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Deductions from Gross Total Income Notes

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Deductions from Gross Total Income

Deductions in respect of certain payments

Section 80C: Contribution to PPF, Payment of LIC premium, etc.

Eligible Assessee Individual or HUF
Eligible Payments

Sums paid or deposited in the previous year by way of

  • Life insurance premium
  • Contribution to PPF/ SPF/ RPF and approved superannuation fund
  • Repayment of housing loan taken from Govt., bank, LIC, specified employer etc.
  • Tuition fees to any Indian university, college, school for full-time education of any two children
  • Term deposit for a fixed period of not less than 5 years with schedule bank
  • Subscription to notified bonds of NABARD
  • Five year post office time deposit
  • Senior Citizen’s Savings Scheme Account etc.
  • Contribution by Central Govt. employee to additional account (Tier II A/c) of NPS referred to u/s 80CCD
Permissible Deduction Sum paid or deposited, subject to a maximum of Rs. 1,50,000

Section 80CCC: Contribution to certain pension funds

Eligible Assessee Individual
Eligible Payments

Any amount paid or deposited to keep in force a contract for any annuity plan of LIC of India or any other insurer for receiving pension from the fund.

Permissible Deduction Sum paid or deposited, subject to a maximum of Rs. 1,50,000

Section 80CCD: Contribution to Pension Scheme of Central Government

Eligible Assessee Individuals employed by the Central Government or any other employer; Any other individual assessee.
Eligible Payments

An individual employed by the Central Government on or after 1.1.2004 or any other employer or any other assessee, being an individual, who has paid or deposited any amount in his account under a notified pension scheme [to his individual pension account [Tier I A/c] under National Pension Scheme & Atal Pension Yojana]

Permissible Deduction Employee’s Contribution/ Individual’ Contribution

In case of a salaried individual, deduction of own contribution under section 80CCD(1) is restricted to 10% of his salary.

In any other case, deduction under section 80CCD(1) is restricted to 20%of gross total income.

Further, additional deduction of upto Rs.50,000 is available under section 80CCD(1B).

Employer’s Contribution

The entire employer’s contribution would be included in the salary of the employee. The deduction of employer’s contribution under section 80CCD(2) would be restricted to 14% of salary, where the employer is the Central Government; and 10%, in case of any other employer.

Note – As per section 80CCE, maximum permissible deduction u/s 80C, 80CCC & 80CCD(1) is Rs. 1,50,000. However, the limit Rs. 1.50 lakh under section 80CCE does not apply to deduction under section 80CCD(2) and 80CCD(1B).

Section 80D: Medical Insurance Premium

Eligible Assessee Individual and HUF
Nature of deduction

Amount paid (in any mode other than cash) by an individual or HUF to LIC or other insurer to effect or keep in force an insurance on the health of specified person. An individual can also make payment to the Central Government health scheme and/or on account of preventive health check-up (subject to limit)

  • Specified person means:

    • In case of Individual – self, spouse, dependent children or parents
    • In case of HUF – Any member thereof
  • Deduction for preventive health check-up shall not exceed in aggregate Rs. 5,000.
  • Payment on account of preventive health check-up may be made in cash.

Limit specified
Individual HUF
For self, spouse and dependent children : Rs. 25,000 (Rs. 50,000 if person insured is a senior citizen*); Premium up to Rs. 25,000 (Rs. 50,000 if member insured is a senior citizen) paid to insure any member of the family.
For parents of the assessee : (Additional) Rs. 25,000 (Rs. 50,000 if person insured is a senior citizen) NA
Medical expenditure if no amount is paid in respect of health insurance-Rs.50,000 (only in case of senior citizen) Medical expenditure if no amount is paid in respect of health insurance-Rs.50,000 (only in case of senior citizen)
Aggregate amount of deduction cannot exceed Rs.1,00,000 in any case Aggregate amount of deduction cannot exceed Rs.50,000 in any case.

*‘Senior citizen’ means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.

Section 80DD: Maintenance including medical treatment of a dependant disabled

Eligible Assessee Resident Individual or HUF
Eligible Payments

Any amount incurred for the medical treatment(including nursing), training and rehabilitation of a dependent disabled

and / or

Any amount paid or deposited under the scheme framed in this behalf by the LIC or any other insurer or Administrator or Specified Company and approved by Board.

Meaning of Dependant

(1) In case of

(2) Dependant
An individual Spouse,children, parents, brothers, sisters
A HUF Any member

Persons mentioned in column (2) should be wholly or mainly dependant on the person mentioned in corresponding column (1) for support and maintenance. Such persons should not have claimed deduction under section 80U in computing total income of that year.

