medical Expenditure for a Handicapped Dependent 
Rs 40,000 
Section 80DDB: Deductions on Treatment of Specified Disease of Dependent 
Rs 75,000-125,000 
Section 80U: Deductions on Treatment of Self Physical Disability
Rs 300,000 
Section 80RRB: Deduction in respect of royalty on patents 

At first refer to the Table-1 above which list out all the Income tax saving options for financial year 2016-2017 (AY 2017-2018) in priority order. The priority is set on the basis of investment limits or maximum deduction allowed under each Section and on the most preferred option by the people. Another  Table-1a given just below it includes special cases of physical disability, special diseases and income from royalty. The investment or deduction limits mentioned in these tables are for normal age group people,whereas for senior and super senior citizens of country the deduction are more. The limits for senior citizens are mentioned in detail in Table-2.

Different Sections (80C to 80U) specially for Income tax rebate are listed in drop down Table-2 click below. Complete information are given on each Section tab. Click on the Sections tab to find a short descriptions, deduction limits and list of tax saving schemes under the Sections of Income tax Act.

Actual tax saving will depend upon  your income and the tax slab it belongs.
Refer Income Tax slab for year 2016-2017.

Table.3 Sections of Income Tax Act 1961 with details of tax saving schemes

Section 80C

Section 80C

 Maximum Rebate on Income Tax 
  • Descriptions
  • 80C Investment Limits
  • Tax Saving Schemes u/s 80C
This 80C Section gives major benefit of income tax savings. The deduction is allowed to an individual or a HUF. The taxable income directly reduced by the amount (subjected to 80C limit) invested under this scheme. Government has given a number of saving schemes under this section.
Section 80C limit is 1.5 lakhs for financial year 2016-2017. It means total investment under different saving schemes of 80C is 150000. It was 1 lakhs for year 2013-14 and before.
• Investment in PPF (Public Provident Fund)
• Employee’s share of PF contribution  (Provident Fund)
• NSCs (National Saving Certificates)
• Life Insurance Premium payment
• Children’s Tuition Fee
• Principal Repayment of home loan
• Investment in SukanyaSamridhi Account. Maximum 1.5 lakhs can be deposited in one financial year.
• ULIPS (Unit Linked Insurance Policy Scheme)
• ELSS (Equity Linked Saving Schemes). Mutual fund under ELSS category, where 3 years locking period is mandatory.
• Sum paid to purchase deferred annuity
• Five year deposit scheme
• Senior Citizens savings scheme
• Subscription to notified securities/notified deposits scheme
• Contribution to notified Pension Fund set up by Mutual Fund or UTI.
• Subscription to Home Loan Account Scheme of the National Housing Bank
• Subscription to deposit scheme of a public sector or company engaged in providing housing finance
• Contribution to notified annuity Plan of LIC
• Subscription to equity shares/ debentures of an approved eligible issue
• Subscription to notified bonds of NABARD

Section 80CCC

Section 80CCC

Deduction for Premium Paid for Annuity Plan of LIC or Other Insurer
  • Descriptions
  • 80CCC Investment Limits
  • Tax Saving Schemes u/s 80CCC
Contributions made towards pension plans of LIC or other insurers are eligible for deduction under Section 80CCC. Applicable for Individual Assesses.  
The investment limit of Section 80CCC is clubbed with Section 80C i.e together the limit is 150000(1.5 lakhs). It means total investment under 80C and 80CCC is 1.5 lakhs 
Those pension plans of LIC or other insurer which are setup under Section10 (23AAB)

Section 80CCG

Section 80CCG

Deduction for investment in Rajiv Gandhi Equity Saving Scheme (RGESS) 
  • Descriptions
  • 80CCG Investment limits
  • Tax Saving options u/s 80CCG
The Individual whose gross total income is less than Rs. 12 lakhs can invest in Rajiv Gandhi Equity Saving Scheme (RGESS) and get rebate of 50% of invested amount. Applicable for only Individual resident of India. The individual shall be first time investing in shares/equity.
Maximum deduction allowed is

  • Rs 25,000
  • 50% of investment

which ever is lower.

Eligible securities under RGESS

  • Equity shares of top 100 listed companies declared in “BSE-100″ or ” CNX-100″.
  • Equity shares of (PSEs) Public Sector Enterprises which are categorized as Maharatna, Navratna or Miniratna by the Central Government
  • Units of Exchange Traded Funds (ETFs) or Mutual Fund (MF) schemes which have securities eligible RGESS as underlying, provided they are listed and traded on a stock exchange and settled through a depository mechanism.
  • Follow on Public Offer (FPOs) of eligible securities.
  • New Fund Offers (NFOs) of eligible ETF’s and mutual funds.
  • Initial Public Offer (IPO) of a Public Sector Undertaking wherein the government shareholding is at least 51%. which is scheduled for getting listed in the relevant previous year and whose annual turnover is not less than four thousand crore rupees during each of the preceding three years

