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Tax Deductions & Exemptions India (FY 2024-25 & FY 2025-26): Reliefs for Individuals & Businesses

India’s Income Tax Act provides various tax deductions, exemptions, and reliefs to help individuals and businesses reduce their tax liabilities. These provisions are designed to encourage savings, investment in specified sectors, and other activities beneficial to society. The deductions, exemptions, and reliefs are applicable to different taxpayers, including individuals, Hindu Undivided Families (HUF), companies, and other entities. In this guide, we will cover the key provisions for the financial years 2024-25 and 2025-26, including updated details for each section.

1. Overview of Tax Deductions, Exemptions, and Reliefs in India

Tax deductions, exemptions, and reliefs play a significant role in reducing taxable income and ultimately lowering tax liability. These provisions are offered by the Income Tax Act to promote savings, investments, and expenses that benefit both individuals and the economy.

2. Key Tax Deductions, Exemptions, and Reliefs

2.1. Deductions under Section 80

The following table outlines the most common tax deductions available to individual taxpayers under various sections of the Income Tax Act:

SectionDescriptionApplicabilityLimit for FY 2024-25 and FY 2025-26
Section 80CInvestment in LIC, PPF, Sukanya Samriddhi Account, Mutual Funds, FD, etc.Individual / HUF₹1,50,000 (combined limit with sections 80CCC and 80CCD(1))
Section 80CCCInvestment in Pension FundsIndividual₹1,50,000 (combined limit with section 80C)
Section 80CCD(1)Contribution to National Pension Scheme (NPS) or Atal Pension YojanaIndividual₹1,50,000 (combined with 80C)
Section 80CCD(1B)Additional NPS ContributionIndividual₹50,000 (over and above ₹1,50,000)
Section 80CCD(2)Employer’s Contribution to NPSIndividual14% of basic salary (Government employees) or 10% (other employers)
Section 80DMedical Insurance Premium and Medical ExpensesIndividual / HUF₹1,00,000 (for self/family and senior citizens)
Section 80DDMedical Treatment of a Dependent with DisabilityIndividual / HUF₹75,000 (Normal Disability), ₹1,25,000 (Severe Disability)
Section 80DDBMedical Treatment of Specified DiseasesIndividual / HUF₹1,00,000 (Senior citizens), ₹40,000 (Others)
Section 80EInterest on Loan for Higher EducationIndividual100% of interest paid up to 8 years
Section 80EEInterest on Housing LoanIndividual₹50,000 (subject to certain conditions)
Section 80EEAAdditional Interest on Housing LoanIndividual₹1,50,000 (subject to conditions)
Section 80EEBInterest on Electric Vehicle LoanIndividual₹1,50,000 (subject to conditions)
Section 80GDonation to Charitable InstitutionsAll Assessees (Individual, HUF, Company, etc.)100% or 50% of donation; cash donations up to ₹2,000 only
Section 80GGADonation to Scientific Research & Rural DevelopmentAll Assessees (except business/profession income)100% of donation; Cash donations up to ₹10,000 only
Section 80GGHouse Rent Paid (without HRA)IndividualRent paid exceeding 10% of income or 25% of income, whichever is lower
Section 80IAProfits of Industrial Undertakings in Infrastructure DevelopmentIndustrial Undertakings100% of profit for 10 consecutive years out of 15 years
Section 80ICProfits from Undertakings in Special Category StatesCertain Industrial Undertakings100% of profit for 10 years (Sikkim and NE States), 100% for first 5 years and 25% for next 5 years (HP, Uttarakhand)
Section 80UDisability DeductionsIndividual₹75,000 (Normal Disability), ₹1,25,000 (Severe Disability)
Section 80TTAInterest on Savings AccountsIndividual / HUF₹10,000
Section 80TTBInterest on Deposits (Senior Citizens)Senior Citizens (60 years and above)₹50,000

2.2. Deductions for Specific Investments and Expenditures

SectionDescriptionApplicabilityLimit for FY 2024-25 and FY 2025-26
Section 80LAOffshore Banking Units in SEZ/IFSCOffshore Banking Units100% of income for 5 years
Section 80IACEligible StartupsEligible Startups100% of profit for 3 consecutive years out of 7
Section 80JJASpecified Business ProfitsSpecified Business100% of the profit for 5 years
Section 80IAProfits from Industrial UndertakingsSpecified Industrial Undertakings100% of profit for 10 years
Section 80IBProfits from Certain Industrial UndertakingsSpecified Industrial Undertakings25%, 30%, or 100% of profit (subject to conditions)
Section 80BBARural Development Bond InvestmentAny Assessee100% of amount invested in rural development bonds
Section 80RRBRoyalty on PatentsIndividuals (Indian or Foreign citizens)₹3,00,000 (maximum royalty income)
Section 80QQBRoyalty Income of AuthorsIndividuals (Indian or Foreign citizens)₹3,00,000 (maximum royalty income)

3. Exemptions and Reliefs under Income Tax Act

In addition to deductions, there are several exemptions and reliefs that reduce the taxable income and overall tax burden.

