Deduction (Section 80C to 80U)

Batch 18 Finance (Taxation) Anup (018) Kiran (046) Click to edit Master subtitle style Anupam (045) Arvind (049) Archana (032)

Deduction (Section 80C to

80U)
Section 80C to 80U specifies the deduction to be made from the gross total income. Gross total income means the total income, under all heads of income, computed in accordance with the provision of the act. The gross total income is to be arrived at before allowing any deduction and after setting off unabsorbed losses, depreciation, etc. incurred for earning the gross income.

Deduction under Section 80C

Section 80C replaced the existing Section 88 with more or less the same investment mix available in Section 88. The new section 80C has become effective w.e.f. 1st April, 2006. Even the section 80CCC on pension scheme contributions was merged with the above 80C. However, this new section has allowed a major change in the method of providing the tax benefit. Section 80C of the Income Tax Act allows certain investments and expenditure to be tax-exempt.

Gross Qualifying Amount

The following payments/investments qualify for deduction under this section. The total amount of investments made during the P.Y. under these below mentioned schemes is known as Gross Qualifying Amount ( GQA ) 1. Life Insurance premium paid on a policy taken on his own life, life of the spouse or any child (child may be dependent/ independent ). In the case of a Hindu undivided family, policy may be taken on the life of any member of the family. The premium paid should be maximum of 20% of sum assured . 2. Any sum deducted from salary payable to a Government employee for the purpose of securing him a deferred annuity or making provision for his spouse or children (subject to a maximum of 1/5th of salary) 1. Contribution towards statutory provident fund and recognized provident fund. 2. Contribution towards 15 year public provident fund (maximum of Rs 70,000). 1. Contribution towards an approved superannuation fund 1. Subscription to National Savings Certificates, VIII Issue .

6. 7. 8. 9. 10. 11.

12. 13. 14. 15. 16.

Contribution for participating in the Unit-Linked Insurance Plan (ULIP) of Unit Trust of India. Contribution for participating in the unit-linked insurance plan (ULIP) of LIC Mutual Fund (i.e. Dhanraksha plan of LIC Mutual Fund) Payment for notified annuity plan of LIC (i.e. Jeevan Dhara, Jeevan Akshay New Jeevan Dhara ,etc ) or any other insurer. Subscription towards notified units of Mutual Fund or UTI Contribution to notified pension fund set up by Mutual Fund or UTI . Any sum paid as subscription to notified Scheme of the National Housing Bank or as a contribution to notified pension fund set up by the National Housing Bank. Any sum paid towards principal part of EMI on Housing Loan The amount you pay as stamp duty when you buy a house, and the amount you pay for the registration of the documents of the house Any sum deposited in accordance with a notified scheme of term deposit for a fixed period of not less than 5 years with a scheduled bank. Any sum paid towards Senior Citizen Savings Scheme (SCSS): SCSS is a deposit scheme specially meant for elderly citizens. Any sum paid as tuition fees to any university/college/educational institution in India for full time education.

Section 80CCC
Deduction In respect of contribution to certain pension fund
Section 80CCC provides deductions from gross (total) income for amounts paid or deposited by the assessee to any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the fund referred to in clause (23AAB). The deduction is available to an individual who is resident or non-resident, Indian citizen or foreign citizen The deduction is allowed only if such amount is paid or deposited by the taxpayer out of his income chargable to tax, If deduction has not been claimed under section 80C. If the aforesaid conditions are satisfied, then a) the amount deposited b) Maximum Rs.1,00,000 Whichever is less ) Surrender value received is taxable in the year of receipt in the hands of the assessee or nominee. ) If deduction is claimed under 80CCC, pension received will be taxable in the hands of assessee or the nominee in the year of receipt.

Section 80CCD
Deduction In respect of contribution to pension scheme of Central Govt

section is for allowing deduction to new central Government employees, if the following conditions are satisfied: The taxpayer is an individual He is employed by the Central Government on or after January 1, 2004. He has in the previous year paid or deposited any amount in his account under a pension scheme notified by the Central Government. Amount of Deduction The total employees contribution and employers contribution to the notified pension scheme during the year.

This

Section 80 CCE
The aggregate amount of deduction allowable under section 80C,80CCC & 80CCD shall not in any case exceed Rs.1,00,00/-

Deduction Under 80CCF

Another avenue to save tax was introduced in the Budget 2010 in the form of section 80CCF. This section allows a deduction of Rs. 20,000 for investments made in Infrastructure Bonds.
The benefit of saving tax through Infrastructure Bonds is available for Individuals and Hindu undivided families(HUF). The deduction of Rs. 20,000 under section 80CCF is over and above the deduction of Rs. 1,00,000 available under section 80C, 80CCC and 80 CCD. The face value of each bond is Rs. 5,000 and it is being issued at par value. A minimum investment of Rs. 5,000 is required i.e. 1 bond and further investment can be made in multiples of 1 bond.

