Income Tax Deductions under Various Sections

There are several tax deductions and benefits that are available under various sections of the Income Tax Act. Section 80C is one of the most popular and commonly known sections for income tax deductions. It provides tax benefits of up to INR 2 lakh per annum for investments made in certain eligible instruments. However, there are several additional sections that offer numerous tax benefits and deductions. Here are some of the lesser-known deductions offered by the Income Tax Act.

Interest earnings up to INR 40,000 per year are eligible for deductions under section 80TTA. The benefits are available to individual and Hindu Undivided Family (HUF) taxpayers. The deduction is available on interest earned from bank or post office savings account. However, interest earned on recurring or fixed deposits and other time deposits is not eligible for such deductions. The maximum deduction is capped at INR 40,000 per year. Any interest earnings exceeding this limit are taxable as per your income tax slab.

Section 80U provides tax benefits if you suffer from a certain disability. As per the norms guiding this section, the disability must be at least 40% as certified by medical authorities to qualify for the tax benefits. This section also defines severe disability where the severity of the condition is 80% or more. Some of these include autism, multiple disabilities, and cerebral palsy. The maximum deduction for disability up to 40% is limited to INR 75,000 per annum. If you suffer from a severe disability, the maximum deduction is capped at INR 1.25 lakh per year.

If you receive royalty income on patents that foster innovation, you are eligible to claim deduction under section 80RRB. To claim the deduction, you need to procure certificates from the person/s that pays the royalty in the format as prescribed in Form 10(CCD). The deduction is capped at the lower of the actual royalty income or INR 3 lakh per annum. If you earn royalty from an international location, you must claim deduction within six months from the end of the year in which such income is received. Non-residents cannot claim deduction under this section. Moreover, the benefits are available only to individual taxpayers. Companies, firms, and Hindu Undivided Families (HUFs) are not eligible for deduction under section 80RRB.

You must add total interest earnings from all the accounts wherein you earn such income under the heading ’income from other sources.’ You must then show the deductible amount under sub-section section 80TTA within section 80D deductions.

Following are the disabilities that qualify for deductions under section 80U:

• Mental illness
• Blindness
• Mental retardation
• Low vision
• Locomotor disability
• Leprosy-cured
• Hearing impairment

• Resident individual
• Original patent holders
• The patent must be registered on or after April 1, 2003, under the Patent Act, 1970

The Indian government offers multiple tax deductions and exemptions for regular taxpayers who buy medical insurance, life insurance, do charity etc. These are listed under Chapter VI-A and are available under several headings. With several benefits offered by the Income Tax Act, making contributions to charitable organizations is advantageous. It not only will help the underprivileged section of the society but will also reduce your tax liability.