Permissible Deduction Flat deduction of Rs. 75,000.

In case of severe disability (i.e. person with 80% or more disability) the flat deduction shall beRs. 1,25,000.

Section 80DDB: Deduction for medical treatment of specified diseases or ailments

Eligible Assessee Resident Individual or HUF
Eligible Payments Amount paid for specified diseases or ailment

Assessee Amount spent
An individual For himself or his dependant being spouse, children, parents, brothers or sisters wholly or mainly dependant on the individual for support and maintenance
A HUF For any member
Permissible Deduction Actual sum paid or Rs. 40,000 (Rs. 1,00,000, if the payment is for medical treatment of a senior citizen), whichever is less,
minus
the amount received from the insurance company or reimbursed by the employer.

Section 80E: Interest on loan taken for higher education

Eligible Assessee Individual
Eligible Payments Interest on loan taken from any financial institution or approved charitable institution. Such loan is taken for pursuing his higher education or higher education of his or her relative i.e., spouse or children of the individual or the student for whom the individual is the legal guardian.
Permissible Deduction The deduction is available for interest payment in the initial assessment year (year of commencement of interest payment) and seven assessment years immediately succeeding the initial assessment year
(or)
until the interest is paid in full by the assessee, whichever is earlier.

Section 80EE: Interest on loan borrowed from any financial institution [bank/housing finance company (HFC)] for acquisition of residential house property

Eligible Assessee Individual
Eligible Payments Deduction for interest on loan borrowed from any financial institution [bank/housing finance company (HFC)] for acquisition of residential house property
Permissible Deduction Deduction of upto Rs.50,000 would be allowed in respect of interest on loan taken from a financial institution (FI).

Conditions

  • Loan should be sanctioned during P.Y.2016-17
  • Loan sanctioned ≤ Rs.35 lakhs
  • Value of house ≤ Rs. 50 lakhs
  • The assessee should not own any residentialhouse on the date of sanction of loan.

Section 80EEA: interest payable on loan taken from a FI (bank or HFC) for acquisition of residential house property

Eligible Assessee Individual
Eligible Payments Deduction in respect of interest payable on loan taken from a FI (bank or HFC) for acquisition of residential house property

(In case the property is self-occupied, the deduction would be over and above the deduction of Rs. 2 lakhs under section 24)

For example, if the interest payable is, say, Rs. 3,80,000 on loan taken from FI for acquisition of residential house, Rs. 2 lakh can be claimed as deduction u/s 24(b) and Rs. 1.50 lakhs as deduction u/s 80EEA. Even though for let-out property, there is no limit u/s 24, by virtue of section 71(3A), set-off of loss from house property against any other head of income is restricted to Rs. 2 lakh. Hence, the excess interest payable can be claimed u/s 80EEA, subject to fulfillment of prescribed conditions.

Permissible Deduction Deduction of upto Rs. 1,50,000 would be allowed in respect of interest payable on loan taken from a FI for acquisition of house property.

Conditions:

  • Loan should be sanctioned by a FI during the period between 1st April 2019 to 31st March 2021.
  • Stamp Duty Value of house ≤ Rs. 45 lakhs
  • The individual should not own any residential house on the date of sanction of loan.
  • The individual should not be eligible to claim deduction u/s 80EE.

Section 80EEB: Interest payable on loan taken from a FI (bank or certain NBFCs) for purchase of electric vehicle

Eligible Assessee Individual
Eligible Payments

Deduction in respect of interest payable on loan taken from a FI (bank or certain NBFCs) for purchase of electric vehicle.

Permissible Deduction Deduction of upto Rs. 1,50,000 would be allowed in respect of interest payable on loan taken for purchase of electric vehicle.

Loan should be sanctioned by a FI during the period from 1.4.2019 to 31.3.2023.

Section 80G: Donations to certain funds, charitable institutions etc.

