India’s Income Tax Act Deductions: What Are You Entitled?

Abbie Ackerly
September 06, 2021
Income Tax Act

Income Tax Act deductions other than tax savings investments such as 5 years FD, PPF, and ELSS Funds are covered by Section 80C, which has a maximum limit of 1.5 lakh.

Most individuals must file their income tax return for the year 2019-20 by 31 December 2020. Remember to claim deductions other than the popular Section 80C while filing your return. Example, used for investments like PPF, ELSS funds, etc. The tax-saving investment deadline for the fiscal year 2019-20 has extend to 31 July 2020. This was on the basis of the Covid-19 pandemic.

Income Tax Act premiums for health insurance (Mediclaim)

Income Tax Act deductions claim of up to 25.000 health insurance premiums per year under Section 80D of the Income Tax Act. This includes premiums paid for a policy that covers you, your spouse, and your children. It may also and include a medical check-up of 5,000. If your parents are senior citizens and you are paying premiums for them, you can claim an additional deduction of 50,000 for this. All in all, you can claim a total deduction of 75,000 under this section. This will also make you elidgeble for health insurance benefits.

Income Tax Act Section 80G (Charitable Donations)

If you have donated to a public charitable trust, you can claim a Income Tax Act deduction. Under Section 80G of the Income Tax Act, 1961, the deduction is possibly 100 percent of the amount you contribute. Alternatively, is 50 percent, depending on the type of institution you donated. As an example, the Prime Minister’s National Relief Fund is eligible for a 100% donation. For certain categories of institutions, the deduction limit is 10 percent of your adjusted total income. Or, deduction may be 100 percent or 50 percent, again depending on the category of the recipient NGO or institution. For example, if you donate $50,000 and your gross total income is $4,000 per year, the actual deduction allowance will limit to $40,000 (10 percent of $400,000). Ask the organization you contributed to the 80G certificate to support your claim.

Income Tax Act Section 80E (Interest on Education Loan)

Interest on education loans is deductible under Section 80E of the Income Tax Act, 1961. The loan must be taken from a bank or a financial institution or an approved charitable institution. It can not be from family or friends. There is no upper deduction ceiling. However, the deduction may go back up to a maximum of 8 years from the date you started repaying the loan. You should obtain a statement from your bank that shows the breakdown of the principal repayment and the interest on the loan.

Section 80 of DDB (Medical Treatment)

This is a deduction from the expenditure incurred for the treatment of dependent family members for diseases such as malignant cancer, AIDS, and renal and neurological disorders. The ceiling for this deduction is 40,000, which is equivalent to 100,000 for senior citizens.

“Taxpayers commonly forget to claim the deduction under Section 80DDB for medical treatment of dependent family members. You do not need a certificate of treatment from a government hospital for this. A certificate from a private doctor but of the relevant specialty will do” said Prakash Hegde, a Bengalurian-based chartered accountant. You may claim the deduction for the treatment of self, spouse, parents, children, or siblings.


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