Category: Finance

Section 80C of Income Tax Act: 80C Deduction List, Limit and Examples

Posted on by CA Meet Dhrangadhariya

Last updated: 11 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80C lets individuals and HUFs deduct up to ₹1,50,000 a year from total income for specified savings and payments, in the old tax regime only.
  • The limit is a combined one: PPF, ELSS, EPF, life insurance, NSC, tax-saver FD, home loan principal, tuition fees and others together cannot exceed ₹1.5 lakh.
  • From Tax Year 2026-27 the provision sits in section 123 of the Income-tax Act, 2025; for FY 2025-26 (AY 2026-27) it is still section 80C of the 1961 Act.
  • NPS gives an extra ₹50,000 under section 80CCD(1B), so the total can reach ₹2 lakh.

How to claim the section 80C deduction

1. Choose eligible investments or payments in your own name
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2. Invest or pay before 31 March of the year
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3. Keep receipts, statements and premium certificates
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4. Declare the investments to your employer so TDS is adjusted
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5. Report the total in the deductions schedule of your ITR under the old regime

Section 80C is the most widely used tax-saving deduction. It allows individuals and Hindu undivided families (HUFs) to reduce their total income by up to ₹1,50,000 in a year by investing in, or paying for, specified items such as PPF, ELSS, life insurance, EPF, NSC, tax-saver fixed deposits, home loan principal and children’s tuition fees. It is available only under the old tax regime.

What is section 80C?

Section 80C is a deduction from gross total income, not from the tax itself. If your taxable income falls by ₹1.5 lakh, the tax saved is that amount multiplied by your slab rate (plus cess).

The limit is one combined limit. If you invest ₹60,000 in PPF, ₹50,000 in ELSS and pay ₹60,000 as life insurance premium, the total is ₹1,70,000 but only ₹1,50,000 is allowed.

Section 80C in the Income-tax Act, 2025

The Income-tax Act, 2025 applies from 01/04/2026, that is from Tax Year 2026-27. Income earned up to 31/03/2026 (FY 2025-26, assessment year 2026-27) is still taxed under the 1961 Act, so section 80C continues to apply to the return you file for that year. The deduction is retained in the new Act under section 123, read with Schedule XV, with the same ₹1.5 lakh limit and the same old regime condition.

Item Income-tax Act, 1961 Income-tax Act, 2025
Specified savings and payments Section 80C Section 123 read with Schedule XV
Pension fund contribution to LIC or an insurer Section 80CCC Section 123 read with Schedule XV
Employee’s NPS contribution Section 80CCD(1) Section 124 (within the combined limit)
Additional NPS contribution Section 80CCD(1B) Section 124(3)
Deductions chapter Chapter VI-A Chapter VIII

Section 80C list: what qualifies

  • Life insurance premium (for policies issued after 31/03/2012 the premium must not exceed 10% of the sum assured; 15% for a disabled person or specified diseases)
  • Public Provident Fund (PPF)
  • Employees’ Provident Fund (employee’s own contribution)
  • Equity Linked Savings Scheme (ELSS) mutual funds
  • National Savings Certificate (NSC)
  • Sukanya Samriddhi Yojana (SSY)
  • 5 year tax-saver fixed deposit with a bank or post office
  • Senior Citizens’ Savings Scheme (SCSS)
  • Unit Linked Insurance Plans (ULIPs)
  • Employee’s contribution to NPS under section 80CCD(1)
  • Repayment of home loan principal
  • Stamp duty and registration charges on buying a house
  • Tuition fees for full time education of up to two children in India (not development fees or donations)

A home loan principal or stamp duty deduction is reversed if the house is sold within 5 years of getting possession.

Maximum limit and the extra NPS deduction

Section What it covers Limit Inside the ₹1.5 lakh combined limit?
80C Investments and payments listed above ₹1,50,000 Yes
80CCC Contribution to a pension fund of an insurer ₹1,50,000 Yes
80CCD(1) Employee’s NPS contribution ₹1,50,000 Yes
80CCD(1B) Own contribution to NPS (including Atal Pension Yojana) ₹50,000 No, it is additional

So the largest deduction from these sections together is ₹2,00,000.

Popular 80C options compared

The rates below are the government-notified rates for October to December 2026. They are revised every quarter, so check the current rate before you invest.

Option Return Lock-in Risk
PPF 7.1% a year, interest tax-free 15 years Low
NSC 7.7% a year, interest taxable 5 years Low
Sukanya Samriddhi Yojana 8.2% a year, interest tax-free 21 years from opening (part withdrawal allowed after 18 for education or marriage) Low
SCSS (age 60 or more) 8.2% a year, interest taxable 5 years, extendable by 3 Low
Tax-saver FD Set by the bank, interest taxable 5 years Low
ELSS Market linked, no assured return 3 years High
ULIP Market linked 5 years Medium
EPF Declared yearly by EPFO Until retirement, with conditions Low

Gains on ELSS held more than a year are taxed at 12.5% on the amount above ₹1.25 lakh in a year.

Who can claim section 80C?

Only individuals and HUFs. Companies, firms and LLPs cannot. Some items, such as tuition fees and NPS, are for individuals only.

Example: how 80C saves tax

Mr A has a salary of ₹10,00,000 and other income of ₹1,00,000, and invests ₹1,50,000 in PPF. He is under the old regime.

Particulars With 80C Without 80C
Salary 10,00,000 10,00,000
Less: standard deduction (50,000) (50,000)
Other income 1,00,000 1,00,000
Gross total income 10,50,000 10,50,000
Less: section 80C (1,50,000) -
Taxable income 9,00,000 10,50,000
Tax including 4% cess 96,200 1,32,600

Section 80C saves Mr A ₹36,400. The old regime slabs are unchanged for Tax Year 2026-27.

How to claim section 80C

  1. Invest or pay before 31 March of the financial year.
  2. Keep proofs: deposit receipts, premium certificates, ELSS statements, fee receipts.
  3. Declare the investments to your employer so that less TDS is cut from salary.
  4. Report the total in the deductions schedule of your ITR. Your employer’s Form 16 may already show it.

Old regime or new regime?

The new regime has lower slab rates but does not allow 80C. If your total deductions (80C, 80D, HRA, home loan interest and others) are large, the old regime may still cost less. Work out both before choosing.

Tips to use section 80C well

  • Start early in the year instead of rushing in March.
  • Count what you already pay: EPF, life insurance premium, home loan principal and tuition fees may fill the limit without new investment.
  • Match the product to your goal: ELSS for long term growth, PPF or SSY for safety.
  • Use the extra ₹50,000 for NPS under section 80CCD(1B) if you have used the full ₹1.5 lakh.
  • Make the investment in your own name, unless the rule for that item allows a spouse or child.

