Income Tax of India: Deductions Allowed from Taxable Income to Individual/ HUF

A. Deduction from Salaries

Section	Particulars	Limit Of Exemption	Applied To
16(ia)	Standard Deduction	₹ 50,000 or the amount of the salary whichever is less	Individual - Salaried Employee & Pensioners
16 (ii)	Entertainment Allowance	Least of the following is exempt from tax:	Individual - Government Employee & Pensioners
		a) Rs 5,000
		b) 1/5th of salary (excluding any allowance, benefits or other perquisite)
		c) Actual entertainment allowance received
16 (iii)	Employment Tax/Professional Tax.	Amount actually paid during the year	Individual - Salaried Employee
-	Lump-sum payment made gratuitously or by way of compensation or otherwise to widow or other legal heirs of an employee who dies while still in active service [Circular No. 573, dated 21-08-1990]	Enter amount paid in lump-sum	Individual - Widow or other legal heirs of employee.
-	Ex-gratia payment to a person (or legal heirs) by Central or State Government, Local Authority or Public Sector Undertaking consequent upon injury to the person or death of family member while on duty [Circular No. 776, dated 08-06-1999]	Enter amount paid as ex-gratia	Individual or legal heirs.
89	Any portion of salary received in arrears or in advance or profit received in lieu of salary [Subject to certain conditions and circumstances]	Relief to the extent computed in accordance with Section 89	Individual - Salaried Employee
	Allowances (Subject to certain conditions and circumstances)	Various allowances allowed to an employee are exempt from to tax up to certain limit*.	Individual - Salaried Employee
		* Refer the document of 'Allowance available for different category of taxpayers'

B. Deduction on Income from Business and Profession

Section	Particulars	Limit Of Exemption	Applied To
44AD	Computation of income from eligible business on presumptive basis under Section 44AD provided turnover of eligible business does not exceed Rs. 2 crore (Subject to certain conditions).	Presumptive income of eligible business shall be 8 % of gross receipt or total turnover.	Resident Individual, Resident HUF or Resident Partnership Firm (Other than LLP)
	Note: If an assessee opts out of the presumptive taxation scheme, after a specified period, he cannot choose to revert back to the presumptive taxation scheme for a period of five assessment years thereafter. [Section 44AD(4)]	Note: Presumptive income shall be calculated at rate of 6% in respect of total turnover or gross receipts which is received by an account payee cheque or draft or use of electronic clearing system or any other electronic mode as may be notified.
44ADA	Computation of income from specified profession on presumptive basis if the total gross receipts from such profession do not exceed fifty lakh rupees in a previous year. (Subject to conditions)	Presumptive income of such profession shall be 50% of total gross receipt.	Resident Assessee being individual or partnership firm (other than LLP)

C. Deductions on Income from Capital Gains

Section	Particulars	Limit Of Exemption	Applied To
54	Investment of long-term capital gains, arising from sale of residential house or land appurtenant thereto, in purchase/construction of one/two new residential house (Subject to certain conditions and limits).	Amount invested new house/houses or capital gain, whichever is lower.	Individual and HUF
	Note:
	With effect from Assessment Year 2020-21, a taxpayer has an option to make investment in two residential house properties in India. This option can be exercised by the taxpayer only once in his lifetime provided the amount of long-term capital gain does not exceed Rs. 2 crores.
54B	Investment of capital gains, arising from transfer of land used for agricultural purposes by an individual or his parents or a HUF, in other agricultural land (Subject to certain conditions and limits).	Amount invested in agricultural land or capital gains, whichever is lower.	Individual and HUF
54F	Investment of long-term capital gains, arising from transfer of any long term asset other than a residential house property, in one new residential house property, provided that on the date of transfer the assessee should not own more than one residential house property (Subject to certain conditions and limits).	Amount invested in one new asset X capital gains/Net Consideration	Individual and HUF
54GB	Investment of long-term capital gains arising from transfer of long-term capital asset, being a residential property, for subscribing the equity shares of an eligible company and such company has, within one year from the date of subscription, utilized this amount for purchase of specified new asset (subject to certain conditions and limits).	Amount invested in new asset by eligible Co. X Capital gains/Net Consideration	Individual and HUF
	Note:
	1. W.e.f. April 1, 2017, eligible start-up is also included in definition of eligible company.
	2. Provisions of this section shall not apply to any transfer of residential property made after March 31, 2017. However, in case of an investment in eligible start-up, the residential property can be transferred up to March 31, 2021.

