Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Deductions from Gross Total Income for computing Taxable Income

Deductions from Gross Total Income for computing Taxable Income
Deductions from Gross Total Income for computing Taxable Income

Table of Contents

1.   [Section 80CCC]- Deduction in respect of Contribution to certain Pension Fund

Essential Conditions for Claiming Deduction under this Section :

(1)          Deduction is permissible , under this section, only to an Individual Assessee

(2)          It is allowed in respect of any amount paid or deposited in the previous year by such individual to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the fund set up by LIC / or any other insurer referred to in section 10(23AAB).

(3)          The amount is paid out of his income chargeable to tax.

Quantum of Deduction U/s 80CCC :

The whole of the amount paid or deposited (excluding interest or bonus accrued or credited to the assessees account, if any)

Or

Rs. 1,50,000.

whichever is less.

2.   [Section 80CCD]- Deduction in respect of contribution to Pension Scheme of Central Government by Central Government or any other employer

(1) [Section 80CCD(1)]- Deduction of an employee’s / assessee‘s  Contribution:

The deduction under this section is allowed to—

(a)          an assessee who is an individual and is employed by the Central Government on or after
1-1-2004 or by any other employer (the date of employment with other employer is not relevant), or

(b)          any other assessee being an individual.

The deduction is allowed on account of—

(i)            any amount not exceeding 10% of salary of the previous year paid or deposited by the employee in his account under the notified pension scheme;

(ii)           any amount contributed by any other assessee being an individual to such pension scheme not exceeding 20% of his gross total income in the previous year.

 (2) Deduction of Rs. 50,000 [Section 80CCD(1B)]:

The employee or the individual referred to in section 80CCD(1), shall be allowed a deduction in computation of his total income, [whether or not any deduction is allowed under section 8OCCD(1)] to the extent of—

(a)          the whole of the amount paid or deposited in the previous year. or

(b)          Rs. 50,0000

whichever is less.

However, No Deduction under section 80CCD(1B) shall be allowed in respect of the amount on which a deduction has been claimed and allowed under section 80CCD(1).

(3) [Section 80CCD(2)]- Deduction of Employer’s Contribution  :

Any amount contributed by the employer (i.e. Central Government or any other employer) to such pension scheme shall be allowed as deduction for an amount not exceeding

–              14% of salary in case of Central Government employee and

–              10% of the salary in case of any other employee in the previous year.

(4) [Section 80CCD(3)]- Taxability of amount received from Pension Scheme:

Where any amount standing to the credit of the assessee in his account referred to in section 80CCD(1) or (1B), in respect of which a deduction has been allowed under those sub-sections or section 80CCD(2), together with the amount accrued thereon, if any, is received by the assessee or his nominee, in whole or in part, in any previous year,—

(a)           on account of closure or his opting out of the pension scheme referred to in section 80CCD(I) or (1B); or

(b)          as pension received from the annuity plan purchased or taken on such closure or opting out,

the whole of the amount referred to in clause (a) or clause (b) shall be deemed to be the income of the assessee or his nominee, as the case may be, in the previous year in which such amount is received, and shall accordingly be charged to tax as income of that previous year.

3.   [Section 80D]- Deduction in respect of Medical Insurance Premia

Essential conditions for claiming deduction under this section:

(1)          Deduction is permissible, under this section, only to an individual or HUF.

(2)          Deduction is allowed for the following purpose—

(A)   [Section 80D(2)]- In case of an Individual, it is allowed for such sum as referred to below by the aggregate of the following—

(a)          (i)            the whole of the amount paid to effect or to keep in force an insurance on the health of the individual or any member of his/her family,

See also  Deemed Profits chargeable to Tax as Business Income [Section 41 and 176(3A) & (4)]

(ii)           any contribution made to the Central Government Health Scheme or such other scheme as may be notified by the Central Government in this behalf.