Section 80D

Section 80D

Deductions on investment on Health Insurance Policy 
  • Descriptions
  • 80D Investment limits
  • Tax Saving options u/s 80D
 Income tax rebate is given on payment made towards premiums of mediclaim policy or any contribution made towards Central Government Health Scheme. One can also claim tax deduction for expenses on preventive health check-up upto a maximum limit of Rs 5000, However the total limit u/s section 80D will be inclusive of this.
 Deduction limit for FY 2016-2017 can be calculated by adding the maximum limit of self/family and parents together:

For self, spouse and children

  • Maximum limit is 25,000 per year for health Insurance of self, spouse and children
  • Maximum limit is 30,000 per year for health Insurance of self, if above 60 years of age

For Parents of Assesse

  • Maximum limit is 25,000 per year for health Insurance of Parents below 60 years of age.
  • Maximum limit is 30,000 per year for health Insurance of Parents above 60 years of age
  • Premium for health Insurance policy of self and family.
  • Premium for health Insurance policy of parents.
  • Expenses on preventive health check-up (up to 5000).

Section 80DD

Section 80DD

Deductions on Medical Expenditure for a Handicapped Dependent
  • Descriptions
  • 80DD Investment limits
  • Tax Saving options u/s 80DD
Medical expenditure on rehabilitation of handicapped dependent relatives or deposit to any medical treatment schemes for maintenance of disabled dependent
For 40% to 80 % disability the limit is 75,000 and for more than 80% disability the limit is 1,25,000
  1. Expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent.
  2. Payment or deposit to specified scheme of LIC or UTI or any other insurer for maintenance of dependent handicapped.

Section 80DDB

Section 80DDB

Deductions on Treatment of Specified Disease of Dependent 
  • Descriptions
  • 80DDB Deduction limits
  • Specified Diseases u/s 80DDB
 Income tax rebate is given on treatment of special disease or ailment specified in Rule 11DD of self, dependent and relatives. A certificate in Form 10-1 is to be furnished by the taxpayer from any Registered Doctor. Applicable for Individual or a HUF who is resident of India.
For financial Year 2016-2017 the maximum limit is

  • 40,000
  • 60,000 for senior citizens
  • 80,000 for super senior citizens (above 80 years)
For the purposes of section 80DDB, the following shall be the eligible diseases or ailments :

  1. Neurological Diseases where the disability level has been certified to be of 40% and above,—
    • Dementia
    • Dystonia Musculorum Deformans
    • Motor Neuron Disease
    • Ataxia
    • Chorea
    • Hemiballismus
    • Aphasia
    • Parkinsons Disease
  2. Malignant Cancers
  3. Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
  4. Chronic Renal failure
    • Hematological disorders
    • Hemophilia

Section 80E

Section 80E

 Deduction for Interest on Education Loan for Higher Studies 
  • Descriptions
  • 80E Investment limits
  • Tax Saving options
Deduction is allowed for interest on loan taken for pursuing Higher Education. Applicable for self, 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. Actual interests amount paid is the only limit. Suppose you get a loan of 10 lakh for 8 years period and 12% interest rate then you can save 70000 every year till 8th year.
 Interests on Education loan is applicable for deduction

Section 80G

Section 80G

 Deduction for donations towards Social Causes 
  • Descriptions
  • 80G deduction limits
  • Donation options u/s 80G
The various donations specified in Sec. 80G are eligible for deduction up to either 100% or 50% with or without restriction as provided in Sec. 80G. 80G deduction not applicable in case donation is done in form of cash for amount over Rs 10,000.
Deduction of 100% or 50% according to type of donation mentioned in section 80G 
Donations with 100% deduction without any qualifying limit:

  • National Defence Fund set up by the Central Government
  • Prime Minister’s National Relief Fund
  • National Foundation for Communal Harmony
  • An approved university/educational institution of National eminence
  • Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
  • Fund set up by a State Government for the medical relief to the poor
  • National Illness Assistance Fund
  • National Blood Transfusion Council or to any State Blood Transfusion Council
  • National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
  • National Sports Fund
  • National Cultural Fund
  • Fund for Technology Development and Application
  • National Children’s Fund
  • Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
  • The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
  • The Maharashtra Chief Minister’s Relief Fund during October 1, 1993 and October 6,1993
  • Chief Minister’s Earthquake Relief Fund, Maharashtra
  • Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat
  • Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of earthquake in Gujarat (contribution made during January 26, 2001 and September 30, 2001) or
  • Prime Minister’s Armenia Earthquake Relief Fund
  • Africa (Public Contributions — India) Fund
  • Swachh Bharat Kosh (applicable from financial year 2014-15)
  • Clean Ganga Fund (applicable from financial year 2014-15)
  • National Fund for Control of Drug Abuse (applicable from financial year 2015-16)

Donations with 50% deduction without any qualifying limit.

