Section 80D - Payment towards health insurance

Eligibility:

Any payment made by an individual through cheque towards insurance policy for the health of self, 

wife, dependent parents or dependent children.

Amount of deduction:

The deduction from the Gross total income is available to the extent of least of the following:

   i. Rs. 10,000 (Rs. 15,000 in case of senior citizen); or

   ii. Actual expenditure incurred.

Section 80DD - Payment towards expenditure for medical treatment

Eligibility:

Deduction is available in case of any expenditure incurred by an individual for the medical 

treatment (including nursing), training and rehabilitation of a dependant of the individual who has a 

disability. For this purpose - dependants would include his spouse, children, parents, brothers and 

sisters.

A person with severe disability means a person who has eighty per cent or more of one or more of 

the disabilities as mentioned in the footnote below.

Amount of deduction:

The deduction is available to the extent of least of the following:

   i. Rs. 50,000 (75,000 in case of a person with severe disability); or

   ii. Actual expenditure incurred.

Medical treatment of certain specified disease

Section 80DDB - Payment towards expenditure incurred on medical treatment of 

certain specified disease

Eligibility:

In case an Indian resident makes actual payment amount towards medical treatment of certain 

specified disease or ailment during the previous year for self, and dependants being spouse, 

children, parents, brothers and sisters, then he is eligible to claim a deduction from his Gross 

total income.

The specified diseases for the purposes of this section are as under:

1. Neurological Diseases where the disability level has been certified to be of 40% and above 

for the following:

   a. Dementia

   b. Dystonia Musculorum Deformans
 

   c. Motor Neuron Disease

   d. Ataxia

   e. Chorea

    f. Hemiballismus

   g. Aphasia

   h. Parkinsons Disease

2. Malignant Cancers

3. Full Blown Acquired Immuno-Deficiency Syndrome (AIDS)

4. Chronic Renal failure

5. Hematological disorders

   a. Hemophilia

   b. Thalassaemia

Amount of deduction:

The deduction from the Gross total income is available to the extent of least of the following:

i. Rs. 40,000 (Rs. 60,000 in case of a senior citizen)  or

ii. Actual expenditure incurred.

Benefits of payments of rent for housing accomodation

Benefit of payment of rent can be claimed in two ways:

A. If House Rent Allowance ('HRA') is part of the compensation structure, then exemption can 

    be claimed from the allowance paid.

B. If employer does not give HRA as part of the compensation structure, then a deduction can 

    be availed from the gross total income.

These are explained in detail below:

A. When HRA is a part of the compensation structure

Least of the following can be considered as exempt from the amount of HRA paid to an 

individual by his employer:

a. Actual HRA received; or

b. Actual rent paid less 10 percent of 'Salary'; or

c. 50 percent of 'Salary' where the house is situated in Delhi, Mumbai, Kolkata, and Chennai 

(40 percent of Salary in other cases).

           "Salary" for the purpose of computing the above exemption will include basic salary and 

dearness allowance if the terms of employment so provide. It also includes commission based 

on a fixed percentage of turnover achieved by an employee as per the terms of contract of 

employment but excludes all other allowances and perquisites.

             However, the above exemption will only be available if actual expenditure has been 


incurred on the rent. This is to be supported by original rent receipts, along with a copy of the 


lease deed, to substantiate actual payment of rent.

Summary :

B. When HRA is not a part of compensation structure

         If the employer does not give HRA as part of compensation structure and expenditure is 

incurred on payment of rent for a housing accommodation, then deduction under Section 

80GG of the Act can be claimed by the individual.

Least of the following can be considered as exempt from the gross total income: -

a. Actual rent paid less 10 percent of the total income before allowing such deduction; or

b. Rs. 2,000 per month; or

c. 25 percent of total income before allowing such deduction.

         
         The exemption under Section 80GG will be provided only if a declaration is filed by the 

individual in the prescribed Form 10BA along with the return of his income.

           Additionally, this deduction will only be available to the individual if, the individual, his 


spouse or minor child does not own a residential accommodation at the place where he 


ordinarily resides or performs duties of his office or employment or carries on his business or 


profession. 

Further, the individual, spouse or minor child should not own a house at any other place 

which is considered as a self occupied

Section 80E - Payment towards interest on education loan

Eligibility

A deduction is available from the Gross Total Income for a person who has incurred expenditure 

towards payment of interest on education loan from an approved Financial Institution for 

pursuing 

higher education for self.

Further, effective April 1, 2008, deduction will be available to the individual if he incurs an 

expenditure towards payment of interest on education loan from an approved Financial 

Institution 

for pursuing higher education for self, his spouse or children.

Amount of deduction:

The deduction is available to the extent of actual amount paid as interest on education loan 

during the year.

However, the deduction for payment of interest paid on education loan is available for eight 

years starting from the year in which the individual starts paying the interest on the loan.

Benefit of payment of interest on housing loans

Benefit of payment of interest on housing loans

A deduction under Section 24 is available in computing the income chargeable to tax under 

the head 'house property' of an individual in respect of any payment made by him towards 

interest on loan for any housing property. Benefit of interest can be claimed in respect of the 

loan taken for -

i. Purchase of residential property

ii. Construction/ reconstruction of house property

iii. Repair, renewal or reconstruction of the existing property

Tax benefit (for the payment of interest on housing loan) can be claimed for the interest paid 

on borrowed capital only from the financial year in which the property is acquired or 

constructed or reconstruction is completed.