D. Deductions on Income from Other Sources

Section	Particulars	Limit Of Exemption	Applied To
56(2)(x)	Any sum of money or immovable property or movable property received on or after April 1, 2017 without consideration or for inadequate consideration*** from a relative or member of HUF (subject to certain conditions and circumstances).	The whole amount received from specified relatives or in specified circumstances shall not be included in taxable income.	Any person
	Note : In case of immovable property, 'inadequate consideration' shall mean difference between stamp duty value and actual consideration, if it exceeds Rs. 50,000 or amount equal to 10% of consideration, whichever is higher.

E. General-Deductions related to certain Payments

Section	Particulars	Limit Of Exemption	Applied To
80C	1. Life insurance premium for policy:	Up to 1,50,000 (Subject to overall limit of Rs. 1,50,000 under Section 80C, 80CCC and 80CCD(1))	Individual and HUF
	a) in case of individual, on life of assessee, assessee?s spouse and any child of assessee
	b) in case of HUF, on life of any member of the HUF
	2. Sum paid under a contract for a deferred annuity:
	a) in case of individual, on life of the individual, individual?s spouse and any child of the individual (however, contract should not contain an option to receive cash payment in lieu of annuity)
	b) in case of HUF, on life of any member of the HUF
	3. Sum deducted from salary payable to Government servant for securing deferred annuity or making provision for his wife/children [qualifying amount limited to 20% of salary]
	4. Contributions by an individual made under Employees? Provident Fund Scheme
	5. Contribution to Public Provident Fund Account in the name of:
	a) in case of individual, such individual or his spouse or any child of such individual
	b) in case of HUF, in the name of any member there of
	6. Contribution by an employee to a recognized provident fund
	7. Contribution by an employee to an approved superannuation fund
	8. Subscription to any notified security or notified deposit scheme of the Central Government.
	For this purpose, Sukanya Samriddhi Account Scheme has been notified vide Notification No. 9/2015, dated 21/1/2015. Any sum deposited during the year in Sukanya Samriddhi Account by an individual would be eligible for deduction.
	Amount can be deposited by an individual in the name of her girl child or any girl child for whom such an individual is the legal guardian.
	9. Subscription to notified savings certificates [National Savings Certificates (VIII Issue)]
	10. Contribution for participation in unit-linked Insurance Plan of UTI:
	a) in case of an individual, in the name of the individual, his spouse or any child of such individual
	b) in case of a HUF, in the name of any member thereof
	11. Contribution to notified unit-linked insurance plan of LIC Mutual Fund:
	a) in the case of an individual, in the name of the individual, his spouse or any child of such individual
	b) in the case of a HUF, in the name of any member thereof
	12. Subscription to notified deposit scheme or notified pension fund set up by National Housing Bank [Home Loan Account Scheme/National Housing Banks (Tax Saving) Term Deposit Scheme, 2008]
	13. Tuition fees (excluding development fees, donations, etc.) paid by an individual to any university, college, school or other educational institution situated in India, for full time education of any 2 of his/her children
	14. Certain payments for purchase/construction of residential house property
	15. Subscription to notified schemes of (a) public sector companies engaged in providing long-term finance for purchase/construction of houses in India for residential purposes/(b) authority constituted under any law for satisfying need for housing accommodation or for planning, development or improvement of cities, towns and villages, or for both
	16. Sum paid towards notified annuity plan of LIC or other insurer
	17. Subscription to any units of any notified [u/s 10(23D)] Mutual Fund or the UTI (Equity Linked Saving Scheme, 2005)
	18. Contribution by an individual to any pension fund set up by any mutual fund which is referred to in section 10(23D) or by the UTI (UTI Retirement Benefit Pension Fund)
	19. Subscription to equity shares or debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions
	20. Subscription to any units of any approved mutual fund referred to in section 10(23D), provided amount of subscription to such units is subscribed only in ?eligible issue of capital? referred to above.
