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DEDUCTIONS
DEDUCTIONS
FROM TOTAL INCOME
DEDUCTION
UNDER CHAPTER VI-A IN RESPECT OF PAYMENTS
| SECTION
|
NATURE
OF DEDUCTION |
WHO
CAN CLAIM |
|
80CCC
|
Pension fund (subject to maximum Rs. 10,000/-)
|
Individuals
|
|
80D
|
Medical insurance premia (subject to maximum of
Rs. 10,000)
|
Individuals and HUF's
|
|
80DD
|
Medical treatment of handicapped dependents (maximum
of Rs. 40,000)
|
Resident individual or resident HUF's
|
|
80DDB
|
Medical treatment expenses (subject to maximum
Rs. 15,000/-)
|
Resident individuals or resident HUF's
|
|
80 E.
|
Repayment of loan taken for higher studies (subject
to maximum of Rs. 25,000)
|
Individuals
|
|
80G
|
Donations to certain funds, charitable institutions
[subject to maximum of 50 per cent of qualifying donation
(100 per cent in some cases)]
|
All assessees
|
|
80GG
|
Rent paid for furnished/unfurnished accomodation
[subject to maximum of Rs. 24,000 or 25 per cent of total
income whichever is less.]
|
Individuals
|
|
80GGA
|
Deduction in respect of certain donations for
scientific research or rural development .
|
All assessees who have no income chargable under
the head of Profits and gains of business or profession.
|
DEDUCTION
UNDER CHAPTER VI-A IN RESPECT OF CERTAIN INCOMES
| SECTION
|
NATURE
OF DEDUCTION |
WHO
CAN CLAIM |
|
80HH
|
Profits and gains from industrial undertakings
or hotel business in backward areas set up before April 1,
1990 [20 per cent of such profits or gains ]
|
All eligible assessees
|
|
80HHA
|
Profits and gains from small-scale industrial
undertakings in rural areas set up before April 1, 1990 [25
per cent of such profits and gains]
|
All eligible assessees
|
|
80HHB
|
Profits and gains from projects outside India
|
Indian company and a non-corporate resident assessee
|
|
80HHBA
|
Profits and gains from business of execution of
housing projects aided by the World Bank and undertaken by
the assessees (subject to maximum of 50 per cent of such profits.)
|
Indian companies or non corporate resident assessee.
|
|
80HHC
|
Profits from export business
|
Indian company and a non-corporate resident assessee
|
|
80HHD
|
Earnings in convertible foreign exchange in some
cases
|
Indian companies or resident non corporate assessees
engaged in the business of hotel/tour operator/travel agent
|
|
80HHE
|
Profit from export of computer software
|
Indian companies or resident non corporate assessees
|
|
80-I
|
Profits and gains from industrial undertakings
/ships /hotels /repair of ocean going vessels. (set up before
March 31,1991)
|
All assessees
|
|
80-IA
|
Profits and gains from industrial undertakings
etc.
|
All assessees
|
|
80JJA
|
Profits and gains from Business of collecting
and processing of bio-degradable waste. (subject to least
of the total profits or Rs. 5,00,000/- whichever is less.)
|
All assessees
|
|
80JJAA
|
Deduction in respect of employment of new workmen
in an industrial undertaking (30 per cent of additional wages
paid.)
|
Indian companies.
|
|
80L
|
Interest on certain securities, dividends, etc.
[subject to maximum of Rs. 15,000]
|
Individual and HUF's
|
|
80-O
|
Royalties, etc., from foreign governments, foreign
state, foreign enterprises, etc.[50 per cent of net royalty]
|
Indian companies and non-corporate resident assessees
|
|
80P
|
Specified incomes [subject to amount specified
in sub-section (2)]
|
Co-operative societies
|
|
80R
|
Remuneration from certain foreign sources in the
case of professors/teachers, etc. [75 per cent of foreign
exchange brought into india, in specified cases]
|
Indian citizens
|
|
80RR
|
Professional income from foreign sources in certain
cases [75 per cent of foreign exchange brought into india,
in specified cases]
|
Resident Individuals
|
|
80RRA
|
Remuneration received for services rendered outside
India [75 per cent of foreign exchange brought into India,
in specified cases]
|
Indian citizens
|
|
80U
|
Income of individual suffering from a permanent
physical disability or mental retardation . [subject to maximum
of Rs. 40,000]
|
Resident individuals
|
DEDUCTION
IN RESPECT OF DONATIONS FOR CHARITABLE PURPOSES U/S 80-G.