3.1 Exemptions on Income from Various Sources

SectionDescriptionApplicabilityExemption Limit for FY 2024-25 & FY 2025-26
Section 10(1)Agricultural IncomeAll AssesseesFully exempt
Section 10(2)Share of Profit from Partnership FirmPartners of Partnership FirmsFully exempt
Section 10(10D)Life Insurance Maturity AmountIndividual (Policyholder)Fully exempt if premium is ≤ 10% of sum assured
Section 10(38)Long-Term Capital Gains on Equity SharesIndividual / HUFExempt up to ₹1,00,000
Section 10(10A)Gratuity PaymentEmployeeExempt up to ₹20,00,000
Section 10(14)Allowances to Salaried Individuals (e.g., House Rent Allowance)Salaried IndividualsExempt based on certain conditions

4. Special Provisions for Senior Citizens

Several tax provisions offer additional benefits to senior citizens (aged 60 years or above) in India. These include:

• Higher Deduction Limits for Medical Insurance: Senior citizens can avail a deduction of up to ₹1,00,000 for medical insurance premiums under Section 80D.

• Exemption on Interest Income: Under Section 80TTB, interest earned on savings accounts, fixed deposits, etc., is exempt up to ₹50,000 for senior citizens.

• Increased Tax Rebate: Senior citizens are also eligible for higher exemptions on pension, gratuity, etc.

5. Tax Relief for Businesses and Startups

Certain provisions under the Income Tax Act allow businesses and startups to avail tax relief. This includes:

• Section 80IA: 100% tax exemption for industrial undertakings engaged in infrastructure development for 10 consecutive years.

• Section 80IAC: 100% tax exemption for eligible startups for three consecutive years out of seven.

6. Conclusion

Understanding the wide array of tax deductions, exemptions, and reliefs available under the Income Tax Act is crucial for reducing tax liability. Taxpayers must be aware of the limits, eligibility criteria, and procedural requirements to ensure they avail the maximum benefit possible.

At ReturnFilings.Com, we help taxpayers navigate the complexities of tax deductions and exemptions, ensuring that all applicable provisions are utilized to reduce the overall tax burden. Our expert team provides end-to-end solutions for tax planning, compliance, and filing, so you can focus on growing your business while we handle the rest. Reach out to us on email: info@returnfilings.com or on whatsapp: https://wa.me/919910123091.

frequently asked questions (faq's) related to Tax Deduction, Exemption, and Relief

What are tax deductions?

Tax deductions are reductions in your taxable income. They lower the amount of income on which you calculate your tax. Think of it as reducing the size of the pie before you slice it.

Tax exemptions are specific types of income that are not included in your total income for tax calculation. They are completely excluded from taxation. Think of it as a portion of the pie that is completely removed before you slice it.   

Tax reliefs are broader provisions that reduce your overall tax burden. This can include deductions, exemptions, rebates, or other measures that lower the final tax payable. It is a more general term.

• Deduction: Reduces your taxable income. You still report the income, but a portion is subtracted.

• Exemption: The income is not included in your total income at all.

Tax relief is a broader term encompassing various ways to reduce your tax burden. Deductions and exemptions are specific types of tax relief. A tax rebate is another form of tax relief. 

Common deductions under the Income Tax Act include:

• Section 80C: Investments in PPF, EPF, life insurance premiums, ELSS, etc.

• Section 80D: Medical insurance premiums.

• Section 80E: Interest on education loan.

• Section 80EE/80EEA: Interest on home loan (subject to conditions).

• Section 80TTA/80TTB: Interest on savings account (subject to conditions).

(Note: This is not an exhaustive list, refer article to know more)

You claim deductions by reporting them in your income tax return (ITR) and providing supporting documents.   

Common exemptions include:

• Agricultural income (under certain conditions).

• Certain allowances received by government employees.

• Interest income from certain bonds.

• Gifts received under specific circumstances.

(Note: This is not an exhaustive list, refer article for more details)

You claim exemptions by not including the exempt income in your total income reported in your ITR.

A tax rebate is a direct reduction in the tax payable. It is subtracted from the calculated tax after deductions and exemptions have been applied. It is different from a deduction, which reduces taxable income.

Section 87A provides a tax rebate to resident individuals whose net taxable income does not exceed a certain limit. This rebate effectively reduces their tax liability, sometimes to zero. (Check the current income tax rules for the exact rebate amount and income limit, as these can change.)   

The eligible tax rebate is automatically applied when you file your ITR.

The most reliable source is the Income Tax Department’s official website. You can also refer to the annual Finance Act and related notifications. OR reach out to us on email: info@returnfilings.com or on whatsapp: https://wa.me/919910123091. 

Tax laws are subject to amendments and updates, usually annually during the budget. It’s crucial to stay informed about the latest changes.

A tax advisor can help you understand the complex tax laws, identify all eligible deductions, exemptions, and reliefs, and optimize your tax liability.

By utilizing available deductions, exemptions, and reliefs.

Senior citizens have specific tax benefits, including higher basic exemption limits and deductions for medical expenses.  

Some specific deductions are available for women.

Invest in eligible tax-saving instruments under Section 80C and other applicable sections.   

Certain investments in mutual funds are eligible for tax deductions under Section 80C.

Donations to approved charities are eligible for deductions under Section 80G.   

Interest paid on home loans is eligible for deductions under Section 80EE/80EEA.   

Medical insurance premiums are eligible for deductions under Section 80D.   

Specific deductions are available under Section 80U.   

The Income Tax Department’s website is the official source for rules and regulations.

Visual representation of tax exemption and tax relief concepts. Illustration depicting tax exemption and relief, symbolizing financial advantages and support from www.ReturnFilings.Com for taxpayers.
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