Tax Deductions for Individual and HUF Taxpayers: Overview
The majority of income tax deductions and exemptions in India are structured to benefit individual and HUF taxpayers. These provisions not only reduce taxable income but also encourage savings, insurance, education, and health investments. From Section 80C to HRA, understanding these deductions can lead to significant tax savings.
Who Can Claim These Deductions?
- Resident Individuals: Salaried, self-employed, or pensioners
- HUFs (Hindu Undivided Families): Recognised as separate tax entities
- Applicable Regime: Most deductions are available only under the old tax regime
Major Tax Deductions for Individual and HUF Taxpayers
| Section | Eligible Deduction | Max Limit | Eligible For |
|---|---|---|---|
| 80C | LIC, PPF, ELSS, tuition fees, home loan principal | ₹1.5 lakh | Individuals & HUFs |
| 80D | Medical insurance premiums | ₹25k – ₹1 lakh | Individuals & HUFs |
| 24(b) | Home loan interest (self-occupied) | ₹2 lakh | Individuals only |
| 10(13A) | House Rent Allowance (HRA) | Variable | Salaried individuals |
| 80E | Education loan interest | Full interest | Individuals only |
| 80TTA/80TTB | Interest on savings/deposits | ₹10k/₹50k | Individuals |
| 80G | Donations to approved funds | 50–100% of amount | Individuals & HUFs |
| 10(14) | Allowances like LTA, children education allowance | Variable | Individuals only |
Focus on Section 80C: Most Widely Used Deduction
Why it matters for Individuals and HUFs
Section 80C is the most commonly claimed deduction. It offers flexibility across multiple savings instruments.
Eligible Investments:
- Life Insurance Premium (LIC)
- Public Provident Fund (PPF)
- Sukanya Samriddhi Yojana
- 5-year tax-saving FD
- ELSS Mutual Funds
- Children’s Tuition Fees
- Principal repayment of home loan
Important Note:
Only investments made before 31st March of the financial year are eligible.
Tax Deductions for HUF: Key Benefits
HUFs enjoy similar deductions as individuals but as separate tax entities. That means a family can split income across individual and HUF accounts to save tax.
Example:
A family can claim ₹1.5 lakh under 80C in the individual’s return and ₹1.5 lakh under the HUF’s return if both invest separately.
Expert Tip:
Consider forming an HUF if you have ancestral property income or a family business. It’s a legitimate way to optimise tax slabs and deductions.
Choosing Between Old and New Tax Regime
Most of these deductions are not allowed in the new tax regime under Section 115BAC (except for:
- Section 80CCD(2) – Employer’s NPS contribution
- Section 80JJAA – New employment deduction
- Standard Deduction of ₹50,000 (from FY 2023–24)
| Criteria | Old Regime | New Regime |
|---|---|---|
| Deductions like 80C, 80D | ✅ Available | ❌ Not allowed |
| Lower tax slab rates | ❌ No | ✅ Yes |
| Ideal for | High savings/investment | Low deduction users |
Recommendation:
Calculate both regimes using your actual deductions before filing. Efiletax’s platform offers a built-in tax regime comparison tool.
Government Sources Supporting These Deductions
- CBDT Circular No. 4/2023 – Clarifies deduction claims under various sections
- Income Tax Act, 1961 – Section 80C to 80U
- Budget Speech 2023 – Changes to default regime and standard deduction in new regime
FAQs: Individual and HUF Tax Deductions
Q1. Can both an individual and their HUF claim 80C separately?
Yes, if both file separate returns and make eligible investments.
Q2. Is 80C allowed in the new regime?
No. Only employer NPS contributions under 80CCD(2) are allowed.
Q3. Can pensioners claim deductions?
Yes, most deductions like 80C, 80D, and standard deduction apply to pensioners under the old regime.
Summary
Most tax deductions like Section 80C and 80D are meant for individual and HUF taxpayers under the old regime. Learn how to claim them and save tax effectively.
Final Thoughts
If you’re filing your return and wondering how to reduce your tax liability, focus on maximising deductions under the old regime—especially if you’re salaried, self-employed, or managing an HUF. At Efiletax, our experts help you calculate, claim, and file accurately—without missing any benefit you deserve.