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How to reduce income tax liability ( For Individuals )
1. Submitted by :
Pankaj Batra, Asst. Professor , Govt. College, Jind
Sr. No. 7 , Faculty Induction Program
Organized By : HRDC, Guru Jhambeshwar University
2nd Week Assignment, Faculty Induction Programme, ( Sep 21 to Oct 24, 2020)
2. How to Save Income Tax Liability
ONLY FOR Individual (Salaried CLASS )
( sec 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80G, 80U, 80TTA,
80GG, 80GGB, 80GGC )
3. General Principles
Deductions u/s 80C to 80U are deductible from GTI.
The aggregate amount of all deductions shall not
exceed the Gross Total Income.
If Gross Total Income is negative, no deduction will be
allowed u/s 80C to 80U.
Deductions u/s 80C to 80U are not allowed against
LTCG & STCG (specified in Sec 111A).
4. Deduction in Respect of
LIP, PF etc.
Section
80C
Individual &
HUF
Up to Rs.150000
Amt
Deposited in
LIC,PPF etc
5. Qualifying Amounts in Case of Individual
LIP (Self, spouse,
children)
Amount
deposited in SPF,
PPF, RPF,
Approved
Superannuation
Fund
Investment in
ULIP , 1971 PLAN
of UTI
Investment in
NSC VIII Issue
Jeevan Dhara &
Jeevan Akshay
Plan Of LIC
Investment in
Home Loan
Account Scheme of
National Housing
Bank
Tuition Fees Paid
for Full time
Education of 2
children
Repayment of Loan taken for Purchase
or construction of Residential House
Property
Note: The qualifying amount of any
premium shall not exced 20% of
assured amt. of policy
Qualifying Amounts in Case of Individual
6. Qualifying Amount in case of Individual
Interest due on
NSC’s (VIII) issue
Investment in
notified bonds of
NABARD
Deposit in Five
Year PO Time
Deposit A/c
Term Deposit of
Atleast 5 years
with Scheduled
Bank
Deposits in Senior
Citizen Saving
Scheme, 2004
Sum paid as
Subscription to any unit
of Mutual fund u/s
10(23D)
9. Amount of Deduction u/s 80CCD
Amount
Deposited or
10% of Salary
whichever is
less
Amount
paid by
employer or
10% of
Salary
whichever is
less
Note :
Salary =
Basic Pay +
DP
11. Deduction u/s 80D
Section
80D
For Individual &
HUF
Deduction in
respect of Medical
Insurance
Premium
Payment should
not be in Cash
Scheme must be of
GIC OR Any insurer
approved by IRDA
The amount
should have
been paid out of
taxable income
13. Deduction in Respect of maintenance &
medical treatment of handicap Dependant
Section
80DD
For Resident
Individual & HUF
Expenditure on
medical treatment,
training &
Rehabilitation
Amt paid under any
scheme of LIC or any
other insurer
Amt. of
Deduction:
Disability- Rs.
75000 & Severe
Disability – Rs
125000
14. Deduction in Respect of Medical treatment
Section
80DDB
Resident Individual
& HUF
Amt. paid or Rs
40000 whichever is
less
Amt. paid or Rs.
100000 whichever is
less ( Senior Citizen
& Super Senior )
Any amt. recovered
from insurer or
reimbursed by
employer will be
deducted
15. Deduction in respect of interest on loan
taken for pursuing higher education
Section
80E
For Individual
Amt: Actual interest
paid during PY
Deduction allowable
for maximum 8 years
or till the entire
interest is repaid
whichever is earlier
16. Deduction in Respect of Rent Paid
Section
80GG
For an employee who is not getting HRA or
a Self employed living in rented building
17. Least of Following three amount will be allowed as
deduction
Actual Rent Paid – 10% of adjusted Total Income
25% of Adjusted Total Income
Rs. 5000 P.m.
Note: Adjusted Total Income = GTI- all deductions u/s
80C to 80 U except 80GG
18. Deduction in respect of Certain
Donations u/s 80GGA
For Scientific
Research
For Social
&
Statistical
Research
For Rural
Development Fund
IN National
Poverty
Eradication
Fund
19. Amt. of Deduction
No deduction will be
allowed if assessee has
any income under B & P
Head
100% of
Donated
Amount
20. Deduction regarding Contribution to
Political Party
Section 80GGB
100% of
Donated
Amount
For Indian
Co’s
Contributi
on To
political
Parties
Donation should
not be in cash
mode
21. Deduction u/s 80GGC
For All Assessees except Local Authority, Juridical
Person & Indian Coompanies
Regarding Contribution to Political Parties etc.
Amount OF Deduction = 100 % Of Amount
Paid
22. Deduction u/s 80 U
Amt. of
Deduction:
For Disability
Rs. 75000
For Severe
Disability –
Rs. 125000
For Resident
Individual
(suffering
from
disability)
23. Deduction in Respect of Interest on
Saving Accounts
Section
80TTA
For Resident
Individual & HUF
Saving Account
must be in a bank or
Pos office or
Cooperative Society
Not applicable on
Interest Income
from FD, RD and
Corporate Bonds
Amt. of
Deduction: Rs.
10000
24. Deduction u/s 80 G
Section
80 G
For All
Assessee
Donation should not be given for
benefit of any particular religion, class,
community etc.
Donation
should not
be in kind
26. Without Limit Donations
PM National relief
Fund (100%)
PM Armenia
Earthquake relief
fund (100%)
PM Drought Relief
Fund (50%)
National Sports
Fund (100%)
National Cultural
Fund (100%)
National
Foundation for
communal
Harmony
National Children
Fund (50%)
National Illness
assistance fund
(100%)
National Blood
Transfusion
Council (100%)
Indian Naval
Benevolent Fund
(100%)
27. Without Limit Donations
National Blood
Transfusion
Council (100%)
National Trust for
Welfare of
Persons with
Autism, Mental
Retardation etc.
(100%)
National
Eminence (College
or University
(100%)
CM Relief Fund
Maharashtra
(100%)
CM Cyclone Relief
Fund
AP ( 100%)
Indian Naval
Benevolent Fund
(100%)
Zila Saksharta
Samiti
(100%)
Jawahar Lal Nehru
Memorial Fund
(50%)
Indira Gandhi
Memorial Trust
(50%)
Rajiv Gandhi
Foundation (50%)
28. With Limit Donations
Donation for
Charitable
Purpose to
local govt.
For Renovation
or Repair of
temple,
mosque,
Church,
Gurudwara etc
For Promoting
Family
Planning
For Promoting
Interests of
Members of
Minority
Community
30. Procedure of Calculating Amount of Deduction
Make list of With limit and Without limit
donations.
Compare total of with limit donations & 10
% of Adjusted total income and find amount
whichever is less.
From this amount, deduct with limit
donations (100%), the rest amount will be of
With limit (50%)
Now add without limit donations. The
resulting amount will be deduction u/s 80 G.
