Chapter 8 Deductions from Gross Total Income

Chapter 12
Deductions from Gross Total Income
[Section 80A – 80U (Chapter VI A)]
General Rules of deductions (Section 80A)
i. In computing the Taxable income (Total Income), deductions u/s 80C to 80U shall be allowed from
GTI subject to provisions of Chapter VI-A. The aggregate amount of deduction under this chapter shall
not, in any case exceed GTI.
ii. Where the assessee claims deduction u/s 10AA, no deduction shall be claimed for the same in Chapter
VI-A. Also, if deduction has been claimed under Chapter VI-A for the specified business, no deduction
shall be allowed u/s 35AD.
iii. Deduction under chapter VI-A shall not be allowed to the members if allowed to AOP/BOI.
iv. Deduction is allowed only when it is claimed by the assessee.
v. Allowability of deductions subject to filing of income tax return as per section 139(1)
Deduction under section No deduction shall be allowed unless-
80IA to 80RRB Return is filed on or before due date u/s 139
10AA and 80IA to 80RRB Claim for deduction is made in the return

Incomes not eligible for any deductions under chapter VI-A

i. Long term Capital gains.
ii. Short term Capital Gains u/s 111A.
iii. Winnings and Lotteries, etc. as referred to u/s 115BB
iv. Specified income of non-residents, including presumptive income.

Deductions in respect of certain payments

Sec Particulars Assessee Deduction Details

80C Deduction in Individual/ Max ₹ 1,50,000 Life Insurance
respect of LIP, HUF  Individual, Spouse, Child
contribution to  For a policy issued before 1-4-2012
PF, PPF, Sukanya premium allowed is 20% of the capital sum
Samridhi Yojana, assured.
etc  For a policy issued after 1-4-2012 premium
allowed is 10% of the capital sum assured.
 For a policy issued after 1-4-2013 in case
of the person insured is a person with a
disability or suffering from a specific

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Chapter 8 Deductions from Gross Total Income
ailment, the premium allowed is 15% of the
capital sum assured.
RPF/SPF
 Contribution by an Individual to RPF or
SPF.
PPF
 Contribution to PPF A/c of the Individual,
Spouse, or any child.
 In case of HUF in A/c of any member of
HUF.
Tuition Fees
 Paid to any University College, School or
any other educational institute situated in
India for full time education.
 At any time whether at the time of
admission or thereafter.
 It should NOT be towards development
fees/ donation.
 For max. 2 children.
Residential House Property
 Any installment or part payment of the
amount due under any scheme of any
development authority or Housing Board.
 Expenses (stamp duty, registration fees
etc.)
Sukanya Samriddhi Yojana
 Only to an Individual
 Deposit for a girl child.
 Maximum for 2 children
Others
 ULIP (Unit Linked Insurance Policy) of
UTI
 Approved Superannuation Fund
 Notified Deposit schemes of PSUs
 Interest in Debentures and equity shares of
a Public Company.
 Bonds of NABARD (National Bank for
Agri and Rural Development)
 Senior Citizen Savings Scheme.
 National Savings certificate.
80CCC Deduction for Only Max. ₹ 1,50,000 Annuity Plan of LIC or any other insurer & for
contribution to Individual receiving a pension from LIC or any other
pension Funds insurer.
80CCD Deduction in Individual ---  Deductions under Section 80CCD are
respect of available to salary as well as self-employed
contribution to individuals. While it is mandatory for
notified pension government employees, for other
scheme of central individuals, it is voluntary.
government (New
Pension Scheme Employee Max Deduction
or Atal Pension CG employee 10% of Salary
Yojana)
Other employee 10% of Salary