(iii)          any payment made on account of preventive health check-up of the individual or any member of his/her family,

as does not exceed in the aggregate Rs. 25,000 (Rs. 50,000 in case if any such person specified in this clause (a) is a senior citizen), and

(b)          the whole of the amount paid on account of Medical Expenditure incurred on the health of the individual or any member of his/her family who is a senior citizen as does not exceed in the aggregate Rs. 50,000 provided no amount has been paid to effect of keep in force an insurance on the health of such person, and

(B)   [Section 80D(3)]- In the case of a HUF, it is allowed for such sum as referred to below by the aggregate of the following—

(a)           whole of the amount paid to effect or to keep in force an insurance on the health of any member of the Hindu undivided family as does not exceed in the aggregate Rs. 25,000 (additional Rs. 25,000 if any member for whom the amount is paid is a senior citizen); and

(b)          whole of the amount paid on account of Medical Expenditure incurred on the health of any member of the Hindu undivided family who is a senior citizen as does not exceed in the aggregate Rs. 50,000 provided that no amount has been paid to effect or to keep in force an insurance on the health of such person.

However, the aggregate of the sum specified under clauses (a) and (b) above shall not exceed Rs.50,000

4.   [Section 80DD]- Deduction in respect of Maintenance including Medical Treatment of a Dependent who is a Person with Disability

Essential conditions for claiming deduction under this section:

(1)          Deduction is available to a person who is:

(a)           resident in India, and

(b)          is either an individual or a IIUF.

(2)          Deduction is available if the assessee has during the previous year:

(a)           incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependent. being a person with disability; or

(b)          paid or deposited any amount, under any scheme framed by the LIC or any other insurer or UTI and which is approved by the CBDT.

(3)          The assessee, claiming a deduction under this section, shall furnish a copy of the certificate issued by the medical authority in the prescribed form and manner, along with the return of income under section 139 in respect of the assessment year for which deduction in claimed.

Further where the condition of disability requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any assessment year relating to any previous year beginning after the expiry of the previous year during which the aforesaid certificate of disability had expired, unless a new certificate is obtained from the medical authority in the form and manner, as may be prescribed, and a copy thereof is furnished along with the return of income.

Quantum of Deduction U/s 80DD:

Rs. 75,000 from his gross total income, irrespective of actual expenditure incurred/amount deposited.

Rs. 1,5,000 (instead of Rs. 75,000 ), where such dependent is a person with severe disability.

5.   [Section 80DDB]- Deduction in respect of Medical Treatment, etc.

Essential conditions for claiming deduction under this section:

(1)       Deduction is available to a person who is—

(a)              Resident in India, and

(b)          is either an Individual or HUF.

(2)          Deduction is allowed in respect of any expenditure actually incurred for the medical treatment of the following persons for such disease or ailment as may be specified in the rules made in this behalf by the Board:

In the case of individual — for himself or a dependent

In the case of HUF — for any member of the HUF

(3)          No deduction under section 80DDB shall be allowed unless the assessee obtains the prescription for such medical treatment from a neurologist, an oncologist, a urologist, a hematologist, an immunologist or such other specialist, as may be prescribed.

Quantum of Deduction U/s 80DDB :

  • Amount actually paid ; or
  • 40,000

whichever is less.

However if the person for whom such expenditure is incurred happens to be a Senior Citizen, the maximum deduction shall be allowed for a sum of Rs. 1,00,000 instead of Rs. 40,000.

In other words, the deduction in this case shall be :

–              actual amount incurred ; or

–              Rs. 1,00,000

whichever is less.

Further, if any amount is received under an insurance from the insurer or reimbursed by an employer for the medical treatment of the person mentioned in point (2) above, the amount so received shall be reduced from the deduction allowable under this section.

6.   [Section 80E]- Deduction for Interest paid on Loan Taken for pursuing Higher Education

Essential conditions for claiming deduction under this section:

(1)          The deduction is available only to Individual assessee.

(2)          The individual must have taken a loan from:

(a)           any financial institution, or

(b)          any approved charitable institution.

(3)          The loan must have been taken for pursuing higher education. Such education must be of Assessee himself or  any of his relatives.

(4)          The deduction shall be allowed only in respect of any sum paid by him, in the previous year by way of interest on such loan.

(5)          Such amount should be paid out of his income chargeable to tax.

Quantum of Deduction U/s 80E:

The amount paid during previous year towards interest.