  • Jawaharlal Nehru Memorial Fund
  • Prime Minister’s Drought Relief Fund
  • Indira Gandhi Memorial Trust
  • The Rajiv Gandhi Foundation

Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income

  • Government or any approved local authority, institution or association to be utilised for the purpose of promoting family planning
  • Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India.

Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income

  • Any other fund or any institution which satisfies conditions mentioned in Section 80G(5)
  • Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning
  • Any authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both
  • Any corporation referred in Section 10(26BB) for promoting interest of minority community
  • For repairs or renovation of any notified temple, mosque, gurudwara, church or other place.

Section 80GG

Section 80GG

 Deduction for House Rent paid and not receiving HRA from company 
  • Descriptions
  • 80GG Deduction limits
  • Tax Saving options u/s 80GG
Deduction is allowed with respect to house rent paid for his own residence while not getting any HRA from the company/employer. Individual should not own any residential accommodation himself or by his/her spouse.  
 Deduction available is minimum of

  1. House Rent paid minus 10% of total income
  2. Rs. 5000/- per month (for financial year 2016-17, previously it was 2000)
  3. 25% of total income for the year
Deduction allowed for House Rent paid. A self declaration Form 10BA is to be filled.

Section 80GGB

Section 80GGB

 Deduction on contributions given by companies to Political Parties 
  • Descriptions
  • 80GGB deduction limits
  • Donation u/s 80GGB
Deduction is allowed to an Indian company for amount contributed by it to any political party or an electoral trust. Deduction is allowed for contribution done by any way other than cash. Political party means any political party registered under section 29A of the Representation of the People Act. Contribution is defined as per section 293A of the Companies Act, 1956
100% of contribution 
Contribution to only registered political parties under section 29A of the Representation of the People Act  

Section 80GGC

Section 80GGC

 Deduction on contributions given by Individuals to any Political Parties 
  • Descriptions
  • 80GGC deduction limits
  • Donation u/s 80GGC
Deduction is allowed to a taxpayer for any amount contributed to any political party or an electoral trust. Deduction is allowed for contribution done by any way other than cash. Political party means any political party registered under section 29A of the Representation of the People Act.
100% of contribution 
 Contribution to only registered political parties under section 29A of the Representation of the People Act

Section 80RRB

Section 80RRB

 Deduction with respect to any Income by way of Royalty of a Patent 
  • Descriptions
  • 80RRB deduction limits
  • Contribution options
Deduction for any income by way of royalty for a patent registered on or after 01.04.2003 under the Patents Act 1970 shall be available up to Rs. 3 lakhs or the income received, whichever is less. The taxpayer must be an individual resident of India who is a patentee. The taxpayer must furnish a certificate in the prescribed form duly signed by the prescribed authority.
100% of contribution 
 Contribution to only registered political parties under section 29A of the Representation of the People Act

Section 80TTA

Section 80TTA

Deductions on Interest on Savings Account 
  • Descriptions
  • 80RRB deduction limits
  • Contribution options
Income to a maximum of Rs.10000 from Interest on Saving Account of bank, co-operative bank and post-office can be claimed for deduction from gross total income.  Applicable for Individual or HUF. Interest Income from fixed deposits, recurring deposits or corporate bond is not allowed for deduction. Interest Income from saving account should be first added to other income and then deduction under Section 80TTA is allowed. 
Rs 10000 from interest on Saving Account 
 Interests income of Saving Account of bank, co-operative bank or post-office. Interest from fixed deposits, recurring deposits or corporate bond is not available for deduction under Section80 TTA

Section 80U

Section 80U

Deductions for expenses on treatment of self disability 
  • Descriptions
  • 80U deduction limits
  • Tax saving options u/s 80U
An individual who is resident of India and suffers from at least 40% disability as per government law are eligible for deductions u/s section 80U for income tax rebate. Following are 7 broad categories of disability.

  • Low Vision:
  • Blindness:
  • Hearing Impairment:
  • Leprosy Cured:
  • Mental Retardation:
  • Loco Motor Disability:
  • Mental Illness:
Rs 75000 limit is for person with disability of 40% to 80%. whereas for severe disability of more than 80% the limit is Rs 1,25,000.
No bills or expenses proof is required. One has to only submit a certificate from a recognized medical authority certifying the disability. 

 

On the basis of above two Table one can find out the different tax saving options available as per prevailing Income tax Act and what will be his eligibility with each options. He can calculate the total saving on income tax that he can do by using the those options. Keeping all these options in mind you can do the proper tax planning every Financial year.

Authored by howtocalculate

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2 comments

  1. Very informative and useful article. One can plan his TAX for year.

  2. I find your website really very informative and helpful for tax planning. ‘Very good guides, useful articles. This site has dozens of useful and informative links to information about tax .. easy to navigate and packed with the great tax information. …
    It’s a very impressive website, easy to read and uncluttered. … Thanks,

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