80D Deduction in respect of Health Insurance Premia

The taxpayer is an individual or a Hindu undivided family . Insurance premium is paid by the taxpayer in accordance with the scheme framed in this behalf by the General Insurance Corporation of India and approved by the Central Government. The scheme is known as mediclaim insurance policy.( The amount deposited in a similar scheme of any other insurer who is approved by the Insurance Regulatory and Development Authority shall also be eligible for deduction.) The aforesaid premium is paid by cheque Mediclaim policy is taken on the health of the taxpayer, on the health of spouse, dependent parents or dependent children of the taxpayer. In case of HUF on the health of any member of the family

Amount Of Deduction
Deduction To Individual Two type of Deductions are available to Individuals under this section from Assessment year 2009-10 1. Deduction on Medical insurance premium paid for himself,spouse,dependent children =Rs 15000 maximum. 2. Deduction on Medical insurance premium paid for parents ,whether dependent on assesee or not =Rs 15000 maximum Deduction To HUF: Deduction to HUF is available on insurance premium paid for policy taken for of any member of the HUF Addition deduction for Resident Senior Citizen:In addition to two point above, additional deduction of Rs 5000 is available where assessee or his spouse (wife or husband) or dependent parents or any member of the family in case one and father or mother is a resident in India and a senior citizen in case two.And same in the case of HUF assessee if policy has been taken on member which is senior citizen than additional Rs 5000/deduction is available also to HUF.

Section 80DD

Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability. Deduction is available in respect of

Expenditure incurred from medical / treatment / nursing / training / rehabilitation, or Amount paid under scheme LIC / UTI other insurer approved by CBDT for maintenance, of a dependant, being a person with disability.

Deduction shall be allowed to the extent of

Rs.50,000 (Rs. 100000 in case of dependant suffering with severe disability), irrespective of expenditure incurred or sum paid.

Section 80DDC

Deduction in respect of Medical Treatment, etc. Deduction is available in respect of sum actually paid during previous year for medical treatment of prescribed disease or ailment for the following

In case of individual: himself or his spouse, children, parents, brothers and sisters, In case of HUF: its member(s), Dependant mainly on such individual or HUF for his support and maintenance.

Deduction shall be available to the extent of lower of the following

Sum actually paid, or Rs. 40,000 (Rs. 60,000 in case of a senior citizen).

Section 80E
Deduction

in respect of interest on loan taken for higher

education.
Deduction

in available in respect of sum paid by the assessee in the previous year, out of his income chargeable to tax, by way of interest on loan taken

For his higher education, or For the higher education of his relative.

100%

of the amount of interest on such loan deduction will be admissible.

Section 80G

Deduction in respect of donations to certain funds, charitable institutions, etc.

Eligible Assesses This section is applicable to all assessees, who make an eligible donation, whether an individual, HUF, NRI or a company. Deduction Limit The extent of deduction is either 50% or 100% of the contribution, depending on the charitable institution donated to.

For certain funds, the aggregate deduction is limited to 10% of the Adjusted Gross Total Income. So, in such cases, even if you do make a donation larger than 10% of your Adjusted Gross Total Income, the donation amount eligible for claiming a deduction would be capped at 10% of the Adjusted Gross Total Income. The Adjusted Gross Total in this case, is the gross total income minus long-term capital gain, short term capital gain and all deductions u/s 80CCC to 80U except any deduction under this section.

Scope of Deduction The donation may be paid either out of taxable or exempted income. Only donations made in cash or cheque are eligible for deductions. Donations made in kind, in the form of food, clothing, medicines etc are not eligible. Donations to foreign charitable trusts or to political parties are not eligible for any deduction. For donations made to Indian Olympic Association, any association notified u/s 10(23) for development of infrastructure for sports or games, or for sponsorship of sports or games, only a company is eligible for deduction. Donations made to not all charitable institutions qualify for a deduction. Here is a list of approved charitable institutions and funds that qualify for a deduction.

Deductions allowed
Deductions in case of Housing Loan ACTUAL INTEREST paid: Interest maximum up to 1,50,000 or actual paid (which ever is Less) is directly deducted from taxable income. ACTUAL PRINCIPAL paid Principal is considered as Deduction in U/S 80C with in the maximum limit of 1,00,000/-.

