Section 80C and Other Deductions for Income Tax Rebate 2016 simplified

This 80C Section gives major benefit of income tax savings. The deduction is allowed to an individual or a HUF. The taxable income directly reduced by the amount (subjected to 80C limit) invested under this scheme. Government has given a number of saving schemes under this section.

Section 80C limit is 1.5 lakhs for financial year 2016-2017. It means total investment under different saving schemes of 80C is 150000. It was 1 lakhs for year 2013-14 and before.

• Investment in PPF (Public Provident Fund)
• Employee’s share of PF contribution  (Provident Fund)
• NSCs (National Saving Certificates)
• Life Insurance Premium payment
• Children’s Tuition Fee
• Principal Repayment of home loan
• Investment in SukanyaSamridhi Account. Maximum 1.5 lakhs can be deposited in one financial year.
• ULIPS (Unit Linked Insurance Policy Scheme)
• ELSS (Equity Linked Saving Schemes). Mutual fund under ELSS category, where 3 years locking period is mandatory.
• Sum paid to purchase deferred annuity
• Five year deposit scheme
• Senior Citizens savings scheme
• Subscription to notified securities/notified deposits scheme
• Contribution to notified Pension Fund set up by Mutual Fund or UTI.
• Subscription to Home Loan Account Scheme of the National Housing Bank
• Subscription to deposit scheme of a public sector or company engaged in providing housing finance
• Contribution to notified annuity Plan of LIC
• Subscription to equity shares/ debentures of an approved eligible issue
• Subscription to notified bonds of NABARD

Contributions made towards pension plans of LIC or other insurers are eligible for deduction under Section 80CCC. Applicable for Individual Assesses.  

The investment limit of Section 80CCC is clubbed with Section 80C i.e together the limit is 150000(1.5 lakhs). It means total investment under 80C and 80CCC is 1.5 lakhs 

Those pension plans of LIC or other insurer which are setup under Section10 (23AAB)

The Individual whose gross total income is less than Rs. 12 lakhs can invest in Rajiv Gandhi Equity Saving Scheme (RGESS) and get rebate of 50% of invested amount. Applicable for only Individual resident of India. The individual shall be first time investing in shares/equity.

Maximum deduction allowed is

• Rs 25,000
• 50% of investment

which ever is lower.

Eligible securities under RGESS

• Equity shares of top 100 listed companies declared in “BSE-100″ or ” CNX-100″.
• Equity shares of (PSEs) Public Sector Enterprises which are categorized as Maharatna, Navratna or Miniratna by the Central Government
• Units of Exchange Traded Funds (ETFs) or Mutual Fund (MF) schemes which have securities eligible RGESS as underlying, provided they are listed and traded on a stock exchange and settled through a depository mechanism.
• Follow on Public Offer (FPOs) of eligible securities.
• New Fund Offers (NFOs) of eligible ETF’s and mutual funds.
• Initial Public Offer (IPO) of a Public Sector Undertaking wherein the government shareholding is at least 51%. which is scheduled for getting listed in the relevant previous year and whose annual turnover is not less than four thousand crore rupees during each of the preceding three years

 Income tax rebate is given on payment made towards premiums of mediclaim policy or any contribution made towards Central Government Health Scheme. One can also claim tax deduction for expenses on preventive health check-up upto a maximum limit of Rs 5000, However the total limit u/s section 80D will be inclusive of this.

 Deduction limit for FY 2016-2017 can be calculated by adding the maximum limit of self/family and parents together:

For self, spouse and children

• Maximum limit is 25,000 per year for health Insurance of self, spouse and children
• Maximum limit is 30,000 per year for health Insurance of self, if above 60 years of age

For Parents of Assesse

• Maximum limit is 25,000 per year for health Insurance of Parents below 60 years of age.
• Maximum limit is 30,000 per year for health Insurance of Parents above 60 years of age

• Premium for health Insurance policy of self and family.
• Premium for health Insurance policy of parents.
• Expenses on preventive health check-up (up to 5000).

Medical expenditure on rehabilitation of handicapped dependent relatives or deposit to any medical treatment schemes for maintenance of disabled dependent

For 40% to 80 % disability the limit is 75,000 and for more than 80% disability the limit is 1,25,000

1. Expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent.
2. Payment or deposit to specified scheme of LIC or UTI or any other insurer for maintenance of dependent handicapped.

 Income tax rebate is given on treatment of special disease or ailment specified in Rule 11DD of self, dependent and relatives. A certificate in Form 10-1 is to be furnished by the taxpayer from any Registered Doctor. Applicable for Individual or a HUF who is resident of India.

For financial Year 2016-2017 the maximum limit is

• 40,000
• 60,000 for senior citizens
• 80,000 for super senior citizens (above 80 years)

For the purposes of section 80DDB, the following shall be the eligible diseases or ailments :

1. Neurological Diseases where the disability level has been certified to be of 40% and above,—
   • Dementia
   • Dystonia Musculorum Deformans
   • Motor Neuron Disease
   • Ataxia
   • Chorea
   • Hemiballismus
   • Aphasia
   • Parkinsons Disease
2. Malignant Cancers
3. Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
4. Chronic Renal failure
   • Hematological disorders
   • Hemophilia

Deduction is allowed for interest on loan taken for pursuing Higher Education. Applicable for self, spouse or children or for a student for whom the taxpayer is a legal guardian. The deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier

There is no restriction on the amount that can be claimed. Actual interests amount paid is the only limit. Suppose you get a loan of 10 lakh for 8 years period and 12% interest rate then you can save 70000 every year till 8th year.