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Chapter 8 Deductions from Gross Total Income
Any other 20% of GTI
individual
 Salary = Basic Pay + DA(R/B)
 The maximum limit of deduction available
under Section 80 CCD is ₹ 2 Lakhs; this
includes the additional deduction of ₹
50,000/- available under sub-section 1B.
 Tax benefits availed under Section 80CCD
cannot be claimed again under Section
80C, i.e. the combined deduction under
Section 80C and 80 CCD cannot exceed ₹
2 Lakhs.
 The money received from NPS as monthly
payments or as surrendered accounts will
be liable for taxation as per the applicable
provisions.
 Any amount received from NPS reinvested
in the annuity plan is entirely exempt from
taxation.
80CCE Limit on NA Max ₹ 1,50,000  The max amount of ₹ 1, 50,000 is
deductions u/s excluding the employer’s contribution to
80C, 80CCC, the pension scheme and an additional
80CCD deduction of ₹ 50,000.
80D Medical Individual/ Refer to note -1 Mode of payment:
Insurance Premia, HUF  Medical premium or medical expenditure –
Payment of Any mode other than cash.
preventive health  Preventive health checkup – Any mode
checkups, including cash.
Contribution to
CGHS or another
similar scheme.
80DD Deduction i.r.o Resident Normal  Deduction shall be i.r.o expenditure on
dependent who is Individual or disability: medical treatment, training, and
a person with a HUF ₹ 75,000 rehabilitation of dependent with a
disability. Severe Disability: disability.
₹ 1,25,000  Flat deduction shall be allowed irrespective
of the amount spent.
80DDB Deduction i.r.o Resident age < 60 years  Treatment shall be for a specified disease
medical Individual or Lower of: or ailment for himself, dependent, or any
treatment. HUF  Actual exp; or members of HUF.
 ₹ 40,000  Individuals need to furnish a prescription
age ≥60 years for such medical treatment from a doctor
Lower of: specialized for such disease.
 Actual exp; or  Any amount received from the insurance
 ₹ 1,00,000 company shall be deducted from ₹
40,000/₹ 1, 00,000.

80E Deduction for Individual Actual amount  Loan shall be taken for himself, spouse, or
interest paid on paid child.
loan taken for
pursuing higher
education
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Chapter 8 Deductions from Gross Total Income
 Deduction shall be allowed for a period of
8 years from the year the assessee starts
paying interest.
80EE Deduction for Individual Lower of:  Assessee has taken a loan not exceeding ₹
interest paid on  Actual amount 35 Lakhs for the purpose of acquiring a
loan taken for of interest; or residential property, the value of which
acquiring  ₹ 50,000 shall not exceed ₹ 50 Lakhs.
residential house  Assessee does not own any residential
property. house property on the date of sanction of
loan.
 Loan has been taken from 1-4-2016 to 31-
3-2017.
80G Deduction i.r.o Any assessee Refer to note - 2  Donation has to be in the form of a sum of
donations to money. Donations in kind do not qualify.
certain funds,  The donation shall be made only to
charitable funds specified funds/ institutions.
80GG Deduction i.r.o Individual Least of the  Individual, spouse, minor child, or a HUF
Rent paid three: of which he is a member should not own a
 ₹ 5,000 p.m or house at a place of residence or the place of
 25% of adjusted work.
GTI. or  If the individual owns a residential house
 Excess of rent property at any other place then such
paid over 10% of property should not be assessed as self-
adjusted GTI. occupied in the hands of the assessee u/h
house property.
80QQB Deduction i.r.o Resident Least of two:  Book for literary, artistic or scientific in
royalty income, individual  100% of such nature.
etc., of author of (who is an income or  Derived by him in due course of his
certain books author)  ₹ 3,00,000 profession.
other than text
books.
80RRB Resident Least of two:
individual  100% of such
(who is a income or
patentee)  ₹ 3,00,000
80TTA Deduction i.r.o Individual Least of  Interest on Savings account with bank, co-
interest other than Actual amount of operative society or post office.
senior interest or
citizen. ₹ 10,000/-
80TTB Deduction i.r.o Senior Least of  Any deposit with bank, co-operative bank
interest citizen, Actual amount of or post office.
resident interest or
individual ₹ 50,000/-
with age 60
years or
more.
80U Resident Normal disability  Deduction is available for the person
Individual ₹ 75,000. himself.
with Severe Disability
disability ₹ 1,25,000

