Tax Savings & Deductions under Chapter VI A

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Nireka Dalwadi

HUF
Section 80C
Section 80CCE
Section 80D
Section 80TTA

Individuals and HUFs (Hindu Undivided Family) can claim income tax deductions on certain investments and expenses undertaken during the financial year.

You can still make tax-saving investments for FY 2019-20 till 30th June 2020. Due to Covid-19 an additional 3-month extension was announced.
Tip
You can still make tax-saving investments for FY 2019-20 till 30th June 2020. Due to Covid-19 an additional 3-month extension was announced.

Index

Section 80C: Income Tax Saving Investments & Payments

Section 80C allows deduction on certain investments and expenses mentioned under the Income Tax Act. The maximum limit for this deduction is INR. 1,50,000.

Investments Eligible for Tax Deductions u/s 80C

Payments eligible for Income Tax Deductions u/s 80C

Section 80CCD – Tax Deductions for Contribution to Pension Fund

Any individual who contributes towards the National Pension Scheme (NPS) can claim deduction under this section. There are 3 different parts of the section 80CCD, that allows the deduction subject to different for a different condition.

Tax Benefits of NPS (National Pension Scheme)
Section Component Deduction
80CCD(1) Employees Contribution to Pension Fund INR 1,50,000
80CCD(2) Employers Contribution to Pension Fund

10% of Basic Salary 

80CCD(1b) Voluntary Contribution to NPS INR 50,000

Both Section 80C and 80CCD are covered under section 80CCE. The total deduction amount eligible for deduction u/s 80CCE is INR 1,50,000 in a financial year.

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Section 80D – Tax Deductions for Medical Insurance Premium

Section 80D of the income tax allows individuals and HUFs (Hindu Undivided Family) to claim a deduction for the amount paid towards medical expenditure. The medical expenditure includes:

An individual taxpayer can claim the deduction for medical expenses paid for the following:

In the case of Hindu Undivided Family (HUF), a deduction is allowed for medical insurance premium paid for a member of HUF.

Section 80DD – Tax Deductions for Differently Abled Dependant

A resident Individual/ HUF can claim a deduction for any expenses incurred on the treatment of dependent family member.
The list of diseases covered u/s 80DD is:

The deduction limit u/s 80DD is:

Category Deduction Amount
Disabled Person (40% or more of the disability) INR 75,000
Severely Disabled Person (80% or more of the disability) INR 1,25,000

Section 80DDB – Tax Deductions for Treatment of Specified Diseases

Section 80DDB is for expenses incurred on the treatment of specified diseases. The list of diseases covered u/s 80DDB are:

The deduction limit u/s 80DDB is:

Age Deduction Amount
Individual or a member of HUF, aged below 60 INR 40,000
Individual or a member of HUF, aged 60 years or above INR 1,00,000

Section 80U – Tax Deductions for Individuals with Disability

Deduction u/s 80U can only be claimed by Resident individuals with a disability. HUF cannot claim tax deduction u/s 80U if any of its members are suffering from a disability. An individual suffering from any of the following disabilities is eligible to claim deduction u/s 80U:

The tax deduction limit u/s 80U is

Category  Deduction Amount
Disabled Person (40% or more of the disability) INR 75,000
Severely Disabled Person (80% or more of the disability) INR 1,25,000

 

Section 80E – Tax Deductions for Interest on Education Loan

Section 80E allows a deduction for interest paid on repayment of education loan taken for higher education. The deduction u/s 80E is not available for principal repayment of the education loan.
There is no monetary limit u/s 80E. An individual can claim the total interest amount paid as a deduction. However, a deduction is available only for 8 consecutive years.

Only individuals are eligible to claim deduction u/s 80E if they fulfil the following conditions:

Section 80EE – Tax Deductions for First Time Home Buyer

Sections 80EE allows individuals to claim the deduction for interest paid on the home loan taken for the first residential house. The eligible deduction amount for AY 2019-20 (FY 2018-19) is INR 50,000.
This limit of Rs. 50,000 is over and above the deduction of Rs. 2,00,000 allowed for home loan interest u/s 24.

To claim income tax deductions u/s 80EE following conditions must be fulfilled:

Section 80G – Donation to Charitable Organisations

Section 80G allows Individuals, HUFs, and businesses to claim income tax deductions for donations made to certain relief funds and charitable institutions. However, only donations made to funds prescribed by the government of India qualify as a deduction.

The qualifying limit eligible for deduction differ based on the charitable organization. Types of income tax deductions on donations u/s 80G are:

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Section 80GG – Rent paid

Section 80GG allows a tax deduction for rent paid for furnished or unfurnished accommodation. The deduction is allowed to taxpayers who do not receive any HRA from their employer.

Following conditions must be fulfilled to claim deduction u/s 80GG for Rent paid

The eligible deduction limit u/s 80GG is lower of the following amounts:

Section 80TTA – Savings Interest

Section 80TTA of the Income Tax Act allows a deduction on savings account interest. Individuals (other than senior citizens) and HUFs can claim a deduction up to INR 10,000 for a financial year. The bank account statements are required to calculate and claim deduction u/s 80TTA.

Following interests are eligible for deduction u/s 80TTA:

Section 80TTB – Interest Deduction on deposits for Senior Citizens

Section 80TTB under the Income Tax Act which allows resident senior citizens to claim a deduction on interest income up to INR 50,000 for a financial year. This section is applicable from FY 2018-19 (AY 2019-20) onwards.

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Following interests are eligible for income tax deductions u/s 80TTB:

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FAQs

Can I save more than INR 1.5 Lakh in Taxes?

Yes, apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE. You can save upwards of INR 2,00,000 in taxes.

Can I claim Chapter VIA deductions under the New Tax Regime?

With the majority of income tax deductions slashed in the New Tax Regime, some Deductions are still claimable.
– Rebate u/s 87A
– Standard Deduction on Rent Received
– Agricultural Income
– Life Insurance Income to Beneficiary
– Retrenchment Compensation
– Voluntary Retirement Scheme
– Leave Entrenchment on Retirement

What is the Section 80CCD(2) of Income Tax?

Section 80CCD(2) allows employees to claim up to 10% of basic plus DA for Tax Deductions. This contribution is considered an additional deduction as its not part of Rs 1.5 lakh allowed under Section 80C.

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