The benefit is available subject to the following limits:

i. In case of a self-occupied property purchased on or after April 1, 1999 - An amount of Rs. 

  150,000 can be claimed as a deduction

ii. In case of a self-occupied property purchased before April 1, 1999 - An amount of Rs. 

   30,000 can be claimed as a deduction

iii. In case of a property which is let-out/ deemed to be let out - Actual amount of interest 

   paid will be reduced from the taxable rental income.

Pre-acquisition Interest

      With respect to the interest paid for the pre-acquisition or pre-construction period (ie before 

the individual gets acquisition of the property, or before completion of construction/ 

reconstruction), the interest deduction can be claimed equally over a period of five financial 

years starting from the financial year in which the property is acquired or constructed or 

reconstruction is completed.

Example: An individual 'X' takes housing loan from a bank for construction of a residential 

house property (to be used for self-occupation) at a fixed rate of interest. The details 

regarding this housing loan are below:

• Amount of Loan - Rs. 15,00,000
• 
  
• Date of borrowing - July 1, 2007
• 
  
• Tenure of Loan - 12 years
• 
  
• Date of completion of construction - January 31, 2010
• 
  
• Monthly installment to be paid - Rs. 30,000 (Principal - Rs.21,000 and Interest - Rs.9,000)

Since X will only complete construction of the house in January 31, 2010, he can claim the 

benefit of payment of principal of Rs 21,000 under Section 80C and interest of Rs 9,000 from 

the financial year 2009-2010 onwards.

Further, one fifth of the interest for the pre- construction period (ie amount paid during the 

financial year 2007-2008 and 2008-2009) will be claimed from the financial year 2009-2010 

onwards for the next five years.

Tax deduction under section 80G

Section 80G - Payment in respect of donations to certain funds/ charitable institutions

Eligibility

Deductions are available from the Gross Total Income of an individual in respect of the 


donations made by him to certain approved institutions/ funds.

Amount of Deduction:

The deduction is available to the extent of 100 percent (or 50 percent in some cases) of the 


amount contributed. The list of approved institutions/ funds is listed below.

Approved Institutions/ funds for 100% deduction as referred in Section 80G

1. The National Defence Fund set up by the Central Government

2. The Jawaharlal Nehru Memorial Fund referred to in the Deed of Declaration of Trust adopted 

by the National Committee at its meeting held on the 17th day of August, 1964

3. The Prime Minister's National Relief Fund

4. The Prime Minister's Armenia Earthquake Relief Fund

5. The Africa (Public Contributions - India) Fund

6. The National Foundation for Communal Harmony

7. Any approved University or educational institution of national eminence

8. Any fund set up by the State Government of Gujarat exclusively for providing relief to the 

victims of earthquake in Gujarat

9. Any Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of 

that district for the purposes of improvement of primary education in villages and towns in such 

district and for literacy and post-literacy activities

10. The National Blood Transfusion Council or to any State Blood Transfusion Council which has 

its sole object the control, supervision, regulation or encouragement in India of the services 

related to operation and requirements of blood banks

11. Any fund set up by a State Government to provide medical relief to the poor

12. The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force 

Central Welfare Fund established by the armed forces of the Union for the welfare of the past 

and present members of such forces or their dependants

13. The Andhra Pradesh Chief Minister's Cyclone Relief Fund, 1996

14. The National Illness Assistance Fund

15. The Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund in respect of any 

State or Union territory

16. The National Sports Fund to be set up by the Central Government

17. The National Cultural Fund set up by the Central Government

18. The Fund for Technology Development and Application set up by the Central Government

19. The National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation 

and Multiple Disabilities constituted under the National Trust for Welfare of Persons with Autism, 

Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999

20. The Government or to any such local authority, institution or association as may be approved 

in this behalf by the Central Government, to be utilized for the purpose of promoting family 

planning

21. Any sums paid by the assessee, during the period beginning on the 26th day of January, 

2001 and ending on the 30th day of September, 2001, to any trust, institution or fund to which 

this section applies for providing relief to the victims of earthquake in Gujarat

Approved Institutions/ funds for 50% deduction as referred in Section 80G

1. The National Children's Fund

2. The Indira Gandhi Memorial Trust, the deed of declaration in respect whereof was registered 

at New Delhi on the 21st day of February, 1985

3. The Rajiv Gandhi Foundation, the deed of declaration in respect whereof was registered at 

New Delhi on the 21st day of June, 1991

4. The Fund for Technology Development and Application set up by the Central Government

5. Any other fund or any institution to which this section applies

6. The Government or any local authority, to be utilized for any charitable purpose other than the 

purpose of promoting family planning

7. An authority constituted in India by or under any law enacted either 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 and villages, or for both

8. Any approved corporation by the Act

9. Any sums paid by the assessee in the previous year as donations for the renovation or repair 

of any such temple, mosque, gurudwara, church or other place as is notified by the Central 

Government in the Official Gazette to be of historic, archaeological or artistic importance or to 

be a place of public worship of renown throughout any State or States