DEDUCTIONS FROM GROSS TOTAL INCOME (CHAPTER VI-A)

DEDUCTIONS FROM GROSS TOTAL INCOME
 (CHAPTER VI-A)

DEDUCTIONS IN RESPECT OF PAYMENTS

1. DEDUCTION IN RESPECT OF INVESTMENTS IN SPECIFIED ASSETS (SECTION 80C)

Section 80C provides for a deduction of savings in specified modes of Investments. It is available only to an Individual or HUF.

The Maximum permissible deduction is Rs.1 lakh along with deduction u/s 80CCC & 80CCD.

Admissible Deductions:-

Ø  Premium paid on insurance on life of the Individual or HUF only to the extent of such premium or other payment made not in excess of 10% (As amended by the Finance Act,2012) of Actual Capital Sum Assured.

Explanation to Sec 80C (3A) has been introduced to provide that the Actual Capital Sum Assured in respect of the life insurance policies to be issued on or after 1^st April, 2012 shall mean the minimum amount assured under the policy on happening of the event at any time during the term of the policy without taking into Account the following:-

· The Value of Premium to be Returned or

· Any Benefit by way of bonus or otherwise to be received over & above the sum actually assured.

Ø  Sum paid under the contract for deferred annuity on life of the Assessee or his/her spouse or children.

Ø  Sum deducted by the government from the salary of an employee for securing a deferred annuity for self, spouse or children.

Ø  Contribution to any PPF.

Ø  Contribution by an employee to RPF.

Ø  Contribution by an employee to an Approved Superannuation Fund.

Ø  Contribution made to any PPF set up by the Central Government.

Ø  Subscription to any deposit scheme or contribution to any Pension fund set up by the National Housing Bank.

Ø  Payment of Tuition fees by an Individual Assessee at the time of admission to any university, college, school or other educational institutions within India for the purpose of full time education of any two children.

Ø  Subscription to deposit scheme of Public Sector, engaged in providing housing finance.

Ø  Subscription to units of Mutual funds notified u/s 10(23D).

Ø  Sum deposited in Fixed Deposits (FDs) with tenure of five years.

Ø  Sum deposited in 5 yrs Post Office Time Deposit (POTD) scheme.

2. DEDUCTION IN RESPECT OF CONTRIBUTION TO CERTAIN PENSION   FUNDS (SECTION  80CCC)

  Deduction in respect of Payment of premium for annuity plan of LIC or any other Insurer is provided. The Premium must be deposited to keep in force a contract for annuity plan of LIC or any other insurer for receiving pension from the fund. For this purpose, the Interest or Bonus accrued or credited to the Assessee’s Account shall not be reckoned as Contribution. The Maximum Deduction allowed is Rs.1 lakh.

3. DEDUCTION IN RESPECT OF CONTRIBUTION TO PENSION             SCHEME OF CENTRAL GOVERNMENT (SECTION 80CCD)

  Under this, Central Government Employee is to contribute 10% of their salary every month towards their Pension Account. Government also contribute the same Amount of money to the said Account. The Contribution made by the government is included in the employee’s salary. However the deduction would be restricted to 10% of salary.

  Further, if in any year where any amount is withdrawn from the Pension Account such Amount shall be charged to Tax as Income of that Previous Year.

4. LIMIT ON DEDUCTION U/S 80C, 80CCC, 80CCD (SECTION 80CCE)

  The Limit for maximum deduction available u/s 80C, 80CCC, 80CCD (combined together) is Rs.1 Lakh only.

5. DEDUCTION IN RESPECT OF INVESEMENT BY A RESIDENT INDIVIDUAL IN LISTED EQUITY SHARES (SECTION 80CCG)

  This Section provides one time deduction to a Resident Individual who has acquired listed equity shares in a previous year in accordance with a scheme notified by the Central Government. The Amount of deduction would be 50% of amount invested in such shares or Rs.25000 whichever is less.

Conditions to be satisfied:

· The gross total income of the Assessee should be less than or equal to Rs.10  lakhs.

· The Assessee should be a New Retail Investor (explained below).

· The investment should be made in such listed shares as per the requirement specified under the notified scheme.

· The Minimum lock-in period is 3 years from the date of Acquisition.

New Retail Investor means the following persons:-

· Any individual who has not opened a Demat Account and has not made any transactions in the derivative segment ;

· Any individual who has opened a Demat Account before the notification of the scheme but has not made any transactions in the equity segment or derivative segment and

· Any individual who is not the first account holder of an existing joint Demat Account shall be deemed to have not opened an Account for the purpose of this scheme.

If any Individual after claiming such deduction fails to satisfy the conditions then the deduction earlier claimed shall be deemed to be the income of the Previous Year in which he fails to comply with the condition.

6. DEDUCTION IN RESPECT OF MEDICAL INSURANCE PREMIUM  (SECTION 80D)

  This Section provides for a deduction of Rs. 15000 in respect of premium paid towards a health insurance policy for the Assessee or his family (spouse and dependent children) or any contribution made to the Central Government Health Scheme in aggregate and a further deduction of Rs. 15000 is allowed of premium paid in respect of health insurance policy for parents.  An increased deduction of Rs. 20000 shall be allowed in case any of the persons mentioned above are senior citizens (i.e. of age 60 years or above).Further it is provided that for claiming such deduction u/s 80D the payment must be by any mode other than cash.

