Various Deduction Individual and HUF can claim for FY 2020-21 as per Income Tax Act, 1961

Various Deduction Individual and HUF can claim for FY 2020-21 as per Income Tax Act, 1961 from April 2020

Deduction allows the assessee to reduce the tax liability, one can avail the deduction only if you have made tax saving investments or incurred eligible investment or expenses. There are various deductions covered under chapter VIA, the most popular are 80C to 80U deduction under chapter VIA is restricted to gross total income. The investment or expenditure if it is in excess of prescribed limit then deduction cannot be carry forward to next financial year. So it becomes important to allocated the limited resources – money smartly. To do that a consolidated list can help taxpayers to take proper decision. The deduction under chapter VIA is not allowed to set off against income in nature of Long term capital gain (LTCG), Short term capital gain (STCG) and special rate income.

The Deduction and benefit as mention below for FY 2019-20 can be availed upto 30 June 2020. However any Investment made or expenditure incurred for availing deduction between 1 April 2020 to 30 June 2020, the taxpayers has option to claim in FY 2019-20 or FY 2020-21

In FY 2020-21 there if Taxpayers opts for New Slab Rate then many deduction are not allowed to know click here for complete list

There are two types of deduction:

1. Payment related deduction
2. Income related deduction

Let us understand the various deductions under chapter VIA as per Income tax act 1961:

Payment related deductions

In case of payment related deduction, the assessee has to make investment or expenses in order to claim the deduction. The various payment related deduction is explained as under:

Section	Eligible Assessee	Eligible Investment and Expenses	Amount of Deduction
80C	Individual or HUF	Life Insurance premiumEmployees contribution to statutory or recognized provident fundNational Savings CertificateTax Saver DepositTuition feesNABARD bondsTax saver Mutual fundsSukanya Samridhi SchemeRepayment of Housing LoanStamp duty paid on purchase of house propertyNotified pension scheme of UTI	Maximum Rs. 1,50,000
80CCC	Individual or HUF	Contribution to pension fund of LIC or Other Insurance Company	Maximum Rs. 1,50,000
80CCD (1)	Individual or HUF	Contribution to pension of central government or Atal pension scheme	For Salaried employee: Lower of Employers contribution or 10% of salary   For Others Lower of Assessee contribution or 20% of Gross total income
80CCD(1B)	Individual or HUF	Additional Contribution to National Pension Scheme	Maximum Rs. 50,000
80CCD (2)	Individual or HUF	EmployerContribution to National Pension Scheme for employee benefit	Lower of Employer contribution or 10% of salary
80D	Individual or HUF	Mediclaim premium or Medical expenses or Central government health scheme	In case of individual less than 60 years then:Self, family and children: Rs. 25,000 deductionParents: Rs. 25,000 if age of parent is less than 60 and Rs. 50,000 in case parent age is more than 60   In case of individual age more than 60 years then:Self, family and children: Rs. 25,000 deductionParents: Rs. 50,000 deduction
80DD	Resident Individual or HUF	Deduction in respect of medical treatment and maintenance of handicapped dependent relative	Normal disability = Rs. 75,000 Severe disability = Rs. 1,25,000
80DDB	Resident Individual or HUF	Deduction in respect of medical treatment of specified disease	Lower of Actual amount of expenses or 40000/ 100000   (40000 in normal case and 100000 for senior citizen)
80E	Individual	Deduction in respect of interest on loan for higher education	Interest amount for 8 consecutive year
80EE	Individual	Deduction in respect of Interest on housing loan	Maximum Rs. 50,000 for loan sanctioned from 01/04/2016 to 31/03/2017
80EEA	Individual	Deduction in respect of Interest on housing loan	Maximum Rs. 1,50,000 for loan sanctioned from 01/04/2019 to 31/03/2020
80EEB	Individual	Deduction in respect of Interest on Electric Vehicle Loan	Maximum Rs. 1,50,000 for loan sanctioned from 01/04/2019 to 31/03/2023
80G	All assessee	Donations	Note 1
80GG	Individual	Rent paid on house property if HRA not received	Lower of Rs. 5,000 per month25% of Adjusted Gross total incomeRent paid – 10% of Adjusted Gross total income
80GGA	All assessee	Donation to scientific research or rural development	100% of donation
80GGB	Indian Company	Donation to political parties or electoral trust	100% of donation
80GGC	Any person other than Indian company	Donation to political parties or electoral trust	100% of donation
80JJAA	Any assessee engaged in business and to whom section 44AB applies	Deduction in respect of employment of new employees	30% of additional employee cost (Note 2)

Note:

1. Eligible donation:
   • Unlimited category donation 100%:

The assessee will get 100% deduction of the amount of donation made to the following entity:

1. National defense fund
2. PM national relief fund
3. PM Armenia earthquake relief fund
4. CM relief fund
5. Zilla Sakshatra Samiti
6. National Sports fund
7. National Children Fund
8. National Cultural Fund
9. Swachh Bharat Kosh
10. Clean Ganga Fund
11. The national fund for control of drug abuse
12. Fund for army

• Unlimited category donation 50%:

The assessee will get 50% deduction of the amount of donation made to the following entity:

1. Jawaharlal Nehru Memorial Fund
2. Indira Gandhi Memorial Trust
3. Rajiv Gandhi Foundation
4. P.M. Drought relief fund

•  Limited Category donation 100%:

The assessee will get 100% deduction of the amount of donation made to the following entity subject to qualifying limit:

1. Indian Olympics association or National sports institution
2. Government or Local authority or approved institution for promoting family planning

•  Limited Category donation 50%:

The assessee will get 50% deduction of the amount of donation made to the following entity subject to qualifying limit:

1. Housing development authority
2. Institution promoting interest of minority communities
3. Notified temple or place of historical importance
4. Government or Local authority or approved institution for charitable purpose

In case limited category donation shall be restricted as follows:

• Total donation                                                XXX
• 10% of Adjusted total income                     XXX

Lower of a or b                                                       XXX

Adjusted total income is total income before deduction under section 80G

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• Notes relating to Deduction under 80JJAA:
  1. Additional employee cost includes, total emoluments or salary paid or payable to additional employees employed during the previous year.
  2. Additional employees do not include:
     • Employee whose emoluments or salary is more than Rs. 25,000 per month
     • Employee who is employed for less than 240 days / 150 days (in case of manufacture of apparel or footwear or leather products) in the previous year
     • Employee does not participate in RPF
     • Employee for whom the entire contribution is paid by government under employee pension scheme notified in accordance with the provision of the Employees Provident Funds and Miscellaneous Provision act, 1952.

Income related deductions

In case of income related deduction, the assessee gets deduction when he earns the specified income from specified activities. The various income related deduction is explained as under:

Section	Eligible Assessee	Eligible Income	Amount of Deduction
80QQB	Resident individual	Royalty from books of literacy, artistic, scientific nature	Lower of Royalty received or Rs. 3,00,000
80RRB	Resident individual	Royalty from Patents	Lower of Royalty received or Rs. 3,00,000
80TTA	Individual or HUF	Interest on savings interest	Lower of Interest amount or Rs. 10,000
80TTB	Resident senior citizen	Interest on Deposits	Lower of Interest amount or Rs. 50,000
80JJAA	All assessee	Profits from Collecting and Processing Bio-degradable waste	100% of profits for 5 consecutive years
80IBA	All assessee	Income from Developing building and housing projects	100% of Profit