Eligible Assessee All assessees
Eligible Payments

There are four categories of deductions –

Category Donee
(I) 100% deduction of amount donated, without any qualifying limit Prime Minister’s National Relief Fund, National Children’s Fund, Swachh Bharat Kosh, National Defence Fund, PM CARES Fund etc.
(II) 50% deduction of amount donated, without any qualifying limit Prime Minister’s Drought Relief Fund, Jawaharlal Nehru Memorial Fund, Indira Gandhi Memorial Trust, Rajiv Gandhi Foundation.
(III) 100% deduction of amount donated, subject to qualifying limit Government or local authority, institution for promotion of family planning etc.
(IV) 50% deduction of amount donated, subject to qualifying limit. Government or any local authority to be used for charitable purpose, other than promotion of family planning, notified temple, church, gurudwara, mosque etc.
Qualifying limit for Category III & IV donations

Calculation of Qualifying limit for Category III & IV donations:

Step 1: Compute adjusted total income, i.e., the gross total income as reduced by the following:

1. Deductions under Chapter VI-A, except u/s 80G
2. Short term capital gains taxable u/s 111A
3. Long term capital gains taxable u/s 112& 112A

Step 2: Calculate 10% of adjusted total income.

Step 3: Calculate the actual donation, which is subject to qualifying limit

Step 4: Lower of Step 2 or Step 3 is the maximum permissible deduction.

Step 5: The said deduction is adjusted first against donations qualifying for 100% deduction (i.e., Category III donations). Thereafter, 50% of balance qualifies for deduction under section 80G.

Note – No deduction shall be allowed for donation in excess of Rs. 2,000, if paid in cash.

Section 80GG: Rent paid for residential accommodation

Eligible Assessee Individual not in receipt of house rent allowance
Eligible Payments

Rent paid for residential accommodation

Permissible Deduction Least of the following is allowable as deduction:

  1. 25% of total income;
  2. Rent paid – 10% of total income
  3. Rs. 5,000 p.m

No deduction if any residential accommodation is owned by the assessee/his spouse/minor child/HUF at the place where he ordinarily resides or performs the duties of his office or employment or carries on his business or profession.

Section 80GGB: Contributions to political parties

Eligible Assessee Indian company
Eligible Payments

Any sum contributed by it to a registered political party or an electoral trust.

Permissible Deduction

Actual contribution (otherwise than by way of cash)

Section 80GGC: Contributions to political parties

Eligible Assessee Any person, other than local authority and an artificial juridical person funded by the Government.
Eligible Payments

Amount contributed to a registered political party or an electoral trust.

Permissible Deduction

Actual contribution (otherwise than by way of cash)

Deductions in respect of Certain Incomes

As per section 80AC,furnishing return of income on or before due dateismandatory for claiming deduction in respect of certain incomes.

Section 80JJAA: Deduction in respect of employment of new employees

Eligible Assessee An assessee to whom section 44AB applies, whose Gross total income includes profits and gains derived from business
Eligible Income

Deduction in respect of employment of new employees

Permissible Deduction

30% of additional employee cost incurred in the previous year. Deduction is allowable for 3 assessment years including assessment year relevant to the previous year in which such employment is provided.

Section 80QQB: Royalty income, etc., of authors of certain books other than text books

Eligible Assessee Resident individual, being an author
Eligible Income

Consideration for assignment or grant of any of his interests in the copyright of any book, being a work of literary, artistic or scientific nature or royalty or copyright fee received as lumpsum or otherwise.

Permissible Deduction

Income derived in the exercise of profession or Rs.3,00,000, whichever is less.

In respect of royalty or copyright fee received otherwise than by way of lumpsum, income to be restricted to 15% of value of books sold during the relevant previous year.

Section 80RRB: Royalty on patents

Eligible Assessee Resident individual, being a patentee
Eligible Income

Any income by way of royalty on patents registered on or after 1.4.2003.

Permissible Deduction Whole of such income or Rs. 3,00,000, whichever is less.

Deductions in respect of Other Income

Section 80TTA: Interest on deposits in savings account

Eligible Assessee Individual or a HUF, other than a resident senior citizen
Eligible Income

Interest on deposits in a savings account with a bank, a co-operative society or a post office (not being time deposits, which are repayable on expiry of fixed periods)

Permissible Deduction Actual interest subject to a maximum of Rs. 10,000.

Section 80TTB: Interest on deposits

Eligible Assessee Resident senior citizen (i.e. an individual of the age of 60 years or more at any time during the previous year)
Eligible Income

Interest on deposits(both fixed deposits and saving accounts) with banking company, co-operative society engaged in the business of banking or a post office.

Permissible Deduction Actual interest orRs. 50,000, whichever is less.

Other Deductions

Section 80U: Deduction in case of a person with disability

Eligible Assessee Resident Individual
Condition for deduction Any person, who is certified by the medical authority to be a person with disability.
Permissible Deduction

Flat deduction of Rs. 75,000, in case of a person with disability.

Flat deduction of Rs. 1,25,000, in case of a person with severe disability (80% or more disability).

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