 Further Deduction of Rs. 5000 shall be allowed in respect of payment made on Account of preventive health check-up of self, spouse, children or parents made during the previous year. This deduction is within the overall limit of Rs. 15000 or Rs.20000, as the case maybe.

For claiming this deduction payment can be by any mode including cash.

7. DEDUCTION IN RESPECT OF REHABILITATION OF HANDICAPPED DEPENDENT RELATIVE (SECTION 80DD)

  It provides for a deduction to an Assessee being an individual or HUF who is a resident in India.

  Deduction of Rs. 50000 is available in respect of any Amount paid for the medical treatment (including nursing), training and rehabilitation of a dependent, or any amount paid or deposited under a scheme framed in this behalf.

  In case of severe disability (i.e. a person with 80% or more disability), the deduction of Rs. 100000 shall be available.

 

Dependent means

  In the case of an Individual the spouse, children, parents, brothers, sisters, of the individual and in the case of HUF, any member who is wholly dependent on the assessee.

8. DEDUCTION IN RESPECT OF MEDICAL TREATMENT (SECTION 80DDB)

  The deduction of Rs. 40000 or Amount actually paid whichever is less shall be allowed to an Assessee who is resident in India being an Individual or HUF. Deduction shall be allowed of any amount paid for the medical treatment of such disease or ailment as may be specified in the rules. In case the Amount is paid in respect of a senior citizen (i.e. of age 60 years or above) then the deduction would be Rs.60000 or the Amount actually paid whichever is less.

9. DEDUCTION IN RESPECT OF INTEREST ON LOAN TAKEN FOR HIGHER EDUCATION (SECTION 80E)

  This section provides deduction to an Individual in respect of any interest paid on loan taken for the purpose of pursuing his higher education or the for the purpose of higher education of his/her relative i.e. spouse or children of the Individual or the student for whom the Individual is the legal guardian. The loan must have been taken from any financial institution or approved charitable institution.

10. DEDUCTION IN RESPECT OF DONATIONS TO CERTAIN FUNDS, CHARITABLE INSTITUTIONS ETC. (SECTION 80G)

  The various donations specified under this section are eligible to deduction upto either 50% or 100% with or without restrictions.

  Sub Section 5D has been inserted in section 80G to provide that no deduction shall be allowed in respect of donation of any sum exceeding Rs.10000 unless such sum is paid by any mode other than cash.

11. DEDUCTION IN RESPECT OF RENT PAID (SECTION 80GG)

  Admissible deduction :-

The deduction will be least of the following:-

·Actual Rent paid less 10% of the total income before allowing such deduction, or

· 25% of such total income or

· Rs. 2000 per month

Total income will not include long term capital gains and any income referred to in sections 115A to 115D.

Conditions to be satisfied:-

· Assessee should not be in receipt of House Rent Allowance.

· The expenditure incurred by him on rent of any furnished or unfurnished accommodation should exceed 10% of his total income arrived at after all deductions under Chapter VI A except section 80GG.

· The Accommodation should be occupied by the Assessee for the purpose of his own residence.

· The Assessee should not have self occupied residential premises in any other place.

· Assessee should file a declaration in form 10BA, confirming the details of rent paid.

12. DEDUCTION IN RESPECT OF DONATIONS FOR SCIENTIFIC RESEARCH AND RURAL DEVELOPMENT (SECTION 80GGA)

     Admissible Deductions:-

· Any sum paid by the Assessee to the Research Association which has, as its object, the undertaking of scientific research

· Any sum paid to an Association or Institution which has, as its object, the undertaking of any programme of Rural Development to be used for carrying for carrying out any programme of Rural Development.

· Any sum paid to Research Association which has, as its object the undertaking of research in Social Science or Statistical Research.

· Any sum paid to Public Sector company or a local authority for carrying out any eligible project or scheme.

· Any sum paid to Rural Development fund.

· Any sum paid to National Urban Poverty Education Fund (NUPEF).

 Sub-section (2A) has been inserted which provides that no deduction shall be allowed in respect of donation of any sum exceeding Rs. 10000 unless such sum is paid by any mode other than cash.

13. DEDUCTION IN RESPECT OF CONTRIBUTIONS GIVEN BY COMPANIES TO POLITICAL PARTIES (SECTION 80GGB)

  This provides of deduction of any sum contributed in the Previous Year by an Indian Company to any Political Party or an Electoral Trust.

14. DEDUCTION IN RESPECT OF CONTRIBUTIONS GIVEN BY ANY PERSON TO POLITICAL PARTIES (SECTION 80GGC)

  This provides for deduction of any sum contributed in the Previous Year by any Person to a Political Party or an Electoral Trust. It will not be available to a Local Authority and an Artificial Judicial Person.

This Article has been Shared by Student of ICAI Palak Aggarwal. She can be reached at aggarwal.palak2809@gmail.com

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