Note 1 Summary of deduction allowed u/s 8D

Description Amount paid in respect of

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Chapter 8 Deductions from Gross Total Income
Self, spouse Total
Parents
and Deduction
dependent or
dependent u/s 80D
not
children
a) In respect of medic-claim premium and preventive health check up
No one attained the age of 60 years ₹ 25,000 ₹ 25,000 ₹ 50,000
Assessee and his family less than 60 years of age ₹ 25,000 ₹ 50,000 ₹ 75,000
and parent is a senior citizen.
Assessee and parent are both senior citizens. (i.e. age ₹ 50,000 ₹ 50,000 ₹ 1,00,000
≥ 60 years)
b) In respect of medical expenditure incurred for senior citizen
Assessee and his family less than 60 years of age and NIL ₹50,000 ₹50,000
parent is a very senior citizen.
Assessee and parent are both senior citizens. (i.e. age ₹50,000 ₹50,000 ₹1,00,000
≥ 60 years)
Maximum cumulative deduction under (a) and (b) ₹ 50,000 ₹ 50,000 ₹ 1,00,000

Note 2 – Deduction i.r.o donations u/s 80G

Section 80G

With qualifying limit Without qualifying limit

100% deduction 50% deduction 100% deduction 50% deduction

3 funds 5 funds 20 funds 5 Funds

How to calculate deduction u/s 80G

A. Donation with qualifying limit (100%)
Amount of donation xxx

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Chapter 8 Deductions from Gross Total Income
Amount of qualifying limit xxx xxx (whichever is
lower)

B. Donation with qualifying limit (50%)

Amount of donation (xxx) * 50% xxx (whichever
Amount of qualifying limit (xxx) * 50% is lower)

Calculation of Qualifying Limit

Qualifying limit = 10% of the Adjusted GTI

Particulars Amount
Gross total Income xxx
(-) LTCG (u/s 112 and 112A) (xxx)
(-) STCG (u/s 111A) (xxx)
(-) Deductions u/s 80C to 80U, except u/s 80G (xxx)
Adjusted Gross Total Income xxx

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Chapter 8 Deductions from Gross Total Income

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Chapter 8 Deductions from Gross Total Income
Graded Illustrations

Illustration 1:
The following are the particulars of the income of R for the previous year 2023-24.
S.no Particulars (₹)
1 Income from house Property 1,11,200
2 Business Income 80,000
3 Dividends from cooperative society 500
4 LTCG from LAND 1,27,000
5 LTCG from listed shares transferred through a recognized stock exchange 45,000
6 Donation to charitable institution approved u/s 80G 20,000
7 Life insurance premium on his life on policy of ₹3,00,000 28,000
8 Deposit in National Saving Scheme, 1992 12,500
8 Deposit in a scheme notified u/s 80C 10,000
9 Interest accrued on National Saving Certificate VIII issue purchase in May 2016 1,840
10 Interest on saving bank deposit 30,000
Compute his total income and tax payable for assessment year 2024-25

Solution
Particulars (₹)
Income from House property 1,11,200
Business Income 80,000
Income from Capital gains
Land u/s 112 1,27,000
Shares u/s 112A 45,000 1,72,000
Income from other sources
Dividend from co-operative society 500
Interest accrued on N.S.C 1,840
Interest on saving bank deposit 30,000 32,340
Gross Total Income 3,95,540
Less: Deduction u/s 80C
Life insurance premium on his life on policy of ₹3,00,000 28,000
Deposit in a scheme notified u/s 80C 10,000
Interest accrued on National Saving Certificate VIII issue purchase in May, 2016 1,840
Deposit in National Saving Scheme, 1992 12,500 (52,340)
Less: Deduction u/s 80G
Donation to a charitable institute (8060)
Less: Deduction u/s 80TTA (10,700)
Total Income (Taxable Income) 3,25,140
Calculation of tax liability