-
Tax-relief in respect of donations to certain funds, approved
educational institution(s) of national importance, charitable
institutions etc. is admissible u/s 80-G of the Act. It will have
to be claimed by the tax payers at the time of assessment and
is not to be allowed by the Tax-Deducting-Authority
-
The qualifying amount for deduction will be 50% of the amount.
-
However, 100% deduction is available in cases where contributions
are made to the Prime Minister National Relief Fund, National
Foundation for Communal Harmony, National and State Blood Transfusion
Council, the Africa Fund, a university or any approved educational
institution of national importance ,Earth-quake
Relief Fund, the Africa Fund, and the National Foundation for
Communal Harmony, etc.
Deduction
in the case of totally blind or physically handicapped resident
persons (Sec-80U)
- A
resident individual who suffers from permanent physical disability
(including blindness) or is subject to mental retardation is entitled
to a deduction of Rs. 40,000 in computing his taxable income.
- Deduction
under section 80U is available in the case of a resident individual
who (at the end of the previous year) is suffering from a permanent
physical disability (including blindness) or is subject to mental
retardation, being a permanent physical disability or mental retardation
specified in the rules made in this behalf by the Board , which
has the effect of reducing considerably such individual's capacity
for normal work or engaging in a gainful employment/ occupation.
- Deduction
is available only if it is certified by a physician, surgeon,
an oculist or a psychiatrist, as the case may be working in a
Government hospital. Such certificate has to be produced before
the Assessing Officer in respect of the first assessment year
for which deduction is claimed under section 80U.
- For
the purpose of sections 80DD and 80U, the Board has made the following
rule.
- Physical
disability shall be regarded as a permanent physical disability
if it falls in any one of the categories specified below, namely.
- Permanent
physical disability of more than 50 per cent in one limb
- Permanent
physical disability of more than 60 per cent in two or more limb
- Permanent
and total loss of voice.
- Blindness
shall be regarded as permanent physical disability if it is incurable
and is falling in specified categories
- Mental
retardation shall be regarded as a mental retardation if intelligence
quotient is less than 50 on a test with a mean of 100 and a standard
deviation of 15 such as the Vechsle scale.
DEDUCTION
IN RESPECT OF REPAYMENT OF LOAN TAKEN FOR HIGHER EDUCATION.
- A
new deduction for Asst. Year 1995-96 and onwards in respect of
repayment of loan taken from any specified financial institution
or any approved charitable institution, by a student(individual
assesse) for pursuing higher studies is allowable.
- This
deduction has been brought to encourage young men and women to
take up higher studies. Repayment of loan and interest upto a
maximum of Rs.25,000/- in a year is deductible.
Medical
TREATMENT OF HANDICAPPED DEPENDENTS U/S 80-DD
- In
the case of resident individuals or HUFs, who incur any expenditure
on medical treatment (including nursing),training and rehabilitation
of a handicapped dependent relative or have paid or deposited
any amount in an approved scheme of Life Insurance Corporation
of India or Unit Trust of India., a deduction of upto Rs. 40,000/-
is deductible.
Deduction
in respect of contribution to pension fund- Section 80CCC
- Section
80CCC has been inserted with effect from the assessment year 1997-98.
This section provides a deduction to an individual for any amount
paid or deposited by him to effect or keep in force any annuity
plan of the Life Insurance Corporation of India for receiving
pension from a fund set up by the said Corporation, referred to
in section 10(23AAB). The deduction shall be restricted to Rs.
10,000.
- One
should keep in view the following points
- Where
the assessee or his nominee surrenders the annuity before the
maturity date of such annuity, the surrender value shall be taxable
in the hands of the assessee or his nominee, as the case may be
in the year of the receipt.
