Income Tax Deduction applicable to a Salary Individual

Income tax deductions are in section 80C to Section 80U of income tax act. Each of these sections provides different tax deductions from your taxable income. But, these tax deductions are not applicable to every one. There are certain tax deductions which are applicable to individuals and certain tax deductions are nor.

Below is a list of those tax deductions which are applicable to a salaried person;

Section 80C: Tax Deductions for investments and expenses

Income Tax Deduction applicable to a Salary IndividualA salaried individual can claim tax deduction under section 80C if he has paid or deposited in to any of the specified investments mentioned under this section like in Life Insurance policy, public provident fund, recognized provident fund, NSC, notified mutual funds, 5 years fixed deposit in a bank.

You are also eligible for tax deductions under this section if you have paid tuition fee to any university or school or college for any of your child or spent money for purchase or construction of a residential house.

Total tax deduction available for a salary individual under section 80C is Rs. 1, 00,000. If you have invested less than Rs. 1, 00,000 then such lesser amount will be available as tax deduction.

Also Read: Detail provision for section 80C

Section 80CCC and 80CCD– Tax deduction for investment in pension fund

You can claim income tax deductions by investing in an annuity plan of LIC or in any approved insurer to get a deduction of Rs. 1, 00,000. If you are contributing to national pension scheme then you are eligible for the maximum tax deduction of Rs. 1, 00,000.

If you have investments in the investment list specified under section 80C then investments under section 80C, 80CCC and 80CCD are together eligible for a maximum tax deduction of Rs. 1, 00,000.

Also Read: Tax Deduction for investment in pension fund

Section 80D – Medical insurance premium

If you have paid any money towards medical insurance premium to ensure the medical expenses of your own or your spouse or any dependent children then that amount will be eligible for a tax deduction of up to Rs. 15, 000.

Additional tax deduction of another 15000 rupees will be available if you have paid medical insurance premium for your parents. Further additional deduction of Rs. 5000 will be allowed if any one is a senior citizen.

Also Read: Detail provisions of section 80D

Section 80DD – Medical Treatment of your handicapped dependent

For medical expenses incurred for medical treatment of dependent handicapped or if any amount paid or deposited in any scheme for this treatment then you may claim a deduction of Rs. 50, 000.

Higher deduction of Rs. 1, 00,000 can be claimed if the medical treatment is for a handicapped dependent whose disability is 80% or more.

Section 80DDB – Medical Treatment

Medical treatment expenses in respect of the specified diseases are eligible for income tax deduction if such expenses are incurred for the purpose of medical treatment of your own, your spouse, children, parents, bothers and sisters.

Maximum deduction of Rs. 40, 000 is available for income tax deduction under income tax act. If the amount is spent for a senior citizen the deduction can be claimed up to Rs. 60, 000.

Also Read: Detail Provision of section 80DDB

Section 80E – Interest on Education Loan

Entire interest amount of your education loan can be claimed as a deduction if such loan has been taken for your full time higher education in a university, school or college.

There is no maximum or minimum amount of tax deduction in this case. However, you can not claim your principal amount as tax deduction under section 80E.

Also Read: Detail provision of applicability of tax deductions on interest on education loan

Section 80EE – Tax deduction in respect of interest on Loan taken for residential house property

If you have taken a housing loan of Rs, 25, 00,000 during the financial year 2013-2014 and the value of the house property does not exceed Rs. 40, 00,000 then you will be eligible for a deduction of Rs. 1, 00,000 for the interest amount you are paying on such loan.

Such deduction is available only if you do not own any residential house on the date of loan sanction. If you are not able to claim deduction of Rs. 1, 00,000 in the assessment year 2014-2015 then the balance left out amount can be claimed as deduction under section 80EE in the assessment year 2015-2016.

Section 80G – Tax Deduction in respect of Donation

You are eligible for a tax deduction of up to an amount of your donation to a specific donee towards a charitable purpose. Your tax deduction will depend upon the charitable institution or fund to which you have donated. Based on that you may be eligible for 50% or 100% tax deductions.

Also Read: Income tax deduction for donation to charitable institution or fund

Section 80GG – Deduction in respect of Rent Paid

If you as a salaried employee do not receive any house rent allowance and you or your spouse or minor child does not own any residential houses in India or abroad then you are eligible for a deduction under this section up to a maximum deduction of Rs. 2, 000 per month.

Section 80TTA – Deduction in respect of interest on deposit in saving accounts

Interest amount received from your saving account is chargeable to income tax under the head income from other sources. If you have received such income then you can claim a maximum deduction of Rs. 10, 000 under this section. If you are getting anything less than Rs. 10, 000 then nothing is taxable for you.

Section 80U – For Specified Diseases

If you are suffering for any specific disease then you are eligible for a maximum deduction of Rs. 50, 000. You can also claim a maximum deduction of Rs. 1, 00,000 if your disability is severe (having any disability of 80% or above)

Income tax for a salaried employee is deducted every month by the employer. For deducting proper tax from your salary you need to disclose your eligible deduction under respective section to your employer. If you have not done that so far then you can talk to your employer on this.

Editorial Staff at Yourfinancebook is a team of finance professionals. The team has more than a decade experience in taxation and personal finance.

One thought on “Income Tax Deduction applicable to a Salary Individual”

  1. sir ,my salary is Rs.34000/- Per Month.& my wife salary is Rs.8000/- per month.I need Rs.1500000/- constrcution Loan .Please advice me assessment year 2016-2017.ITR-1 File karni hein.Please advise me for what amount ITR -1 filled (income tax no issue).Please I can avail constuction loan

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