Frequently asked questions

What is the maximum deduction under section 80C?

₹1,50,000 in a financial year, as a combined limit for all eligible investments and payments.

Is section 80C available in the new tax regime?

No. It can be claimed only if you opt for the old tax regime.

Who can claim section 80C?

Individuals and Hindu undivided families. Companies, firms and LLPs cannot.

What is the new section number of 80C?

Section 123 of the Income-tax Act, 2025, read with Schedule XV, applies from Tax Year 2026-27.

Can I claim more than ₹1.5 lakh?

Yes, up to ₹50,000 more for NPS contributions under section 80CCD(1B), which is outside the ₹1.5 lakh limit.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Crossed Cheque under the Negotiable Instruments Act: General Crossing, Special Crossing, Not Negotiable and Account Payee

Posted on by CA Meet Dhrangadhariya

Last updated: 09 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • A cheque with two parallel transverse lines across its face (with or without “and company” or “not negotiable”) is crossed generally, and a bank on which it is drawn can pay it only to another banker, not over the counter.
  • A cheque with the name of a banker across its face is crossed specially, and can be paid only to that banker or its agent for collection.
  • “Not negotiable” does not stop transfer, but the person taking the cheque gets no better title than the person from whom he took it.
  • “Account payee” is a banking practice and is not defined in the Act. It tells the collecting bank to credit only the payee’s account.

Crossing a cheque is the oldest anti-fraud device in banking. The Negotiable Instruments Act, 1881 deals with it in sections 123 to 131A (Chapter XIII, “Of crossed cheques”). The idea is simple: a crossed cheque cannot be paid in cash across the counter, so the money has to pass through a bank account where it can be traced.

General crossing (section 123)

A cheque that bears across its face either:

  • the words “and company” (or an abbreviation) between two parallel transverse lines, or
  • two parallel transverse lines simply,

with or without the words “not negotiable”, is crossed generally.

Special crossing (section 124)

A cheque that bears across its face the name of a banker, with or without the words “not negotiable”, is crossed specially, and crossed to that banker.

Who can cross, and when (section 125)

  • The holder of an uncrossed cheque may cross it generally or specially.
  • The holder of a cheque crossed generally may cross it specially, or add the words “not negotiable”.
  • A banker to whom a cheque is crossed specially may cross it again specially to another banker, his agent, for collection.

How the paying bank must act

Crossing The drawee bank may pay
General Only to a banker (section 126)
Special Only to the banker to whom it is crossed, or his agent for collection (section 126)
Special to more than one banker (other than an agent for collection) The bank must refuse payment (section 127)

Consequences for the banks and the parties

  • Payment in due course (section 128): if the drawee bank has paid a crossed cheque in due course, both the bank, and the drawer (where the cheque has reached the payee), are placed in the same position as if the amount had been paid to and received by the true owner.
  • Payment out of due course (section 129): a bank that pays a generally crossed cheque otherwise than to a banker, or a specially crossed cheque otherwise than to the banker named or its collecting agent, is liable to the true owner for any loss he sustains.
  • Collecting bank (section 131): a banker who in good faith and without negligence receives payment for a customer of a crossed cheque, crossed to itself, is not liable to the true owner merely because the customer’s title turns out to be defective. A banker is treated as receiving payment even if it credits the customer’s account before receiving payment. Where the payment is based on an electronic image of a truncated cheque, the collecting banker must verify the prima facie genuineness of the cheque and any fraud, forgery or tampering apparent on its face, with due diligence and ordinary care.
  • Drafts (section 131A): the same chapter applies to a draft as if it were a cheque.

“Not negotiable” (section 130)

The words do not make the cheque non-transferable. What they do is take away the usual protection of a person who takes a negotiable instrument in good faith for value: someone who takes a crossed cheque marked “not negotiable” does not have, and cannot give, a better title than the person from whom he took it. If the cheque was stolen, no later holder gets good title, however innocent.

“Account payee”

The words “account payee” or “A/c payee only” written between the lines are not in the Act. They are a banking practice, understood as an instruction to the collecting bank to credit only the account of the named payee. How a bank treats them is a matter of its own rules and RBI instructions, so ask your bank before relying on them for a large payment.

Practical points

  • To protect a cheque you send by post or courier, cross it, and add the payee’s name and “account payee only”.
  • To pay a person who has no bank account, do not cross the cheque, or use a bearer cheque with caution, since an uncrossed cheque can be paid in cash to whoever presents it.
  • Where a crossed cheque has been paid to the wrong person, tell the bank in writing at once and keep a copy of the cheque and the statement.
  • A crossed cheque that is returned unpaid for insufficiency of funds still falls under section 138 if all other conditions are met (see our post on cheque bounce).

Points to check

  • This post follows the Act as published on India Code. The truncated-cheque explanation to section 131 was added by amendment and applies where payment is based on an electronic image.
  • Practice for “account payee” and bank procedures varies; check the bank’s own rules and RBI instructions for the cheque truncation system.

Frequently asked questions

What is a crossed cheque?

A cheque with an addition across its face that restricts how the drawee bank may pay it. Under section 123, two parallel transverse lines (with or without the words and company or not negotiable) make it crossed generally. Under section 124, the name of a banker across its face makes it crossed specially.

Can a crossed cheque be encashed over the counter?

No. A cheque crossed generally can be paid only to a banker, and a cheque crossed specially only to the banker named or to his agent for collection (section 126). It has to go through a bank account.

Can the holder cross an uncrossed cheque?

Yes. The holder may cross it generally or specially. The holder of a generally crossed cheque may cross it specially or add not negotiable (section 125).

What does not negotiable mean on a cheque?

The cheque can still be transferred, but a person who takes it gets no better title than the person from whom he took it, and cannot give a better title (section 130). A thief or finder cannot pass on good title.

What happens if a bank pays a crossed cheque wrongly?

A banker who pays a generally crossed cheque otherwise than to a banker, or a specially crossed cheque otherwise than to the named banker or its agent, is liable to the true owner for any loss (section 129).

Is account payee in the Act?

No. The Act deals with general and special crossing and not negotiable. Account payee is a banking practice of writing the words across the cheque so that the proceeds are credited only to the payee’s account.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Cheque Bounce under Section 138 of the Negotiable Instruments Act: Notice, Time Limits, Penalty, Interim Compensation and Appeal

Posted on by CA Meet Dhrangadhariya

Last updated: 09 October 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • A cheque returned unpaid for insufficient funds, or because it exceeds the arrangement with the bank, is an offence under section 138 if it was issued for a legally enforceable debt or liability. Punishment is imprisonment up to two years, or fine up to twice the cheque amount, or both.
  • Three steps in time: present the cheque within six months of its date or its validity, whichever is earlier; send a written demand notice within 30 days of the bank’s return information; the drawer has 15 days from receipt of the notice to pay.
  • The complaint must be filed within one month after the 15 days end, in the court of the branch where the payee holds the account (if the cheque was deposited through an account).
  • The court may order interim compensation up to 20% of the cheque amount, and an appellant against conviction may be asked to deposit at least 20% of the fine or compensation.