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Chapter 8 Deductions from Gross Total Income
Taxable Income ₹3,25,140
Tax on Normal Income (3,25,140-172,000) = ₹1,53,140+₹96,860 = 2,50,000 Nil
Tax on LTCG
Tax on LTCG on Land u/s 112 (₹1,27,000-₹96,860) * 20% 6028
On shares u/s 112A (as not exceeding ₹1,00,000) Nil 6028
Gross tax liability 6028
Less: Rebate u/s 87A (as taxable income does not exceed ₹ 3,50,000) (25,00)
Net tax liability 3,528
Add: Health and education @4% 141
Total tax payable round off in multiple of 100 3670

Calculation of qualifying limit

Particulars Amount
Gross total Income 3,25,140
(-) LTCG (u/s 112) (172000)
(-) STCG (u/s 111A) Nil
(-) Deductions u/s 80C to 80U, except u/s 80G
Adjusted Gross Total Income xxx

Illustration 2: Mr. M an author, furnishes the following information for the AY 2024-25.
Particulars Amount Amount
Taxable Salary 5,32,000
Royalty Income from books of a scientific nature (net) 5,08,000
Contribution towards PPF 25,000
Contribution towards SPF 3000
Tuition fees for 2 children
Child A 15000
Child B 8000 23000
Life Insurance premium of a married major son (sum assured Rs 60,000) 7,500
Investment in national saving certificate (VIII issue) 15000
Repayment of housing loan taken from DU for construction of house which 8000
was completed in 2016 and is self-occupied
Sukanya Sam Riddhi Yojana 50,000
Compute taxable income for Mr M.

Mr. M
AY 2024-25

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Chapter 8 Deductions from Gross Total Income
Particulars Amount Amount
Salary 5,32,000
Royalty from books 5,08,000
Gross Total Income 10,40,000
Deductions under Chapter VI A
Under Section 80C
Contribution towards PPF 25,000
Contribution towards SPF 3,000
Tuition Fees 23,000
Life Insurance premium of a married major son (60,000*10%) 6000
Investment in national saving certificate (VIII issue) 15000
Repayment of housing loan 8000
Sukanya Sam Riddhi Yojana 50,000 (1,30,000)
U/s 80QQB (3,00,000)
Taxable Income 6,10,000

Illustration 3: Mr Y aged 66 years a resident in India has a GTI of Rs 3,65,000. This includes LTCG of Rs
1,60,000 and Interest on government securities amounting to Rs 20,000. He deposited Rs 15,000 in PPF A/c
during PY. Compute his tax liability for the AY – 2024-2.

Solution

Mr. Y
AY 2020-21
Particulars
GTI 3,65,000
(Less) Deduction u/s 80C (15,000)
Taxable Income 3,50,000

Illustration 4: Mr. R an individual has made the following payments in the PY 2019-20:
1. Rs 12,000 paid by cheque to General Insurance company for insuring R’s own health.
2. Rs 6,000 paid in cash for preventive health checkup of Mr. R
3. Rs 7,000 paid by cheque to GIC for insuring the health of R’s wife, not dependent on him.

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Chapter 8 Deductions from Gross Total Income
4. Rs 3,000 paid by credit card to GIC for ensuring the health of R’s dependent major son.
5. Rs 2000 paid in cash for insuring the health of R’s dependent minor daughter.
6. Rs 32,000 paid by cheque to GIC for insuring health of R’s father, a senior citizen not dependent on
him.
7. Rs 2,000 paid to GIC for R’s dependent brother.
8. Rs 21,000 paid by credit card to GIC for insuring the health of R’s mother, a senior citizen, dependent
upon R.
9. Rs 1,500 paid by cheque to GIC for insuring R’s grandfather's health, dependent upon R.
10. Rs 1,000 paid by cheque to GIC for insuring health of Mr. R’s minor son, not dependent upon him.
11. Rs 1,000 paid by cheque to LIC for group insurance of which he is a member.
Calculate the deduction allowable u/s 80D. What will be your answer if R’s father is a non-resident in
India?
Solution:
Mr. R
AY 2020-21
Particulars Amount
Deduction u/s 80D
Amount paid on own health 12,000
Amount paid for preventive health check up 5000
Amount paid on health of wife 7000
Amount paid on health of dependent major child 3000
Amount paid on health of dependent minor daughter Nil
Amount paid on health of brother Nil 25000