 Interests on Education loan is applicable for deduction

The various donations specified in Sec. 80G are eligible for deduction up to either 100% or 50% with or without restriction as provided in Sec. 80G. 80G deduction not applicable in case donation is done in form of cash for amount over Rs 10,000.

Deduction of 100% or 50% according to type of donation mentioned in section 80G 

Donations with 100% deduction without any qualifying limit:

• National Defence Fund set up by the Central Government
• Prime Minister’s National Relief Fund
• National Foundation for Communal Harmony
• An approved university/educational institution of National eminence
• Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
• Fund set up by a State Government for the medical relief to the poor
• National Illness Assistance Fund
• National Blood Transfusion Council or to any State Blood Transfusion Council
• National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
• National Sports Fund
• National Cultural Fund
• Fund for Technology Development and Application
• National Children’s Fund
• Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
• The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
• The Maharashtra Chief Minister’s Relief Fund during October 1, 1993 and October 6,1993
• Chief Minister’s Earthquake Relief Fund, Maharashtra
• Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat
• Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of earthquake in Gujarat (contribution made during January 26, 2001 and September 30, 2001) or
• Prime Minister’s Armenia Earthquake Relief Fund
• Africa (Public Contributions — India) Fund
• Swachh Bharat Kosh (applicable from financial year 2014-15)
• Clean Ganga Fund (applicable from financial year 2014-15)
• National Fund for Control of Drug Abuse (applicable from financial year 2015-16)

Donations with 50% deduction without any qualifying limit.

• Jawaharlal Nehru Memorial Fund
• Prime Minister’s Drought Relief Fund
• Indira Gandhi Memorial Trust
• The Rajiv Gandhi Foundation

Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income

• Government or any approved local authority, institution or association to be utilised for the purpose of promoting family planning
• Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India.

Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income

• Any other fund or any institution which satisfies conditions mentioned in Section 80G(5)
• Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning
• Any authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both
• Any corporation referred in Section 10(26BB) for promoting interest of minority community
• For repairs or renovation of any notified temple, mosque, gurudwara, church or other place.

Deduction is allowed with respect to house rent paid for his own residence while not getting any HRA from the company/employer. Individual should not own any residential accommodation himself or by his/her spouse.  

 Deduction available is minimum of

1. House Rent paid minus 10% of total income
2. Rs. 5000/- per month (for financial year 2016-17, previously it was 2000)
3. 25% of total income for the year

Deduction allowed for House Rent paid. A self declaration Form 10BA is to be filled.

Deduction is allowed to an Indian company for amount contributed by it to any political party or an electoral trust. Deduction is allowed for contribution done by any way other than cash. Political party means any political party registered under section 29A of the Representation of the People Act. Contribution is defined as per section 293A of the Companies Act, 1956

100% of contribution 

Contribution to only registered political parties under section 29A of the Representation of the People Act  

Deduction is allowed to a taxpayer for any amount contributed to any political party or an electoral trust. Deduction is allowed for contribution done by any way other than cash. Political party means any political party registered under section 29A of the Representation of the People Act.

100% of contribution 

 Contribution to only registered political parties under section 29A of the Representation of the People Act

Deduction for any income by way of royalty for a patent registered on or after 01.04.2003 under the Patents Act 1970 shall be available up to Rs. 3 lakhs or the income received, whichever is less. The taxpayer must be an individual resident of India who is a patentee. The taxpayer must furnish a certificate in the prescribed form duly signed by the prescribed authority.

100% of contribution 

 Contribution to only registered political parties under section 29A of the Representation of the People Act

Income to a maximum of Rs.10000 from Interest on Saving Account of bank, co-operative bank and post-office can be claimed for deduction from gross total income.  Applicable for Individual or HUF. Interest Income from fixed deposits, recurring deposits or corporate bond is not allowed for deduction. Interest Income from saving account should be first added to other income and then deduction under Section 80TTA is allowed. 

Rs 10000 from interest on Saving Account 

 Interests income of Saving Account of bank, co-operative bank or post-office. Interest from fixed deposits, recurring deposits or corporate bond is not available for deduction under Section80 TTA

An individual who is resident of India and suffers from at least 40% disability as per government law are eligible for deductions u/s section 80U for income tax rebate. Following are 7 broad categories of disability.

• Low Vision:
• Blindness:
• Hearing Impairment:
• Leprosy Cured:
• Mental Retardation:
• Loco Motor Disability:
• Mental Illness:

Rs 75000 limit is for person with disability of 40% to 80%. whereas for severe disability of more than 80% the limit is Rs 1,25,000.

No bills or expenses proof is required. One has to only submit a certificate from a recognized medical authority certifying the disability.