Period of Deduction U/s 80E:

  • Deduction shall be allowed for 8 Assessment years starting from the assessment year in which the assessee starts paying the interest on loan, ; or
  • until the interest thereon is paid by the assessee in full,

whichever is earlier.

Note :

Meaning of Higher Education:

Higher education means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so.

Meaning of Relative :

Relative in relation to an individual , means the spouse and children of that individual or the student for whom the individual is a legal guardian.

7.   [Section 80EE]- Deduction in respect of Interest on Loan taken for Residential House Property

An individual shall be allowed a deduction under section 80EE on account of interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential property subject to the following conditions being satisfied:

(1)          The loan has been sanctioned by the financial institution during the period beginning on 1-4-2016 and ending on 31-3-2017;

(2)          The amount of loan sanctioned for acquisition of the residential house property does not exceed Rs. 35,00,000

(3)          The value of residential house property does not exceed Rs. 50,0,000 ;

(4)          The assessee does not own any residential house property on the date of sanction of loan

(5)          Where a deduction under this section is allowed for any interest, deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year.

Quantum of Deduction U/s 80E :

The deduction under this section shall not exceed Rs. 50,000 and shall be allowed in computing the total income of the individual for the assessment year beginning on I-4-2017 and subsequent assessment years.

8.   [Section 80EEA]- Deduction in respect of Interest on Loan taken for Certain House Property

An individual (not eligible to claim deduction under section 80EE) shall be allowed a deduction under section 80EEA on account of interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential property subject to the following conditions being satisfied:

(1)          The loan has been sanctioned by the financial institution during the period beginning on 1.4.2019 and ending on 31.3.2020 (extended up to 31.3.2021 by the Finance Act,
2020);

(2)          The stamp duty value of residential house property does not exceed Rs. 45,00,000

(3)          The assessee does not own any residential house property on the date of sanction of loan.

(4)          Where a deduction under this section is allowed for any interest, deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year.

Quantum of Deduction U/s 80EEA :

The deduction under this section shall not exceed Rs. 1,50,000 and shall be allowed in computing the total income of the individual for the assessment year beginning on 1.4.2020 and subsequent assessment years.

9.   [Section 80EEB]- Deduction in respect of Purchase of Eclectic Vehicle

An individual, shall be allowed a deduction under section 80EEB on account of interest payable on loan taken by him from any financial institution for the purpose of purchase of an electric vehicle subject to the following conditions being satisfied.

(1)          the loan has been sanctioned by the financial institution during the period beginning on 1.4.2019 and ending on 31.3.2023:

(2)          where a deduction under this section is allowed for any interest, deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year.

Quantum of Deduction U/s 80EEB:

The deduction under this section shall not exceed Rs. 1,50,000 and shall be allowed in computing the total income of the individual for the assessment year beginning on 1.4.2020 and subsequent assessment years.

For the purposes of this section, —

 “Electric Vehicle” means a vehicle which is powered exclusively by an electric motor whose traction energy is supplied exclusively by traction battery installed in the vehicle and has such electric regenerative braking system, which during braking provides for the conversion of vehicle kinetic energy into electrical energy;

10. [Section 80GGC]- Deduction in respect of Contribution given by any Person to Political Parties

Any amount of contribution made in the previous year to a Political Party or an Electoral trust by an assessee being any person, except local authority and every artificial judicial person wholly or partly funded by the Government shall be allowed as Deduction which computing the Total Income of such person.

No Deduction shall be allowed under this section in respect of any sum contributed by way of cash.

11. [ Section 80QQB]- Deduction in respect of Royalty Income, etc., of Author of Certain Books other than Text Books.

Essential conditions for claiming deduction under this section

(1)          The deduction is available to an individual who is resident in India and is an author of a book.

(2)          The book should be a work of literary, artistic or scientific nature.

(3)          The income must be derived by him in the exercise of his profession.

(4)          The income must be either:

(a)          on account of any lump sum consideration for the assignment or grant of any of his interests in the copyright of such book, or

(b)          of royalty or copyright fees (whether receivable in lump sum or otherwise).

(5)          Where the income by way of such royalty or the copyright fee is not a lump sum consideration in lieu of all rights of the assessee in the book, then such royalty, etc., before allowing expenses, in excess of 15% of the value of such books sold during the previous year, shall be ignored.