A bounced cheque is not always a crime, but one returned for want of funds can be. Section 138 of the Negotiable Instruments Act, 1881 turns the dishonour of a cheque issued to discharge a debt into a criminal offence, subject to a strict timetable. Missing any step in that timetable ends the complaint, so the dates matter more than the amount.

When section 138 applies

A cheque drawn by a person on an account maintained by him with a banker, for payment of an amount to another person from that account, for the discharge in whole or in part of any debt or other liability, is returned by the bank unpaid either because:

  • the money standing to the credit of the account is insufficient to honour the cheque, or
  • the cheque exceeds the amount arranged to be paid from that account by an agreement with the bank.

“Debt or other liability” means a legally enforceable debt or liability. A cheque given as a gift, or for a time-barred or illegal debt, falls outside the section.

The three conditions in the proviso

  1. Presentation: the cheque is presented to the bank within six months from the date on which it is drawn, or within the period of its validity, whichever is earlier. (The RBI has fixed the validity of a cheque at three months from its date, so in practice the cheque must be presented within three months.)
  2. Demand notice: the payee or holder in due course gives a written notice to the drawer demanding the amount, within 30 days of receiving information from the bank that the cheque was returned unpaid.
  3. Drawer’s chance to pay: the drawer fails to pay the amount within 15 days of receiving the notice.

Only when all three are met is the offence complete.

Filing the complaint (section 142)

  • Only on a written complaint by the payee or the holder in due course.
  • Within one month from the date the cause of action arises, which is the day after the 15 days to pay have ended. The court may take a late complaint if the complainant shows sufficient cause.
  • The court must be not lower than a Metropolitan Magistrate or Judicial Magistrate of the first class.
  • Territorial jurisdiction: if the cheque was delivered for collection through an account, the court where the payee’s (or holder’s) branch is situated; if it was presented for payment otherwise than through an account, the court where the drawer’s branch is situated. A cheque delivered to any branch of the payee’s bank is treated as delivered to the branch where the payee holds the account.
  • Later complaints against the same drawer for other cheques go to the same court as an earlier pending complaint (section 142A).

Example timeline

Step Date
Cheque dated 01/06/2026
Presented to the bank 15/06/2026 (within validity)
Bank return memo received 17/06/2026
Last day to send the notice (30 days from receipt of information) 17/07/2026
Notice sent and received 05/07/2026
Drawer’s 15 days end 20/07/2026
File the complaint by (one month after the cause of action arises; do not leave it to the last day) 20/08/2026

Count the days from the date the notice was received, not the date it was posted, and keep the postal proof.

Presumptions and what the drawer cannot say

  • It is presumed, unless the contrary is proved, that the holder received the cheque for the discharge of a debt or liability (section 139).
  • It is not a defence that the drawer had no reason to believe the cheque would be dishonoured (section 140).
  • On production of the bank’s slip or memo showing the official mark of dishonour, the court presumes the fact of dishonour until it is disproved (section 146).
  • The complainant’s evidence can be given on affidavit (section 145), and summons can be served by speed post or approved courier (section 144).

Punishment

Imprisonment which may extend to two years, or a fine which may extend to twice the amount of the cheque, or both.

Companies (section 141): where the drawer is a company, every person in charge of and responsible for the conduct of its business at the time of the offence, as well as the company, is deemed guilty, unless the person proves the offence was committed without knowledge or that he exercised all due diligence. A nominee director from the Government or a government financial institution is not liable. A director, manager or other officer is also liable where the offence was committed with consent or connivance or is attributable to neglect on his part. For this section, “company” includes a firm or other association of individuals, and “director” means a partner in a firm.

Trial, interim compensation and appeal

  • Summary trial (section 143): trials are by a Judicial Magistrate of the first class or Metropolitan Magistrate and follow the summary procedure, with a sentence of up to one year in a summary trial, and the court endeavours to conclude the trial within six months of the complaint.
  • Interim compensation (section 143A, from 01/09/2018): the court may order the drawer to pay the complainant up to 20% of the cheque amount, when the drawer pleads not guilty in a summary trial or summons case, or after charge is framed in other cases. It is payable within 60 days (extendable by up to 30 days) and is refunded, with interest at the RBI bank rate, if the drawer is acquitted.
  • Appeal deposit (section 148): in an appeal by the drawer against conviction, the appellate court may order a deposit of at least 20% of the fine or compensation awarded, in addition to any interim compensation, within 60 days (extendable by 30 days). The amount can be released to the complainant during the appeal and is repaid with interest if the appellant is acquitted.
  • Settlement: every offence under the Act is compoundable (section 147).

What to do if your cheque bounces

  1. Ask the bank for the return memo and note the date you received it.
  2. Send a written notice, by a method that gives proof of delivery, within 30 days, stating the cheque number, date, amount and the reason for return.
  3. Wait for the 15 days to end, then file the complaint within the next month.
  4. Keep the bank slips, the notice, the postal receipts and proof of the underlying debt (invoice, ledger, agreement).

If you are the drawer, reply to the notice, pay within 15 days where the debt is genuine, and keep proof of payment.

Points to check

  • This post follows the Act as published on India Code. That copy still refers to the Code of Criminal Procedure, 1973; the Bharatiya Nagarik Suraksha Sanhita, 2023 has replaced it from 01/07/2024, so check the equivalent BNSS provisions for procedure.
  • The three month validity of a cheque is an RBI instruction, not stated in the Act.
  • The facts of each case (the debt, defences, jurisdiction) decide the outcome; take legal advice before sending a notice or replying to one.

Frequently asked questions

Is every bounced cheque a criminal offence?

No. Section 138 applies when a cheque issued for a legally enforceable debt or liability is returned unpaid because the account has insufficient money, or the cheque exceeds the amount arranged with the bank. Other reasons, such as signature mismatch or account closed, are dealt with by courts on their own facts.

What is the punishment?

Imprisonment for a term which may extend to two years, or a fine which may extend to twice the amount of the cheque, or both.

Within what time must the cheque be presented?

Within six months from the date on which it was drawn, or within its validity period, whichever is earlier.

What is the time limit for the legal notice?

A written demand must be given to the drawer within 30 days of receiving information from the bank that the cheque was returned unpaid.