Section 80GG
Deduction in respect to rent paid
Conditions:
Rent

paid is in excess of 10 % of the total income Rent paid is in respect of accommodation for the purpose of his own residence The deduction is to be claimed only if the residential accommodation is not owned by the assessee or his spouse or minor child or by Hindu undivided family of which he is member. The assessee, being an employee, who is entitled to house rent allowance from employer is eligible for exemption under section 10(13A) but not under section 80 GG.

Section 80GGA
Deduction in respect to certain donations for scientific research or rural development
In computing the total income, an assessee will be allowed deduction for the sum paid in the previous year

To a scientific research association or University, college or other institution for undertaking of scientific research, and approved for the purposes of section 35(1)(iii). To a University, college or other institution to be used for research in social science or statistical research, and approved for the purposes of section 35(1)(iii). To an association or institution, undertaking of any programme of rural development, to be used for carrying out any programme of rural development approved for the purposes of section 35CCA; or To an association or institution for the training of persons for implementing programmes of rural development. Provided that the

Section 80GGB
Deduction in respect to contributions given by companies to political parties
Deduction is allowed to an Indian company, for any sum contributed by it in the previous year to any political party or an electoral trust .

Section 80GGC
Deduction in respect to contributions given by any person to political parties
Deduction is allowed to any person, except local authority and every artificial juridical person wholly or partly funded by the Government, for any amount contributed by him in the previous year to a political party or an electoral trust .

Section 80IA

Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development
Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication service or develops an industrial park or develops or develops and operates or maintains and operates a special economic zone referred to in clause (iii) of sub-section (4) or generates power or commences transmission or distribution of power:

Section 80IB

Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings.

Where the gross total income of an assessee includes any profits and gains derived from any

business referred to in sub-sections (3) This section applies to any industrial undertaking which fulfils all the following conditions A- it is not formed by splitting up, or the reconstruction, of a business already in existence : B- it is not formed by the transfer to a new business of machinery or plant previously used for any purpose C- it manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule

Section 80IAB

Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone
Where the gross total income of an assessee, being a Developer, includes any profits and gains derived by an undertaking or an enterprise from any business of developing a Special Economic Zone, notified on or after the 1st day of April, 2005 under the Special Economic Zones Act, 2005, there shall, in accordance with and subject to the provisions of this section, be allowed The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which a Special Economic Zone has been notified by the Central Government The provisions of sub-section (5) and sub-sections (7) to (12) of section 80-IA shall apply to the Special Economic Zones for the purpose of allowing deductions under sub-section

Section -80IC
Special provisions in respect of certain undertakings or enterprises in certain special category States
A- Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section B- there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains, as specified in sub-section

Section 80 ID
Deduction in respect of profits and gains from business of hotels and convention centres in specified area
Where the gross total income of an assessee includes any profits and gains derived by an undertaking from any business referred to in sub-section (2) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for five consecutive assessment years beginning from the initial assessment year. This section applies to any undertaking (i) engaged in the business of hotel located in the specified area (ii) engaged in the business of building, owning and operating a centre, located in the specified area (iii) engaged in the business of hotel located in the specified district having a World Heritage Site

convention

Section 80 IE
Special provisions in respect of certain undertakings in North-Eastern States.
(1)

Where the gross total income of an assessee includes any profits and gains derived by an undertaking, to which this section applies, from any business referred to in sub-section (2), there shall be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years commencing with the initial assessment year. (2) This section applies to any undertaking which has, during the period beginning on the 1st day of April, 2007 and ending before the 1st day of April, 2017, begun or begins, in any of the North-Eastern States, (i) to manufacture or produce any eligible article or thing; (ii) to undertake substantial expansion to manufacture or produce any eligible article or thing; (iii) to carry on any eligible business.

Section 80JJA
Deduction in respect of profits and gains from business of collecting and processing bio-degradable waste

Deduction is allowed where the gross total income of an assessee includes any profits and gains derived from the business of collecting and processing or treating of bio-degradable waste. Deduction @ 100% of such profits and gains are allowed for a period of five consecutive assessment years.

Section 80JJAA
Deduction in respect of employment of new workmen

Conditions:

1) The assessee is an Indian company whose gross total income includes profits and gains derived from any industrial undertaking engaged in the manufacture or production. 2) the industrial undertaking is not formed by splitting up or reconstruction of an existing undertaking or amalgamation with another undertaking. 3) the assessee has employed new regular workmen in the previous year. - Regular workmen does not include a casual workmen and employed for a period of less than 300 days during the previous year.

Deduction allowed in the form of 30% of the additional wages paid to the new regular workmen employed in the previous year and it is available for 3 assessment year.

