DEDUCTIONS OF INCOME TAX ACT 1961

Contents

• Sec 10(13A) - House Rent Allowance.
• Sec 80D – Medical Insurance.
• Sec 80DD – Medical treatment of Handicapped dependents.
• Sec 80E – Interest on Education Loan.
• Sec 80U – Deduction in case of Disability-Self.
• Sec 24 – Housing loan interest. 
• Sec 80EE – Deduction in respect of interest on loan taken for residential house property.
• Sec 80CCC – Pension Policy.
• Sec 80TTA – Interest on Saving Bank account.
• Sec 10 – Leave Travel Allowance.
• Sec 80C 

Sec 10(13A) – House Rent Allowance.

• Least of following is Exempt from Tax :
•  Actual HRA Received
• Actual rent paid over and above 10% of Salary*
•  40% or 50% of the Salary* (50% for who are living in Mumbai, Delhi, Chennai, Kolkata.)

* Here Salary means =  Basic + DA (Dearness Allowance)+Commission

•   PAN of the Landlord is Mandatory when payment of rent is exceeds Rs.1,00,000 p.a. 
•  The person who is paying rent without HRA, he can claim deduction u/s 80GG.
•  Deduction will not be available one who living in own house.

Sec 80D – Medical Insurance.

•  It is applicable to Individual and HUF.
•  Rs.15,000/- on payment made on Himself, Spouse and Children is exempted.
•  Rs. 15,000/- on payment made on Parent or Parents of employee is exempted.
•  Rs.20,000/- if Senior Citizen.
•  Mode of Payment is any mode other than Cash.
•  Preventive Health check-up is restricted to Rs.5000/- [cash payment allowed here]

Sec 80DD and 80U 

• Applicable to Individual (R) and HUF(80DD). 
• Dependents means Spouse, children, parents, brother and sister.
•  40% disability = Rs.50,000/-
•  80% disability = Rs.1,00,000/-

Sec 80E – Interest on Education Loan.

• Applicable only for Individual.
• Purpose of the Loan should be for Higher Education(H E means after passing Senior Secondary Examination).
• Loan should be taken from Financial Institution or any approved Charitable Institution.
• Deduction allowed in which employee starts paying interest and immediately succeeding Seven Financial Year.
• This loan can be taken for Himself, Spouse, Children, Student for whom Legal Guardian.

Sec 24(b) – Housing Loan Interest.

• Purpose – Purchase, Construction, Repair, Renewal or Reconstruction.
• Rs.2,00,000/- ,  Incase acquisition or construction is completed within 3 years(SOP).
• The Loan should be taken on or after 1.4.1999.
• For other purpose(repairs, renewal, reconstruction) = Rs.30,000/-.
• For let out property no Maximum Limit.

Sec 80EE – Deduction in respect of interest on loan taken for residential house property (w.e.f 01-04-2014).

• Applicable to Individual for residential house.
• Deduction limit up to Rs.1,00,000/-.
• Loan taken from Financial Institution, sanctioned during the period 01-04-2013 to 31-03-2014.
• Loan amount should not exceed Rs.25 lakhs. 
• Acquisition value does not exceed Rs.40 lakhs.
•  Assessee does not own any residential houseproperty on the date of sanction of the loan.

Sec 80CCC – Pension Policy.

• Applicable to only Individuals. 
• Maximum deduction is Rs.1,50,000/- along with the sec 80CCD and 80C.
• The amount of Deposit is out of his income chargeable to tax.
• No deduction allowed u/s 80C if claimed under this section.

Sec 80TTA – Interest on Saving Bank account.

• Applicable to Individual and HUF.
• Interest from Saving account (not being time deposits).
• Deduction up to Rs.10,000/-.
• SB maintained in – a. Bank,

                                         b. Co-operative Society,

                                         c. Post office.

Sec 10(5) – Leave Travel Allowance.

• Applicable to both Resident and Non-resident of India. 
• Any place within India.
• Rule 2B
• Restriction on children - Two children of individual born after 01.10.1998.

Sec 80C

• Contribution to Provident Fund.
• Life Insurance Premium.
• Home loan Principal Repayment.
• National Saving Certificate.
• Pension Fund.
• Fixed Deposit (5Years).
• Senior Citizen Saving Scheme.
• 5 Years Post Office Time Deposit.