How long does the drawer have to pay after the notice?

15 days from the receipt of the notice. If the drawer does not pay, the cause of action arises.

By when must the complaint be filed?

Within one month from the date the cause of action arises, that is, after the 15 days end. The court can take a late complaint if the complainant shows sufficient cause for the delay.

Which court has jurisdiction?

The court where the payee’s or holder’s bank branch is situated, if the cheque was delivered for collection through an account; otherwise the court where the drawer’s bank branch is situated.

Can the case be settled?

Yes. Every offence under the Act is compoundable under section 147.

What is interim compensation?

Under section 143A, the court trying the case may order the drawer to pay up to 20% of the cheque amount to the complainant when the drawer pleads not guilty (or after charge is framed), payable within 60 days, and refundable with interest if the drawer is acquitted.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Tax on FD Interest: How to Pay Income Tax on Fixed Deposit Interest Income?

Posted on by CA Meet Dhrangadhariya

Last updated: 16 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • FD interest is added to your income and taxed at your slab rate, under Income from Other Sources.
  • Banks deduct 10% TDS once interest crosses ₹50,000 a year (₹1,00,000 for senior citizens) for FY 2025-26; the TDS may be less than the tax you owe.
  • Senior citizens in the old regime can claim up to ₹50,000 under section 80TTB; tax-saver FD principal qualifies under section 80C in the old regime.
  • Check Form 26AS, AIS and TIS before filing, and use Form 15G or 15H to avoid TDS if your income is below the taxable limit.

How to report FD interest in your return

1. Check FD interest in your bank statements, Form 26AS, AIS and TIS
↓
2. Add all FD interest to Income from Other Sources
↓
3. Claim section 80TTB (senior citizens, old regime) or section 80C (tax-saver FD, old regime) if eligible
↓
4. Compute tax on the total income at your slab rates
↓
5. Reduce the TDS already deducted by the bank
↓
6. Pay the balance as self-assessment tax, or claim a refund if TDS is more

Interest on a fixed deposit (FD) is added to your income and taxed at your normal slab rate. It is shown under “Income from Other Sources” in the return. The bank deducts TDS on the interest above a limit, but that TDS may be less than the tax you actually owe, so you may have to pay the balance yourself. Resident senior citizens in the old regime can claim a deduction of up to ₹50,000 on interest from savings accounts and deposits under section 80TTB.

Where can I check my FD interest?

Bank interest is easy to miss because it looks small, but under-reporting can lead to notices. You can check FD interest in:

  • your bank statements and interest certificates,
  • Form 26AS,
  • the Annual Information Statement (AIS), and
  • the Taxpayer Information Summary (TIS).

How to calculate tax on FD interest

  1. Add up the interest (earned or accrued in the year) from all FDs and banks for the year. Interest on a cumulative FD, where the interest is paid only at maturity, should be offered to tax every year as it accrues. Banks deduct TDS and report the interest in Form 26AS and the AIS on the same yearly basis, so offering it year by year keeps your return matching these records. Some individuals who follow the cash system of accounting offer it only on receipt. If you want to do that, speak to your professional first, because a mismatch with Form 26AS and the AIS can lead to a notice.
  2. Add it to your other income. Show it under Income from Other Sources.
  3. Claim the deductions that apply to you (see below).
  4. Tax is charged at your slab rates. The rate depends on your regime, age and residential status.
  5. Reduce the TDS shown in Form 26AS from your total tax. Pay the balance as self-assessment tax, or claim a refund if the TDS is more.

Deduction under section 80TTB (senior citizens)

  • Available to resident senior citizens (age 60 or more) in the old regime.
  • Covers interest on savings accounts, fixed deposits and recurring deposits with banks, post offices and co-operative banks.
  • The maximum deduction is ₹50,000, and it cannot exceed the interest earned.
  • Non-senior individuals can claim section 80TTA (up to ₹10,000), but only for savings account interest. It does not cover FD interest.

Deduction under section 80C (tax-saver FD)

In the old regime, the principal invested in a 5-year tax-saver FD qualifies under section 80C, within the overall limit of ₹1.5 lakh. The interest on such an FD is still taxable.

TDS on FD interest

  • Banks deduct TDS under section 194A at 10% when the interest in a year crosses the threshold. For FY 2025-26 the threshold is ₹50,000 for most depositors and ₹1,00,000 for senior citizens, applied bank by bank (branch by branch for banks with core banking).
  • If you have not given your PAN, TDS is deducted at a higher rate of 20%.
  • If your total income is below the taxable limit, you can submit Form 15G (below age 60) or Form 15H (senior citizens) to the bank so that no TDS is deducted. TDS being nil does not make the interest tax-free: it must still be reported in your return.
  • Under the Income-tax Act, 2025 the TDS provisions have new section numbers, but the rates and thresholds are carried forward unless the Finance Act changes them.

Final Word

FD interest is a regular part of most returns. Report all of it, check your 26AS and AIS before filing, and use the deductions that apply to you. Tax-saving FDs and senior citizen benefits help only in the old regime, so compare the two regimes before you choose.

Frequently asked questions

Is FD interest taxable?

Yes. FD interest is added to your income and taxed at your slab rate, whether or not TDS is deducted.

What is the TDS rate on FD interest?

Banks deduct TDS at 10% under section 194A once interest crosses the threshold, and at 20% if PAN is not provided.

What is the TDS threshold on FD interest?

For FY 2025-26 it is ₹50,000 a year for most depositors and ₹1,00,000 for senior citizens, applied bank by bank.

Can I claim a deduction on FD interest?

Resident senior citizens in the old regime can claim up to ₹50,000 under section 80TTB. Others cannot claim a deduction on FD interest; section 80TTA covers only savings account interest.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

How to Reach the ₹1,50,000 Section 80C Limit Without New Investments

Posted on by CA Meet Dhrangadhariya

Last updated: 30 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • You may already be near the ₹1.5 lakh section 80C limit through payments you make anyway: EPF, life insurance premium, home loan principal, children’s tuition fees, and stamp duty on a house.
  • Add up these items first, then invest only the gap, if any.
  • Section 80C is available only in the old tax regime and is section 123 of the Income-tax Act, 2025 from Tax Year 2026-27.
  • Declare the items to your employer in Form 124 (earlier Form 12BB) so TDS is adjusted.

How to check your 80C position

1. Note your EPF contribution for the year
↓
2. Add home loan principal repaid and stamp duty if you bought a house
↓
3. Add children’s tuition fees (up to two children)
↓
4. Add life insurance premiums that qualify
↓
5. Subtract the total from ₹1,50,000 and invest only the balance

Every March someone suggests that you must invest in a tax-saving scheme to use up section 80C. Before you do, check what you have already paid during the year. Many ordinary payments qualify, and you may have used most of the ₹1,50,000 limit without any new investment.