- The
amount received by the assessee or his nominee as pension will
be taxable, in the hands of the assessee or the nominee, as the
case may be, in the year of the receipt
- Rebate
(with reference to the amount paid under seciton 80CCC) will not
be available under section 88 to persons to whom deduction under
this section has been allowed.
DEDUCTION
IN RESPECT OF HOUSE RENT PAID U/S 80-GG
- Section
80GG of the Income-tax Act provided for a deduction to all assessees
(except the salaried persons who received house rent allowance
covered under section 10(13A) in respect of expenditure incurred
towards payment of rent for residential accommodation, subject
to certain limits. This relief was withdrawn by the Finance Act,
1997 by omitting the said section with effect from 01-04-1998.
- The
Act seeks to continue the above deduction and has, accordingly,
reintroduced section 80GG of the Income-tax Act with effect from
01-04-1998. Subject to certain conditions, the deduction is now
allowable to an assessee who incurs any expenditure in excess
of 10% of his total income towards payment of rent in respect
of any furnished or unfurnished accommodation occupied by him
for the purpose of his own residence. The amount of allowable
deduction will be the least of the following :-
- the
excess of actual rent paid over 10% of the total income.
- Rs.
2000/- per month.
- 25
per cent of the total income.
- The
benefit of above deduction will not be available to an assessee
in a case where he, his spouse or minor child or the HUF of which
he is a member, owns any residential accommodation at a place
where the assessee ordinarily resides, performs the duties of
his office or employment or carries on his business or profession.
The deduction will also be denied to an assessee who owns any
residential accommodation at any other place and the concession
in respect of self-occupied property is claimed by him in respect
of such accommodation.
- This
amendment will take effect retrospectively from 1st April, 1998
and will, accordingly, apply in relation to the assessment year
1998-99 and subsequent years.
- The
accommodation occupied by him for the purpose of his own residence
should be situated in any of the following places, namely:-
Agra, Ahmedabad, Allahabad, Amritsar, Bangalore, Bhopal, Calcutta,
Coimbatore, Delhi, Faridabad, Gwalior (Laskar), Hyderabad, Indore,
Jabalpur, Jaipur, Kanpur, Lucknow, Ludhiana City, Madurai, Nagpur,
Patna, Pune, Srinagar, Surat, Vadodra (Baroda) or Varanasi(Banares)
or the urban agglomeration of each of such places; or
Municpal area of:- Bombay, Calicut, Cochin, Ghaziabad,
Hubli-Dharwar, Madras, Sholapur, Trivandrum or Vishakhapatnam.
DEDUCTION
FOR REMUNERATION RECEIVED IN FOREIGN CURRENCY FROM ANY EMPLOYER
U/S 80RR
- A
resident individual, being an author, play wright (including script
writer), artist (including photographers and T.V. news film cameramen
and director), musician or actor (or sportsman including an athlete
who derives professional income from foreign sources and receives
or brings such income in India in accordance with foreign exchange
regulations, is entitled to a deduction of -
- An
amount equal to seventy-five per cent of such income as is brought
in India in convertible foreign exchange within a period of six
months from the end of the previous year or within such period
as the Chief Commissioner or Commissioner may allow. No deduction
shall be admissible unless the assessee furnishes a certificate
in the prescribed form along with the return of income certifying
that the deduction has been correctly claimed in accordance with
the provisions of this section.
- A
film producer is not entitled to a deduction under section 80RR,
because he does not fall under any of the categories mentioned
above.
REMUNERATION
RECEIVED FOR SERVICES RENDERED OUTSIDE INDIA u/s 80RRA
- An
Indian national receiving remuneration under an approved contract
of service [application Form : ITNS 186] in a foreign currency
from any employer for any service rendered by him outside India,
is entitled, in computing his taxable income, to a deduction equal
to 75 per cent of such remuneration as is brought into India by
or on behalf of the assessee in accordance with foreign exchange
regulations, within a period of six months from the end of the
previous year or within such period as the Chief Commissioner
or Commissioner may allow. The deduction under this section shall
not be admissible unless the assessee furnishes a certificate
in the prescribed form along with the return of income certifying
that the deduction has been correctly claimed in accordance with
the provisions of this section. In the case of an employee of
the Central or State Government or a person who immediately before
taking up employment outside India was an employee of the Central
or State Government, the deduction is allowed if the service of
the employee is sponsored by the Central Government.
