Basic Rules of Deductions Under Chapter VI-A (Sections 80A, 80AB, 80AC)

The deductions under Chapter VI-A (Sections 80A to 80U) are subject to certain overarching rules that govern their applicability, limits, and conditions. The key provisions are:

1. Section 80A – General Rules for Deductions

This section lays down the fundamental conditions for claiming deductions under Chapter VI-A:

Key Provisions:

• Deduction cannot exceed Gross Total Income (GTI)
  • The total of all deductions under Chapter VI-A cannot exceed the Gross Total Incomeof the taxpayer.
  • If deductions exceed GTI, the excess cannot be carried forward.
• Only the assessee can claim the deduction
  • Deductions are personaland cannot be claimed by any other person (e.g., spouse, parent, etc.).
• Must be claimed in the relevant assessment year
  • Deductions must be claimed in the year in which the investment/payment is made.
• No double deduction
  • The same expenditure/investment cannot be claimed under two different sections.

2. Section 80AB – Deductions to be Calculated on Net Income (Not Gross)

This section ensures that deductions under certain sections (like 80G, 80IA, 80IB, etc.) are allowed only on the net income and not the gross amount.

Key Provisions:

• Deduction is allowed only on the net income (after expenses)
  • Example: If you donate ₹1,00,000 to a charity (eligible under Section 80G), but you incurred ₹20,000 in fundraising expenses, the deduction will be on ₹80,000 (net donation)and not ₹1,00,000.
• Applies to sections where deduction is a % of income(e.g., 80G, 80IA, 80IB, etc.).

3. Section 80AC – Deduction Allowed Only if Return is Filed on Time

This section mandates that certain deductions (like 80-IA, 80-IAB, 80-IB, etc.) are allowed only if the return is filed before the due date (usually July 31 for individuals).

Key Provisions:

• Applies to deductions under:
  • Section 80-IA(Industrial undertakings)
  • Section 80-IAB(SEZ units)
  • Section 80-IB(Certain businesses)
  • Section 80-IC/ID/IE(Special category states, infrastructure, etc.)
• If the return is filed late, the deduction is denied(even if all conditions are met).

Summary of Key Rules

Conclusion

• Section 80Aensures deductions do not exceed income.
• Section 80ABrestricts deductions to net income (after expenses).
• Section 80ACmandates timely return filing for certain deductions.