(6)          Where any income is earned from any source outside India, only so much of the income shall be taken into account for the purpose of this section as is brought into India by, or on behalf of, the assessee in convertible foreign exchange within a period of 6 months from the end of the previous year in which such income is earned or within such further period as the competent authority may allow in this behalf.

Quantum of Deduction U/s 80QQB :

  • 100 % of such income ; or
  • 3,00,000

whichever is less.

Certificate  to be Furnished U/s 80QQB:

(1)          No deduction under this section shall be allowed unless the ussessee furnishes a certificate in the prescribed form (Form No. 10CCD) and in the prescribed manner, duly verified by any person responsible for making such payment to the assessee. along with the return of income, setting forth such particulars as may be prescribed.

(2)          No deduction under this section shall be allowed in respect of any income earned from any source outside India, unless the assessee furnishes a certificate, in the prescribed form (Form No. 10H) from the prescribed authority, along with the return of income in the prescribed manner.

Note :

(1)          “Author” includes a joint author.

(2)          “Books” shall not include brochures, commentaries, diaries, guides, magazines, journals. newspapers. pamphlets. text books for schools, tracts and other publications of similar nature, by whatever name called;

12. [Section TTA]- Deduction in respect of Interest on Deposits in Savings Accounts to the maximum extent of Rs. 10,000

Where the gross total income of an assessee, being an Individual (other than a Senior Citizen) or a Hindu Undivided Family, includes any income by way of interest on deposits (not being Time Deposits) in a savings account with—

(a)          a banking company to which the Banking Regulation Act, 1949, applies (including any bank or banking institution referred to in section 51 of that Act);

(b)          a co-operative society engaged in carrying on the business of banking (including a cooperative land mortgage bank or a co-operative land development bank); or

(c)           a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898, a deduction of such interest shall be allowed to the maximum extent of Rs. 10,000 to an assessee (other than the assessee referred to in section 80TTB i.e. a senior citizen) being an individual or IIUF.

However, where the income referred to in this section is derived from any deposit in a savings account held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.

13. [Section 80TTB]- Deduction in respect of Interest on Deposits in case of Senior Citizens

(1)   [Section 80TTB(1)]- Senior Citizen to be allowed a Deduction of Rs.50,000 on account  of Interest on Deposits  :

Where the gross total income of an assessee, being a senior citizen, includes any income by way of interest on deposits with—

(a)          A banking company to which the Banking Regulation Act, 1949, applies (including any bank or banking institution referred to in section 51 of that Act);

(b)          A co-operative society engaged in carrying on the business of banking (including a cooperative land mortgage bank or a co-operative land development bank); or

(c)           A Post Office as defined in clause (A) of section 2 of the Indian Post Office Act, 1898,

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—

(i)        in a case where the amount of such income does not exceed in the aggregate Rs.50,000, the whole of such amount; and

(ii)              in any other case, Rs. 50,000

(2) [Section 80TTB(2)]- No Deduction to be allowed if Deposit held in the name of Partner / Member by the Firm / AOP:

Where the income referred to in section 80TTB(1) is derived from any deposit held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.
For the purposes of this section, “senior citizen” means an individual resident in India who is of the age of 60 years or more at anytime during the relevant previous year.

14. [Section 80U]- Deduction in case of a Person with Disability

In computing the total income of an individual being a person with disability, a deduction under section 80U shall be allowed if certain conditions and satisfied.

(1)          The assessee is an individual being a resident and is a person with disability.

(2)          He is certified by the medical authority to be a person with disability, at any time during the previous year.

(3)          He furnishes a certificate issued by the medical authority in the form and manner, as may be prescribed, along with the return of income under section 139, in respect of the assessment year for which the deduction is claimed.

Where the condition of disability requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any assessment year relating to any previous year beginning after the expiry of the previous year during which the aforesaid certificate of disability had expired, unless a new certificate is obtained from the medical authority in the form and manner, as may be prescribed, and a copy thereof is furnished along with the return of income under section 139.

Quantum of Deduction U/s 80U :

  • 75,000 in case of a person with disability.
  • Rs. 1,25,000 in case of a person with severe disability.
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