Section 80C works only in the old tax regime. From Tax Year 2026-27 it is section 123 of the Income-tax Act, 2025, with the same ₹1.5 lakh limit.

Step by step

  1. Employees’ Provident Fund. Your own contribution to EPF during the year counts. Check your salary slip or EPF passbook. For many salaried people this alone is a large amount.
  2. Home loan principal. The principal part of your EMIs counts. Your lender’s certificate shows it.
  3. Stamp duty and registration. If you bought a house, the stamp duty and registration charges paid in that year count.
  4. Children’s tuition fees. Tuition fees for full time education of up to two children in India count, including playschool and preschool fees if they are tuition fees. Development fees, donations and transport do not.
  5. Life insurance premium. Premiums on a policy for yourself, your spouse or your children count. The premium should be within 10% of the sum assured for policies issued after 31/03/2012 (15% for a disabled person or specified diseases).
  6. Employee’s NPS contribution under section 80CCD(1) also counts within the same limit.
  7. Add them up and subtract the total from ₹1,50,000. The result is the balance of the limit.
  8. Invest only the balance, if any, in a product that suits your risk and your time horizon, such as PPF, ELSS, NSC, a 5 year tax-saver FD, Senior Citizens’ Savings Scheme or Sukanya Samriddhi Yojana.

Example

Priya’s EPF contribution is ₹72,000. She repaid ₹48,000 of home loan principal and paid ₹20,000 of tuition fees for one child. The total is ₹1,40,000, so only ₹10,000 of the limit is left. She does not need to invest ₹1.5 lakh in ELSS.

Who can claim?

Individuals (resident or non-resident) and Hindu undivided families can claim section 80C. Companies, firms and LLPs cannot.

How to claim

Give your employer a declaration in Form 124 (earlier Form 12BB) with proofs, so that less TDS is deducted. EPF is usually already known to the employer. If you did not declare it, you can claim the deduction when you file your return, as long as you are in the old regime and file on time.

What not to do

  • Do not buy a product only because the limit is unfilled. Choose it for the return, lock-in and risk.
  • Do not forget that a home loan principal or stamp duty claim is reversed if you sell the house within five years of getting possession.
  • Do not assume this works in the new tax regime. If you move to the new regime, 80C is lost altogether, so compare your total tax first.

Frequently asked questions

Can I reach the section 80C limit without investing?

Often, yes. EPF, life insurance premium, home loan principal, tuition fees and stamp duty can already add up to ₹1.5 lakh.

Do I need to invest more once the limit is reached?

No. The deduction is capped at ₹1.5 lakh, so extra investment under 80C does not reduce tax further.

Is my EPF counted?

Yes, your own contribution to the Employees’ Provident Fund counts.

Which tuition fees count?

Tuition fees for full time education of up to two children in India. Development fees and donations do not count.

Is 80C available in the new tax regime?

No. It is available only in the old tax regime.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

How to Save Tax Other Than 80C: Deductions and Exemptions for 2026-27

Posted on by CA Meet Dhrangadhariya

Last updated: 25 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Besides section 80C, you can save tax through NPS (₹50,000 extra), health insurance (up to ₹1 lakh), home loan interest, education loan interest, donations, rent, disability and treatment deductions, and exempt life insurance maturity.
  • Most of these work only in the old tax regime. In the new regime the standard deduction (₹75,000) and the employer’s NPS contribution are the main benefits.
  • Each deduction now has a new section number in the Income-tax Act, 2025 from Tax Year 2026-27: for example 80D is section 126 and 80E is section 129.
  • Compare your tax under both regimes before you choose.

Section 80C is the best known deduction, but it is only one of many. If you are in the old tax regime, these other sections can reduce your tax further. From 01/04/2026 the Income-tax Act, 2025 applies, and each deduction has a new section number, shown below.

Deductions other than 80C

Deduction Limit Section in 1961 Act Section in 2025 Act
Own contribution to NPS ₹50,000, over and above 80C 80CCD(1B) 124(3)
Health insurance, preventive check-up, medical for senior citizens ₹25,000 self and family (₹50,000 if senior), ₹25,000 for parents (₹50,000 if senior); preventive check-up ₹5,000 within these 80D 126
Dependant with disability ₹75,000 or ₹1,25,000 80DD 127
Treatment of specified diseases ₹40,000 or ₹1,00,000 (senior citizen) 80DDB 128
Education loan interest Whole interest, 8 years 80E 129
First-time buyer home loan interest (loans of FY 2016-17) ₹50,000 80EE 130
Donations 100% or 50%, with a 10% limit for some 80G 133
Rent without HRA Up to ₹60,000 80GG 134
Contributions to political parties Whole amount, other than cash 80GGC 137
Savings account interest ₹10,000 80TTA 153
Deposit interest, senior citizens ₹50,000 80TTB 153
Person with disability ₹75,000 or ₹1,25,000 80U 154

Chapter VIII of the 2025 Act contains these deductions. The loan interest deduction for electric vehicles (80EEB) ended for loans sanctioned after 31/03/2023, and the additional affordable housing interest (80EEA) was for loans sanctioned up to 31/03/2022.

Other ways to save tax

  • Home loan interest: up to ₹2 lakh a year on a self-occupied house (section 24(b) of the 1961 Act, section 22 of the 2025 Act). On a let-out house the whole interest is deducted against the rent, with the loss set-off limited to ₹2 lakh a year.
  • Exempt allowances and HRA: HRA, LTA, children education allowance and others reduce taxable salary in the old regime.
  • Exempt insurance proceeds: the maturity amount of a life insurance policy is exempt if the premium conditions are met: for policies issued from 01/04/2012, premium up to 10% of sum assured (15% for special policies), and for policies issued on or after 01/04/2023 the total premium must be below ₹5 lakh a year, or below ₹2.5 lakh for unit linked policies.
  • Agniveer Corpus Fund: the whole contribution is deductible.

Employer contribution to NPS

If your employer contributes to your NPS account, the contribution is deductible up to 10% of salary (14% for Government employers) in the old regime. In the new regime the limit is 14% for all employers. This is the one major deduction that works in both regimes.

What works in the new tax regime?

  • Standard deduction: ₹75,000 for salary and pension (₹25,000 for family pension).
  • Employer’s NPS contribution, up to 14% of salary.
  • Interest on a let-out house against its rent.
  • Contribution to the Agniveer Corpus Fund.
  • Travel, daily charges and conveyance allowances, and the disabled employee’s transport allowance.

Old or new regime?