Amount paid on health of R’s father 32000

Amount paid on health of R’s mother 21000 50,000
Amount paid on health of R’s grandfather Nil
Amount paid on health of R’s minor son Nil
Amount paid to LIC for group insurance Nil
Total Deduction 75,000

If R’s father is a non-resident, he will not be treated as a senior citizen. Hence the deduction shall be
restricted to Rs 25,000, and in this case total deduction for parents shall be 46,000 (25000 + 21000)

Illustration 5: Mr. A whose GTI for AY 2024-25 is Rs 4 Lakhs (which includes LTCG of Rs 1,60,000
and STCG of Rs 30,000), submits the following information:
Particulars Amount Amount
Contribution towards PPF 45,000
LIP paid for the married son not dependent on him 16,000
Medical premium paid by cheque for:

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Chapter 8 Deductions from Gross Total Income
(a) For Himself 4000
(b) For married son not dependent on him 2000 6000
Mr. A has made the following donations:
(a) National Defense Fund 3,000
(b) PM’s National Relief Fund 5,000
(c) Indira Gandhi Memorial Trust 6,000
(d) Delhi University 3,000
(e) Zila Saksharta Samiti 5,000
(f) An approved charitable institution 14,000
(g) Government for family planning 15,000
(h) Donations of blankets to an orphanage 5,000
(i) Donation to the National Blood Transfusion Council 3,000

Calculate total income for AY 2024-25.

Solution
Mr. A
AY 2024-25
Particulars Amount Amount
Gross Total Income 4,00,000
(Less) Deduction u/s 80C to 80U
U/s 80C (45000+16000) 61,000
U/s 80D 4000
U/s 80G (WN) 38,250 (103,250)
Taxable Income 2,97,750
Working notes
A. 100% Deduction without QL

National Defence Fund 3000

PM’s National Relief Fund 5000
Delhi University 3000
Zila Saksharta Samiti 5000
Donation to National Blood Transfusion Council 3000 19,000

B. 50% deduction without QL

Indira Gandhi Memorial Trust 6000*50% 3000

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Chapter 8 Deductions from Gross Total Income

C. 100% with QL

Government for family planning 15000

Qualifying limit 17500 15000

D. 50% with QL

An approved charitable institution (14000 * 50%) 7,000

Qualifying Limit (2500*50%) 1250 1250

Calculation of QL
QL = 10% of Adjusted GTI = 17,500

Calculation of Adjusted GTI

GTI 4,00,000
(-) LTCG (1,60,000)
(-) Deduction u/s 80C to 80U (except 80G) (61,000+4000) (65000)
Adjusted GTI 1,75,000

Illustration 6 The basic salary of Mr A is Rs 1,00,000 per month. He is entitled to DA (50% R/B) and 40%
of Basic Salary. Both Mr. A and his employer, XYZ Ltd contribute 15% of basic Salary to the pension scheme
referred to in section 80CCD. Explain the tax treatment in respect of such contributions and calculate taxable
income.
Solution
Particulars Amount
Basic Salary (1,00,000*12) 12,00,000
DA (50 % R/B) (12,00,000*40%) 4,80,000
Employer’s contribution to pension scheme (12,00,000*15%) 1,80,000
GTI 18,60,000
Deduction u/s 80CCD (1) 1,30,000
U/s 80CCD (1B) 50,000

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Chapter 8 Deductions from Gross Total Income
Taxable income

Salary for 80CCD = Basic Pay + DA(R/B)

=12,00,000 + 4,80,000*50%
= 14,40,000
Maximum deduction allowed u/s 80CCD (1) is 10% 0f Salary i.e 1,44,000 but investment is Rs 1,80,000.

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