Professional Documents
Culture Documents
Prepared by,
P.BHASKAR DEEKSHIT,
MBA (fin), MA (eco), AMFI, cfp,
09490470505.
Indian Income Tax deductions, Tax exemption limits
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
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 up to Rs. 15000/- per annum for the premium paid on this insurance.
For senior citizen this limit is Rs. 20000. With effect from 1-4-2009, you can claim the total
Thus if you are paying premiums of medi claim policies for your spouse children and parents
Section 80DD of Indian Income Tax Act provides provision for tax deduction if you incurred
medical expenditure for a dependent 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.
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.
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.
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 education means - studies for any
graduate course in applied sciences or pure sciences including mathematics and statistics.
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 official page of Indian Income Tax Act.
Section 80CCF was introduced in Financial Budget 2010. The bonds covered under this section were
informed to be specified later. Central government has now issued a press release indicating the list
of bonds eligible for 80CCF exemption.
The tenure of the Bonds shall be a minimum of ten years with a lock-in period of five years for an
investor. It will be mandatory for the subscriber to furnish permanent account number to the issuer
for investment in the bonds.
Tax Benefits: - Under section 80CCF of the Income Tax Act, Rs 20,000 per annum paid or
deposited as subscription to long term infrastructure bonds shall be deducted in computing
the taxable income. This is over and above Rs 1,00,000 tax benefit available under section
80C, 80CCC and 80CCD.
Pros:- The limit of Rs 20,000 per annum is in addition to Sections 80C, 80CCC and 80CCD.
Hence, it is advisable to consider applying in this issue.
Cons:- The bonds are locked in for five years, so there is no exit in case you need the
money midway which restricts liquidity.
***************************