Add up all deductions and exemptions you can claim. If they are large enough (for example HRA, 80C, 80D and home loan interest together), the old regime can still cost less. If they are small, the new regime usually wins. Do this calculation every year, since you choose with your return, and a person without business income must choose the old regime along with the return furnished by the due date.

Frequently asked questions

What can I claim over and above section 80C?

NPS (₹50,000 under 80CCD(1B)), health insurance (80D), education loan interest (80E), donations (80G), rent without HRA (80GG), home loan interest, savings interest (80TTA or 80TTB) and disability related deductions.

What is the limit under section 80D?

₹25,000 for self, spouse and children (₹50,000 if a senior citizen) and the same again for parents, so up to ₹1,00,000 in total when both are senior citizens.

Which of these work in the new tax regime?

Mainly the standard deduction of ₹75,000, the employer’s contribution to NPS, and interest on a let-out house against its rent. Most other deductions need the old regime.

What are the new section numbers?

80D is section 126, 80E is 129, 80G is 133, 80GG is 134, 80TTA and 80TTB are 153, and 80CCD(1B) is 124(3) in the Income-tax Act, 2025.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Section 80G and 80GGA: Deduction for Donations, Limits and How to Claim

Posted on by CA Meet Dhrangadhariya

Last updated: 29 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80G allows a deduction for donations to specified funds and charities, at 100% or 50%, with or without a limit of 10% of adjusted gross total income.
  • Donations must be in money, and a donation above ₹2,000 must be made by a mode other than cash.
  • Claims for donations to registered charities are allowed only on the basis of the information the charity reports to the department, so ask for the donation certificate.
  • Section 80GGA covers donations for scientific and social science research. Both sections are available only in the old tax regime and are sections 133 and 135 of the Income-tax Act, 2025 from Tax Year 2026-27.

How to claim the section 80G deduction

1. Donate to an eligible fund or registered charity by cheque, draft or online (cash only up to ₹2,000)
↓
2. Collect the donation receipt and the donation certificate from the charity
↓
3. Check that the donation shows in your pre-filled return data
↓
4. Work out the qualifying limit and the 100% or 50% share
↓
5. Claim the deduction in the old regime and report the donee details in the return

Donations to certain funds and charities reduce your taxable income under section 80G. Donations for scientific and social science research are covered by section 80GGA. Both work only under the old tax regime.

From Tax Year 2026-27 section 80G is section 133 and section 80GGA is section 135 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) the 1961 Act sections still apply.

Who can claim section 80G?

Any taxpayer who makes an eligible donation: individuals, HUFs, firms, companies and others, including NRIs. The deduction is 100% or 50% of the donation, depending on the donee, with or without a ceiling.

Mode of payment

  • The donation must be in money. Donations in kind (food, clothes, medicines, material) do not qualify.
  • A donation of up to ₹2,000 can be in cash. A donation above ₹2,000 must be by cheque, demand draft or an electronic mode.

Donations eligible at 100% with no limit

  • National Defence Fund.
  • Prime Minister’s National Relief Fund and PM CARES Fund.
  • Prime Minister’s Armenia Earthquake Relief Fund and the Africa (Public Contributions, India) Fund.
  • National Children’s Fund and National Foundation for Communal Harmony.
  • An approved university or educational institution of national eminence.
  • A fund set up by the Gujarat Government for earthquake relief.
  • A Zila Saksharta Samiti.
  • National and State Blood Transfusion Councils.
  • A State Government fund for medical relief to the poor.
  • Army Central Welfare Fund, Indian Naval Benevolent Fund and Air Force Central Welfare Fund.
  • Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996.
  • National Illness Assistance Fund.
  • Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund meeting the conditions of the Act.
  • National Sports Development Fund, National Cultural Fund and Fund for Technology Development and Application.
  • National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities.
  • Swachh Bharat Kosh and Clean Ganga Fund (not for CSR spending).
  • National Fund for Control of Drug Abuse.

Donations eligible at 100% subject to the 10% limit

  • Donations to the Government or an approved local authority, institution or association to promote family planning.
  • Donations by a company to the Indian Olympic Association or a notified association for sports infrastructure or sponsorship.

Donations eligible at 50% with no limit

  • Prime Minister’s Drought Relief Fund.

Donations eligible at 50% subject to the 10% limit

  • A fund or institution established in India for a charitable purpose that is a registered non-profit organisation (or approved as the Act provides).
  • The Government or a local authority, for any charitable purpose other than family planning.
  • An authority constituted for housing or for the planning and development of cities, towns and villages.
  • A corporation set up by the Central or a State Government to promote the interests of a minority community.
  • Repairs or renovation of a notified temple, mosque, gurudwara, church or other place of renown.

A purpose that is wholly or substantially religious is not a charitable purpose.

The 10% qualifying limit

The ceiling is 10% of the adjusted gross total income, which is gross total income less income on which tax is not payable and less other Chapter VIII deductions.

  1. Allow the donations eligible at 100% or 50% without a limit in full.
  2. For the donations subject to the limit, take the lower of the total of such donations and 10% of adjusted gross total income.
  3. Set off the 100% donations first. Any balance of the limit is used for the 50% donations, at 50%.
  4. Add the amounts to get your section 80G deduction.

Example

Mr X has an income of ₹7,00,000 and donates ₹1,60,000 to a charitable trust (50% with the limit). He is in the old regime.

Particulars Amount in ₹
Income before 80G 7,00,000
Donation 1,60,000
Qualifying limit (10% of 7,00,000) 70,000
Amount eligible (lower of donation and limit) 70,000
Deduction at 50% 35,000
Income after 80G 6,65,000
Tax comparison Amount in ₹
Tax before donation, with cess 54,600
Tax after donation, with cess 47,320
Tax saved 7,280

Proof and reporting of the donation

  • Ask the charity for a donation receipt with your name and address, the amount, the mode of payment and the charity’s PAN and registration details.
  • A registered charity must report your donation to the Income Tax Department every year and issue you a donation certificate. For FY 2025-26 these are the statement in Form 10BD and the certificate in Form 10BE. Under the Income-tax Rules, 2026 the statement is Form 113 and the certificate is Form 114.
  • Under section 133(6), your claim for a donation to such a charity is allowed only on the basis of the information the charity has reported, and is subject to verification. If the charity does not report it, you may lose the deduction. Check the donation in your pre-filled return data or the annual information statement.
  • In your return give the donee’s name, address and PAN, the amount, and the split between cash and other modes.

Section 80GGA: research donations

Section 80GGA (section 135 in the 2025 Act) allows a deduction of the full amount paid to:

  • a research association, university, college or other approved institution for scientific research, or
  • a research association, university, college or other approved institution for social science or statistical research.