- In
the case of other individual, the deduction is available only
if the individual is a technician. "Technician" as per Explanation
(c) to section 80RRA, means a person having specialised knowledge
and experience in:- constructional or manufacturing operations
or mining or the generation or distribution of electricity or
any other form of power; or agriculture, animal husbandry, dairy
farming, deep sea fishing or ship building,; or public administration
or industrial or business management,; or accountancy,; or any
field of natural or applied science (including medical science)
or social science; or any other field which the Board may prescribe.
In exercise of the power, the Board has prescribed "journalism"
for the purposes of deduction under this section [rule 11C]. With
effect from May 31, 1988, the profession of actuaries, banking,
insurance and journalism, have been prescribed for this purpose.
- If
the remuneration is paid to the Indian technician, etc., partly
in Indian currency and partly in foreign currency, the amount
paid in Indian currency will not be taken into account for purpose
of deduction under section 80RRA Likewise, if a part of the remuneration,
although paid in foreign currency relates to service rendered
in India, then such part of the remuneration will also not qualify
for deduction under section 80RRA - Circular No. 724, dated September
29,1995.
- In
order to expedite processing of applications seeking approval
under section 80RRA, the following guidelines are issued :-
- The
application should be signed by the applicant and filed in duplicate
and should state the complete postal address of the applicant.
Furnishing the address of any authorised representative is not
sufficient.
- The
applicant should indicate the income-tax authority in whose jurisdiction
he is either assessed to tax or is assessable to tax, and his
Permanent Account Number (PAN). If he is not assessed, he should
apply for a PAN and indicate the authority before whom he has
filed the application.
- In
respect of applications from Indian seamen employed on ships of
Indian companies, the signed certificate (in original) of the
employer indicating the total remuneration as well as the remuneration
received in foreign currency should invariably be furnished in
the first year for which the application is made. In respect of
other applications, the certificate should be for the years for
which the application is made.
- If
the application is field through an authorised representative,
a letter of authority should be filed along with it (Circular
No. 705, dated June 20, 1995.)
Deduction
u/s 80 L
- Under
Section 80L of the Income Tax Act, the tax concession is in the
form of a deduction from the tax payer's gross total income. A
tax payer (Individual or Hindu Undivided Family) is granted a
deduction from the gross total income for income upto a maximum
of Rs. 12,000 from certain investments (additional Rs. 3,000 in
the case of income from government securities, UTI and Mutual
Fund units
- The
incomes eligible for deduction under Section 80L
- Interest
on Government (Central or State) security
- Interest
on National Saving Certificates (VI VII & VIII Issue)
- Interest
on debentures/bonds of an institution or authority or any public
sector company or a co-operative society as notified by the Central
Government.
- Interest
on deposits under National Deposit Scheme as notified by the Central
Government.
- Interest
on deposits under any other scheme notified by the Central Government
for eg. National Savings Scheme, Post Office (time deposit and
recurring deposit) schemes.
- Interest
on deposits under the Monthly Income Scheme of the Post Office.
- Income
received in respect of units of Unit Trust of India and Mutual
Funds specified under Section 10 (23D) of the Income Tax Act.
- Interest
on deposits with Banks including co-operative Banks.
- Interest
on deposits with an approved financial corporation which is engaged
in providing long-term finance for industrial development in India.
- Interest
on deposits with an approved public company engaged in long-term
financing of housing accommodation.
- Interest
on deposits with authorities set up under the law enacted to deal
with the need for housing accommodation or for planning and development
of cities or villages.
- Dividend
from co-operative societies.
- Interest
on deposits (made by a member) with co-operative societies.
- The
limit for deduction under section 80L
- As
mentioned earlier, the amount of deduction that can be availed
of under Section 80L is limited to Rs. 12,000. However, if the
income from investments includes income from government securities,
units remain unallowed of Unit Trust of India and specified Mutual
Fund units then the limit is Rs. 15,000.
LIMITS
- The
sum total of deductions is limited to the amount of gross total
income.
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