	21. Term deposits for a fixed period of not less than 5 years with a scheduled bank, and which is in accordance with a scheme framed and notified.
	22. Subscription to notified bonds issued by the NABARD.
	23. Deposit in an account under the Senior Citizen Savings Scheme Rules, 2004 (subject to certain conditions)
	24. 5-year term deposit in an account under the Post Office Time Deposit Rules, 1981 (subject to certain conditions)
	25. Contribution to Tier-II NPS account by central Government's employees.
80CCC	Contribution to certain specified Pension Funds of LIC/other insurer (Subject to certain conditions).	Up to 1,50,000 (Subject to overall limit of Rs. 1,50,000 under Section 80C, 80CCC and 80CCD)	Individual
80CCD	Contribution to Pension Scheme (NPS) notified by the Central Government (Subject to certain conditions).	Amount contributed to pension scheme or 10% of salary/gross total income*, whichever is less (subject to ceiling limit of Rs. 1,50,000 as provided under Section 80CCE) shall be allowed as deduction under section 80CCD(1).	Individual
	Note:-	Additional deduction to the extent of Rs. 50,000 shall also be available to the assessee under section 80CCD(1B). The additional deduction is not subject to ceiling limit of Rs. 1,50,000 as provided under Section 80CCE.
	1. Deduction under section 80CCD(2) on account of contribution made by the employer to a pension scheme is not subject to ceiling limit of Rs. 1,50,000 as provided under section 80CCE.	Contribution made by employer shall also be allowed as deduction under section 80CCD(2) while computing total income of the employee. However, amount of deduction could not exceed 14% of salary in case of central Govt. employees and 10% in any other employees.
	2. Addition deduction of Rs. 50,000 shall not be allowed in respect of contribution which is considered for deduction under section 80CCD(1), i.e., limit of 10% of salary/gross total income	*10% of salary in case of employees otherwise 20% of gross total income.
	3. Any payment from NPS to an assessee because of closure or his opting out of the pension scheme is exempt to the extent of 60%. However, with effect from the assessment year 2017-18, the whole amount received by the nominee from NPS on death of the assessee shall be exempt from tax.
	4. Any partial withdrawal from NPS shall be exempt to the extent of 25% of amount of contributions made by the employee.
80CCG	Amount invested by specified resident individuals in listed shares or listed units in accordance with notified scheme for a lock-in period of 3 years (Subject to certain conditions).	Deduction of 50% of total investment subject to maximum of Rs. 25,000 is allowed for 3 consecutive assessment years, beginning with the assessment year relevant to the previous year in which the listed shares or list units of equity oriented funds are first acquired	Specified Resident Individual
	Note: No deduction shall be allowed under this Section from Assessment Year 2018-19. However, an assessee who has claimed deduction under this Section earlier shall be allowed deduction till assessment year 2019-20.
80D	Amount paid (in any mode other than cash) by an individual or HUF to LIC or other insurer to effect or keep in force an insurance on the health of specified person*. An individual can also make payment to the Central Government health scheme and/or on account of preventive health check-up.	In case of Individual, amount paid:	Individual/HUF
	* specified person means:	a) For self, spouse and dependent children: Up to Rs. 25,000 (Rs. 50,000 if specified person is a senior citizen)
	- In case of Individual - self, spouse, dependent children or parents	b) For parents: additional deduction of Rs. 25,000 shall be allowed (Rs. 50,000 if parent is a senior citizen)
	- In case of HUF - Any member thereof	In case of HUF, up to Rs. 25,000 (Rs. 50,000 if specified person is a senior citizen).
	Note:
	1. Deduction for preventive health check-up shall not exceed in aggregate Rs. 5,000.
	2. Payment on account of preventive health check-up may be made in cash.
	3. Within overall limit, deduction shall also be allowed up to Rs. 50,000 towards medical expenditure incurred on the health of specified person provided such person is a senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person.
	4. 'Senior citizen' means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.
80DD	a) Any expenditure incurred for the medical treatment (including nursing), training and rehabilitation of a dependent, being a person with disability	Rs. 75,000 (Rs. 1,25,000 in case of severe disability)	Resident Individual and HUF