Conditions:

  • It is not allowed if your gross total income includes business or professional income.
  • A cash donation above ₹2,000 does not qualify.
  • The claim is allowed on the basis of information reported by the payee, subject to verification.
  • The same amount cannot be claimed under any other provision.

The old section 80GGA also covered rural development, afforestation and poverty eradication funds. The 2025 Act does not list these, so do not rely on older articles for them.

Section 80G vs section 80GGA

Basis Section 80G Section 80GGA
Purpose Charity and relief funds Scientific and social science research
Rate 100% or 50% 100%
Limit 10% limit for some donations No limit
Business income Allowed Not allowed if GTI includes business or profession income
Cash Up to ₹2,000 Up to ₹2,000
Regime Old regime only Old regime only

Frequently asked questions

Who can claim section 80G?

Any taxpayer, including individuals, HUFs, firms and companies, but only if the donation is to an eligible fund or institution and the taxpayer is in the old tax regime where that applies.

Can I claim 80G for a cash donation?

Only up to ₹2,000. A donation above ₹2,000 must be paid by cheque, draft or online mode.

Are donations in kind allowed?

No. The deduction is allowed only for a donation made as a sum of money.

What is the 10% qualifying limit?

For certain donations, the amount eligible is limited to 10% of adjusted gross total income.

Is section 80G available in the new tax regime?

No. It is available only in the old tax regime.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Section 80U: Tax Deduction for Individuals with Disability

Posted on by CA Meet Dhrangadhariya

Last updated: 06 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80U gives a resident individual who is certified as a person with disability (40% or more) a flat deduction of ₹75,000, or ₹1,25,000 for severe disability (80% or more).
  • No bills are needed, but the disability certificate from the prescribed medical authority must be furnished with the return.
  • If the certificate needs reassessment after a period, the deduction stops after the year it expires until a new certificate is furnished.
  • From Tax Year 2026-27 it is section 154 of the Income-tax Act, 2025, and it is available only in the old tax regime.

Section 80U gives a fixed deduction from total income to a resident individual who has a certified disability. The amount does not depend on how much the person spends. It is available only under the old tax regime.

From Tax Year 2026-27 the provision is section 154 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) it is section 80U of the 1961 Act.

Amount of deduction

Condition Deduction
Person with disability (40% or more) ₹75,000
Person with severe disability (80% or more, including severe autism, cerebral palsy and multiple disabilities) ₹1,25,000

Who can claim?

A resident individual who is certified by the prescribed medical authority, at any time during the year, as a person with disability or severe disability. A HUF cannot claim.

The disabilities covered include blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, mental retardation, mental illness, autism, cerebral palsy and multiple disabilities.

Disability certificate

  • You do not need bills or proof of expenses. You need the certificate.
  • A copy of the certificate from the prescribed medical authority must be furnished with your return of income. Up to FY 2025-26 the form for autism, cerebral palsy and multiple disabilities was Form 10-IA. Under the Income-tax Rules, 2026 the certificate form is Form 30.
  • If the certificate says the disability must be reassessed after a stipulated period, the deduction is not allowed for the years after the year in which the certificate expires, until you get and furnish a new certificate.
  • The medical authority can be a civil surgeon or chief medical officer of a government hospital, or a specialist as notified, for example a neurologist.

Old regime and the due date

Section 80U works only in the old regime. A person without business income chooses the old regime along with the return furnished by the due date. If you file late, the new regime applies and you lose the deduction. File on time.

Section 80U vs section 80DD

Parameter Section 80DD Section 80U
Who claims Resident individual or HUF supporting a dependant with disability Resident individual who has the disability
Spending needed? Yes, spent on care or paid into an approved scheme No
Amount ₹75,000 or ₹1,25,000 ₹75,000 or ₹1,25,000
Both for the same person? Not allowed Not allowed
Regime Old regime only Old regime only

Frequently asked questions

How much is the deduction under section 80U?

₹75,000 for a person with disability (40% or more) and ₹1,25,000 for severe disability (80% or more). It is a fixed amount.

Who can claim section 80U?

A resident individual who is certified by the medical authority, at any time during the year, as a person with disability or severe disability. A HUF cannot claim it.

Is a disability certificate required?

Yes. A copy of the certificate from the prescribed medical authority has to be furnished with the return.

Can I claim 80U and 80DD together?

Not for the same person. A person who claims 80U for themselves means nobody can claim 80DD for them.

Is section 80U available in the new tax regime?

No. It is available only in the old tax regime, and the old regime must be chosen when you file your return on time.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Difference Between Exemption, Deduction and Rebate in Income Tax

Posted on by CA Meet Dhrangadhariya

Last updated: 29 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • An exemption keeps a particular income out of tax altogether, a deduction reduces your taxable income, and a rebate reduces the tax you have to pay.
  • Examples: agricultural income is exempt, section 80C is a deduction, and the section 87A rebate cuts your computed tax.
  • For Tax Year 2026-27 the new regime gives a rebate of up to ₹60,000 if taxable income is up to ₹12 lakh; the old regime gives up to ₹12,500 if income is up to ₹5 lakh.
  • Most exemptions and deductions (HRA, 80C, 80D) work only in the old regime.

Exemption, deduction, rebate and relief are often used as if they mean the same thing. They do not. Each works at a different stage of the tax calculation, and knowing which is which helps you plan your tax and read your Form 16 correctly.

Exemption

An exemption makes a particular income tax-free. That income is left out of your total income, so it never enters the calculation.

Examples:

  • Agricultural income.
  • House rent allowance (HRA), within the prescribed limit, in the old regime.
  • Leave travel allowance (LTA), on the conditions of the rules, in the old regime.
  • Scholarships granted to meet the cost of education.
  • Gratuity and leave encashment on retirement, up to the limits allowed.

In the Income-tax Act, 2025, which applies from 01/04/2026, most of these exemptions are listed in the Schedules to the Act, while the old section 10 no longer exists as a single section.

Deduction

A deduction is an amount you subtract from your income, because you invested in or spent on something the law encourages. It reduces your taxable income, so the tax saved depends on your slab rate.

Examples:

  • Standard deduction on salary and pension.
  • Section 80C: up to ₹1.5 lakh for PPF, ELSS, life insurance and more.
  • Section 80D: health insurance premium. In the old regime, up to ₹25,000 for self, spouse and children (₹50,000 if a senior citizen), and the same again for parents.
  • Section 80E: interest on an education loan.
  • Section 24(b): home loan interest, up to ₹2 lakh for a self-occupied house.

Rebate

A rebate reduces the tax itself, after it has been computed on your taxable income. The main one is section 87A, available to resident individuals.