Section 80LA
Conditions:

Deduction in respect of certain incomes of offshore banking units and international financial services centre

1) The assessee is either: - a scheduled bank or any bank incorporated under the law outside India and having an offshore banking unit in a SPEZ or a unit of IFSC. 2) The income: - from an offshore banking unit in a SPEZ. - from the business referred to in section 6(1) of the Banking Regulation Act,1949. - from any unit of the IFSC from its business.

Deductions allowed @ 100% of the income referred to in condition (2) above for 5 consecutive assessment years.

Section 80P
Deduction in respect of income of co-operative societies
In the case of a co-operative society engaged in - carrying on the business of banking - a cottage industry - the marketing of agricultural products - engaged in fishing and allied activities the whole amount of profits and gains of such business is allowed for deduction The whole amount of income mentioned below derived by the cooperative society is allowed for deduction: - income by way of interest and dividend derived from its investment - income from the letting of godowns or warehouses or - income by way of carrying on transport business or engaging in the performance of manufacturing operations.

Section 80QQB
Deduction in respect of royalty income, etc. of authors of certain books other than text books
Conditions:

1) The assessee is an individual resident in India, being an author 2) assessee gross total income includes any income , derived in the exercise of his profession. 3) the assessee is required to furnish a certificate in the prescribed Form No.10CCD.

Deduction @ 100% of income referred to in condition (2) above , subject to monetary limit of Rs.3,00,000.

Section 80RRB
Conditions:

Deduction in respect of royalty on patents

1) The assessee is an individual resident in India and who is a patentee 2) The assessee is in receipt of any income by way royalty in respect of a patent registered on or after 01-04-2003 under the Patent Act,1970. 3) The assessee is required to furnish a certificate in the prescribed Form No. 10CCE duly signed by the prescribed authority along with the return of income.

Deduction @ 100% of income referred to in condition (2) above , subject to monetary limit of Rs.3,00,000.

Section 80U
Conditions:

Deduction in the case of a person with disability

The assessee is an individual being a resident He is a person with disability. He is certified by the medical authority to be a person with disability, at any time during the previous year. He furnishes a certificate issued by the medical authority in the prescribed form along the return of income A fixed deduction of: Rs. 50,000 in case of a person with disability Rs. 75,000 in case of a person with severe disability.( having any disability over 80%)

How to calculate Income Tax ?

The Gross Total income of Mr. A for the assessment year 201011 is Rs. 7,10,000/The detail of his expenses & investment is as follows

House rent paid (@ 8,000 /month *12) 96,000.00 LIC Premium paid 55,000.00 Deposit in PPF 30,000.00 NSC 20,000.00

How to calculate Income Tax ?

Computation of Rent Deduction :

Rent paid for the year (@ 8,000 /month *12) 96,000 Rent paid Less 10% of Basic Salary : Rent paid (@ 8,000 /month *12) : 96,000 10% of Basic Salary (10% * 20,000 /month*12) : (24,000) 72,000 Least of the following i.e 72,000/- is exempt for

How to calculate Income Tax ?

Deduction for Housing Loan
1.

Interest paid in the financial year 96,000

2. Principal paid in the financial year 42,000 (In this case following are considered) 1. Employee must be the owner of the house. 2. Benefit of Housing loan is allowed when the possession of the house is taken by employee. 3. Principal paid is become the part of Deduction U/S 80

How to calculate Income Tax ?

Computation of Deduction u/s 80C

LIC Premium paid of self 35,000 LIC Premium paid of Child 10,000 LIC Premium paid of Spouse 10,000 Deposit in PPF 30,000 NSC 20,000

How to calculate Income Tax ?

Deduction u/s 80D

Mediclaim Policy 10,000 10,000 is allowed as Deduction

Deduction u/s 80G

Donation of Charitable Institute Deduction allowed is 50% 500/- is allowed as Deduction

How to calculate Income Tax ?

Computation of Taxable Income

Total Income Less Less Less Less

(A)

7,10,000

Deduction of House Rent 72,000 Deduction U/S 80 C 1,00,000 Deduction U/S 80 D 10,000 Deduction U/S80 G 500 TOTAL Deduction (B) 1,82,500

Total Taxable Income (A- B) = be deducted on this Income)

5,27,500 (Tax will

How to calculate Income Tax ?

Computation of Taxable Income

Taxable Income

5,27,500

TAX UP TO 1,60,000 IS NIL 1,60,001 TO 3,00,000 = 140000 *10 % 14,000 3,00,001 TO 5,00,000 = 200000 *20% 40,000 5,00,001 TO 5,27,500 = 27500 * 30% 8,250 TAX 62,250 CESS 3% 1,868 TOTAL TAX 64,118

Thank You!