	b) Any amount paid or deposited under an approved scheme framed in this behalf by the LIC or any other insurer or the Administrator or the specified company for the maintenance of a dependent, being a person with disability	Note:
	(Subject to certain conditions).	"dependant" means?
		(i) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;
		(ii) in the case of a HUF, any member thereof,
		dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year.
80DDB	Expenses actually paid for medical treatment of specified diseases and ailments for:	Up to Rs. 40,000 (Rs. 100,000 in case of senior citizen)	Resident Individual and HUF
	a) In case of Individual: Assessee himself or wholly dependent spouse, children, parents, brothers and sisters	With effect from assessment year 2016-17, the prescription for medical treatment may be obtained from any specialist doctor not necessarily from a doctor working in Government hospital only.
	b) In case of HUF: Any member of the family who is wholly dependent upon the family (Subject to certain conditions).
80E	Amount paid out of income chargeable to tax by way of payment of interest on loan taken from financial institution/approved charitable institution for pursuing higher education (Subject to certain conditions).	The amount of interest paid during initial year and 7 immediately succeeding assessment years (or until the above interest is paid in full).	Individual
80EE	Interest payable on loan taken up to Rs. 35 lakhs by taxpayer from any financial institution, sanctioned during the FY 2016-17, for the purpose of acquisition of a residential house property whose value doesn't exceed Rs. 50 lakhs.	Deduction of up to Rs. 50,000 towards interest on loan.	Individual
	Note:
	?1.? On the date of sanction of loan, taxpayer should not own any other residential house property.
	?2.? The deduction is available from AY 2017-18 and subsequent assessment years.
80EEA	Interest payable on loan taken by an individual, who is not eligible to claim deduction under section 80EE, from any financial institution during the period beginning from 01/04/2019 ending on 31/03/2022 for the purpose of acquisition of a residential house property whose stamp duty value doesn?t exceed Rs. 45 lakhs	Deduction of up to Rs. 1,50,000 towards interest on loan	Individual
80EEB	Interest payable on loan taken by an individual from any financial institution during the period beginning from 01/04/2019 and ending on 31/03/2023 to purchase an electric vehicle.	Deduction of up to Rs. 1,50,000 towards interest on loan	Individual
80GG	Rent paid for furnished/unfurnished residential accommodation (Subject to certain conditions)	Least of the following shall be exempt from tax:	Individual not receiving HRA
		a) Rent paid in excess of 10% of total income*;
		b) 25% of the Total Income; or
		c) Rs. 5,000 per month.
		Total Income = Gross total income minus long term capital gains, short-term capital gains under section 111A, deductions under sections 80C to 80U (other than 80GG) and income under section 115A
80QQB	Royalty income of authors of certain specified category of books other than text books	Least of the following shall be exempt from tax:	Resident Individual ? Authors
		a) In case of Lump sum payment - Amount of royalty income subject to maximum of Rs. 3,00,000
		b) In other cases ? amount of such income subject to maximum of 15% of value of books sold during the previous year.
80RRB	Royalty in respect of patents registered on or after 01.04.2003 (subject to certain conditions)	100% of royalty subject to maximum of Rs. 3,00,000	Resident Individual-Patentee
80TTA	Interest on deposits in saving account with a banking company, a post office, co-operative society engaged in banking business, etc. (Subject to certain conditions)	100% of amount of such income subject to maximum of Rs. 10,000	Individual and HUF (Other than Resident Senior Citizen)
80TTB	Interest on deposits with a banking company, a post office, co-operative society engaged in banking business, etc. (Subject to certain conditions)	100% of the amount of such income subject to the maximum amount of Rs. 50,000	Any senior citizen
80U	A resident individual who, at any time during the previous year, is certified by the medical authority to be a person with disability [as defined under Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995]	Rs. 75,000 (Rs. 1,25,000 in case of severe disability)	Resident Individual

Note - Tax exemption available only to Individuals & Hindu Undivided Family