New regime (default) Old regime
Taxable income limit ₹12,00,000 ₹5,00,000
Maximum rebate ₹60,000 ₹12,500

These limits apply to Tax Year 2026-27 and to FY 2025-26. Marginal relief is available in the new regime for income slightly above ₹12 lakh. The rebate does not apply to special rate income, such as tax on short term capital gains under section 111A, so read the conditions before relying on it. See our article on the section 87A rebate for a full explanation.

Exemption vs deduction vs rebate: comparison table

Feature Exemption Deduction Rebate
Meaning A specific income is tax-free An amount subtracted from income An amount subtracted from tax
Stage Before total income is arrived at Before taxable income is arrived at After tax is computed
Effect Income is not taxed at all Reduces taxable income Reduces tax payable
Examples Agricultural income, HRA Section 80C, 80D, 80E Section 87A
Most are available in Mostly the old regime Mostly the old regime Both regimes

A note on tax deducted at source (TDS) and tax relief

Rebate, deduction and exemption are not the same as TDS. TDS is tax collected in advance by the payer, such as an employer or bank, on salary, interest, commission, rent or professional fees. It is later adjusted against your final tax, and any excess is refunded to you.

“Tax relief” is a general term for any provision that lowers your tax, including the three above and relief for double taxation. “Tax benefit” is used in the same loose way.

Which is better?

All three help, but they act differently. An exemption removes income completely. A deduction saves tax at your slab rate. A rebate saves a fixed amount of tax. Because most deductions and exemptions work only in the old regime, compare your tax under both regimes every year.

Frequently asked questions

What is the difference between a deduction and an exemption?

An exemption excludes a specific income from tax, for example agricultural income. A deduction is subtracted from your income, for example the section 80C deduction, to reach taxable income.

What is a tax rebate?

A rebate reduces the tax computed on your taxable income. Section 87A is the common example.

Is a rebate the same as a refund?

No. A rebate cuts your tax liability before you pay. A refund is money returned to you when your tax paid or deducted is more than your tax liability.

Which comes first in the calculation?

Exemptions are left out of income first, then deductions are subtracted, tax is calculated on the taxable income, and the rebate is applied to that tax.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Section 80EE: Extra Deduction of Up to ₹50,000 on Home Loan Interest

Posted on by CA Meet Dhrangadhariya

Last updated: 26 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80EE gives first-time home buyers an extra deduction of up to ₹50,000 a year on home loan interest, on top of the ₹2 lakh under section 24(b).
  • It applies only to loans sanctioned between 01/04/2016 and 31/03/2017, for a house worth up to ₹50 lakh with a loan up to ₹35 lakh, if you owned no house on the sanction date.
  • The deduction can still be claimed each year while that loan runs, only in the old tax regime.
  • From Tax Year 2026-27 it is section 130 of the Income-tax Act, 2025.

Section 80EE gave first-time home buyers an extra deduction of up to ₹50,000 a year on home loan interest. It was a limited-period scheme for loans sanctioned in FY 2016-17, but if you have such a loan you can still claim it every year until the loan ends, if you are in the old tax regime.

From Tax Year 2026-27 the provision is section 130 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) it is still section 80EE of the 1961 Act.

Conditions

  • Only an individual can claim (resident or non-resident). HUFs, firms and companies cannot.
  • The loan must be taken from a financial institution (a bank or housing finance company) to buy a residential house in India.
  • The loan must have been sanctioned between 01/04/2016 and 31/03/2017.
  • The loan amount must not exceed ₹35 lakh.
  • The value of the house must not exceed ₹50 lakh.
  • You must not have owned any residential house on the date the loan was sanctioned.
  • The same interest cannot be claimed under another section for that year or any other year.
  • It is available only in the old tax regime.

How much?

Up to ₹50,000 a year. Claim the interest first under section 24(b) (section 22 in the 2025 Act), which allows up to ₹2 lakh for a self-occupied house. If the interest is more, the balance can be claimed under 80EE, up to ₹50,000, so the total is up to ₹2,50,000. The total cannot exceed the interest you actually pay.

For a let-out house section 24(b) has no ₹2 lakh ceiling on interest, though the loss from house property that can be set off against other income is limited to ₹2 lakh a year.

Examples

  1. Sunita bought her first home for ₹45 lakh with a loan of ₹30 lakh sanctioned on 15/01/2017. She owned no house. She can claim up to ₹50,000 under section 80EE each year for the interest in excess of the section 24(b) limit.
  2. Rohan paid ₹2,40,000 as interest in a year. He claims ₹2,00,000 under section 24(b) and the remaining ₹40,000 under section 80EE. Total ₹2,40,000.
  3. Sonia’s house cost ₹52 lakh. She cannot claim, because the value exceeds ₹50 lakh.
  4. Ajay’s loan was ₹38 lakh. He cannot claim, because the loan exceeds ₹35 lakh.
  5. Two friends buy their first home together, each with a loan of ₹15 lakh, for a house worth ₹40 lakh. If each meets the conditions, each can claim up to ₹50,000.

Documents

  • The interest certificate from the lender, showing the principal and interest for the year.
  • The sanction letter and loan agreement, showing the sanction date and amount.
  • Papers that show the value of the house.

Section 24(b) vs section 80EE

Feature Section 24(b) Section 80EE
Interest allowed Up to ₹2 lakh for self-occupied house Extra up to ₹50,000
Who Individuals and HUFs Individuals only
Loan period Any Sanctioned 01/04/2016 to 31/03/2017
House value and loan limits None ₹50 lakh and ₹35 lakh
Regime Self-occupied house: old regime only. Let-out house: interest is also allowed in the new regime Old regime only

Section 80EE vs section 80EEA

Basis Section 80EE Section 80EEA
Loan sanctioned 01/04/2016 to 31/03/2017 01/04/2019 to 31/03/2022
Deduction ₹50,000 ₹1,50,000
Loan limit ₹35 lakh No limit
House value ₹50 lakh Stamp duty value up to ₹45 lakh

In the 2025 Act, section 80EE is section 130 and section 80EEA is section 131.

Frequently asked questions

Can I claim section 80EE for a loan taken now?

No. It is only for loans sanctioned between 01/04/2016 and 31/03/2017. If your loan was sanctioned then and meets the conditions, you can still claim it each year.

What is the limit under section 80EE?

₹50,000 a year, in addition to section 24(b).

Who can claim 80EE?

Only individuals who owned no residential house on the date the loan was sanctioned. HUFs and companies cannot.

Is it available if the house is let out?

The section does not require self-occupation, but the interest cannot be claimed twice under different sections.

Is section 80EE available in the new tax regime?

No. It is available only in the old tax regime.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.