Deductions From Salary – Income tax Act

The following article deals with the Deductions From Salary under Income tax Act. Which Deductions are allowed clearly explained in the article. The salary persons always ask from us that tell all the deductions which we can claim from salary for A.Y. 2015-2016 or any previous year. So we are giving the list of all the deductions which you can claim while calculating taxable salary income or net total income after adding other sources incomes.  The deductions are given along with the income tax sections. So you can get all the complete details by going to that particular section in case of any doubt.

Deductions From Salary - Income tax Act

Deductions From Salary

The following are the Deductions From Salary

Entertainment  Allowance: The first deduction which you claim from salary is Entertainment Allowance. Entertainment allowance received is first included in the employee’s income and then a deduction is allowed in case of government employees, for a sum equal to 1/5th of salary (excluding all allowances, benefits and other perquisites) or Rs. 5,000, whichever is less.

Professional Tax: Tax on employment by whatever name called, levied by a State under Article 80C 276 of the Constitution shall be allowed as a deduction. [Sec. 16(iii)]

Deductions Permissible under Chapter VI-A: Certain deductions are available from the gross taxable income, under sections 80C to 80U. Important deductions are:

Deposit/Contribution to Life Insurance Premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, bank deposits under notified scheme, 5 years POTD, Senior Citizen Saving Scheme, etc. [Sec. 80C]

Contribution to LIC Pension Plan (Jeevan Suraksha) or Pension Fund of other insurance companies. [Sec. 80CCC]

Contribution to notified Pension Scheme by employees of Central Government or any other employer or by any other individual. [Sec. 80CCD]

Tax deductions for pension funds are a global trend now, see this example from Australia.

Investment in listed equity shares (w.e.f 1-4-2014) A.Y.2014-15 [or listed units of equity-oriented mutual funds] under Rajiv Gandhi Equity savings Scheme. [Sec. 80CCG]

Deductions From Salary – Section 80D

Deductions From Salary - Income tax Act

 

Payment of Medical Insurance Premia (Mediclaim) or contribution to Central Government Health Scheme. [Sec. 80D]. Deductible upto a maximum of Rs. 15,000 (Rs. 20,000 in case the person insured is a senior citizen). Besides, an additional deduction upto Rs. 15,000 (Rs. 20,000 in case the person insured is a senior citizen) [The age limit for a senior citizen from A.Y.2013-14 is 60 years or more] shall be allowable in respect of medical insurance premium for parent(s).

W.e.f. A.Y. 2013-14, deduction can also be availed for any payment for preventive health check-up of the assesses, his family and parents, subject to a limit of Rs. 5,000 within the aforesaid ceilings.

Deductions From Salary – Section 80DD

Deductions From Salary - Income tax Act

Expenditure on medical Treatment etc. and deposit for maintenance of handicapped dependents. [Sec. 80DD]. A deduction is allowed to compensate for any expenditure incurred by an assesses, during a year, for the medical treatment (including nursing), training and rehabilitation of one or more handicapped relatives wholly dependent on him, and for amount deposited in an approved scheme of LIC or UTI, for the benefit of a handicapped dependent. A fixed deduction of Rs. 50,000 is allowable, in aggregate for any or both the purpose specified above, irrespective of the actual amount of expenditure incurred.

Deductions From Salary – Section 80DDB

Expenditure  or Medical Treatment of assess/dependant relative [Sec. 80DDB]. Deduction for the amount of expenditure incurred or Rs. 40,000, whichever is less, is allowable for any year during which expenditure is actually incurred for the medical treatment of specified diseases or ailments for the assesses himself or a dependent relative. If the patient is a senior citizen the deduction allowable shall be the expenditure incurred or Rs. 60,000 whichever is less. Besides, any amount received under a medical insurance policy shall be reduced from the amount of deduction allowable.

Deductions From Salary – Section 80E

Deductions From Salary - Income tax Act

Interest on Loan taken for Higher Education. [Sec. 80E]. Any amount paid by way of interest on a loan taken from any financial institution or any approved charitable institution for the purpose of pursing his higher education, is deduction without any limit.

Deductions From Salary – Section 80EE

Deductions From Salary - Income tax Act

Interest on Loan taken for first residential house. [Sec. 80EE]. Deduction is allowable for interest on housing loan from a bank/housing finance company, for allowable is Rs. 1, 00,000, subject to specified conditions. The deduction is allowable for A.Y. 2014-15 and A.Y. 2015-16 only.]

Deductions From Salary – Section 80G

Donation for Charitable Purposes [Sec. 80G]: There are a number of donations in respect of which deduction is permissible under Sec. 80G. Deduction @ 50% is available for donation to Jawaharlal Nehru Memorial Fund, Prime Minister Drought Relief Fund, [National Children’s Fund] Indira Gandhi Memorial Trust or Rajiv Gandhi Foundation etc. 100% deduction is allowed for donations to National Defense Fund, Prime Minister’s National Relief Fund, [National Children’s Fund,]National Foundation for Communal Harmony, Chief Minister’s/Lt. Governor’s Relief Fund etc. Deduction is granted subject to the prescribed maximum ceiling and on furnishing of appropriate certificate from the done organization.

Donation of a sum exceeding Rs. 10,000 shall be eligible for deduction, only if it paid by a mode other than cash.

Deductions From Salary – Section 80GG

Expenditure on Rent. [Sec. 80GG].Rent paid by an assesses not owning a house and not in receipt of house rent allowance u/s 10(13A) for residential accommodation whether furnished or unfurnished, is deductible subject to the prescribed ceilings. [w.e.f 1-4-2014, for A.Y. 2014-15]

Deductions From Salary – Section 80GGA

Donations to specified institutions/associations for Research or for Rural Development [Sec. 80GGA].Donation of a sum exceeding Rs. 10,000 shall be eligible for deduction, only if it paid by a mode other than cash.

Deductions From Salary – Section 80U

Physical Disability [Sec. 80U].Rs. 50,000 for disability and Rs. 1, 00,000 for severe disability.  

The Above all the sections are the Deductions From Salary. So its is the clear explanation of Deductions From Salary.

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