Deduction to be made in Computing Total Income Under Section 80A to 80U
Introduction -
In computing the total income of an assessee, the deduction allowable under section 80CCC to 80U from the gross total income.
Deductions available under section 80C to 80U are of special nature and allowed to certain specified categories of taxpayers. The purpose of this deduction is to encourage saving, industrialisation and to assist the taxpayers in meeting the expenditure.
These deduction have to be made from the gross total income in order to arrive at net income.
The aggregate amount of the deduction under this chapter shall not be exceed the gross total income of the assessee. (i.e. gross total income after excluding long term capital gain, short term capital gain taxable under section 111A winning from lotteries, races etc. and income referred to in the sections 115 A to 115AD, 155 BBA and 115D ). Students must understand the basic rules for deduction from the gross income.
The basic rules are as under -
1) Deductions cannot exceed gross total income.
2) Deductions are allowed only for the individuals / H.U.F.
3) Deductions are not allowed to the members if allowed to A.O.P. / BOI.
4) Deduction should be claimed by the assessee.
5) Assessees duty to place relevant material.
6) Deductions need to be out of current year's income only.
7) If the return is not filed within the time limit, the benefits of certain deductions are not be allowed.
8) Upper limit for the deductions to Rs. 1,00,000/-.
Summary of Section 80C to 80U :
Section 80C : Deduction in respect of life insurance, deferred annuity, contribution to P.F. subscription to certain equity shares or debenture etc. -
Deduction under section 80C is available to an individual or H.U.F. on the basis of specified qualifying investments /contributions /deposits /payments made by the taxpayers during the previous year.
It is in respect of life insurance policy premium, deferred annuity, contribution to provident fund, subscription to certain equity shares or debentures.
The gross qualifying amount would be allowed subject to maximum of Rs. 1,00,000/- .
With effect from the assessment year 2013-14, if premium payable for any year is more than 20% of actual sum assured, the excess amount does not qualify for any deduction.
Section 80CCA : Deposit under in N.S.C. payment to a deferred annuity plan -
The deduction was available under section 80CCA a only for the assessment year 1988-89 to 1992-93 in relation to the amount deposited under National Saving Scheme 1987 or the amount paid under Jeevan Dhara / Jeevan Akshay plan of Life Insurance Corporation.
Section 80CCB : The deduction under section 80CCB was available and allowable for the assessment year 1991-92 and 1992-93 -
Deduction under section 80CCB was discontinued from assessment year in 1993-94.
The deduction was related to the investment made in accordance with notified equity linked savings scheme.
Section 80CCC : Contribution to certain pension funds -
The deduction under section 80CCC is related or in respect of Pension Fund.
The following conditions, the assessee has to satisfy :
1. The taxpayer must be individual
2. In the previous year he has paid / deposited a sum under an annuity plan of LIC or any other insurer for receiving the pension.
3. The above mentioned amount is paid out of income chargeable to tax.
If the said conditions are satisfied, then the amount deposited or Rs.1,00,000/- whichever is lower is deductible. If the deduction is claimed under section 80C, in respect of the same investment, deduction will not be available under section 80CCC.
Section 80CCD : Contribution to pension scheme of Government -
Deduction under section 80CCD is available in respect of the contribution to the pension scheme of government service.
Following are the conditions to satisfy for the deduction from tax.
1. The taxpayer is an individual
2. He is employed on and after 1.1.2004 in government service
3. He had deposited any amount in his account in the previous year under pension scheme notified by the central government.
It is to noted that, no deduction is available in respect of employers contribution which is in excess of 10% of the salary of the employee.
Section 80CCF : Deduction in respect of subscription to long term infrastructure bonds -
In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, the whole of the amount to the extent such amount does not exceed Rs. 20,000/- paid or deposited during the previous year relevant to the assessment year beginning on the 1st day of April 2011, or to the assessment year beginning on the 1st day of April 2012, as subscription to long term infrastructure bonds as may, for the purpose of this section, be notified by the central government with effect from 1st April, 2011.
As provision of this section have not been amended, no deduction will be available under section 80CCF from assessment year 2013-14.
Section 80CCG : Deduction in respect of investment made under any equity Saving Scheme -
Dection 80CCG has been inserted with effect from the assessment year 2013-14. Deduction under this section is available if the following conditions are satisfied :
1. The assessee is a resident individual.
2. His gross total income does not exceed rupees 10 lakh.
3. He has acquired listed shares in accordance with a notified scheme.
4. The assessee is a new retail investor as specified in the above notified scheme.
5. The investment is locked in for a period of 3 years from the date of acquisition is accordance with the above scheme.
6. The assessee satisfies any other condition as may be prescribed.
If the above conditions are satisfied, a deduction will be allowed under section 80CCG. If the assessee, after claiming such deduction, fails to satisfy the above conditions, the deduction originally allowed shall be Deemed to be the income of the assessee of the year in which default is committed.
Section 80D : Medical Insurance Premium-
The deduction is available toward the medical insurance premium paid by the assessee. The conditions are as below :
1. Taxpayer must be individual
2. The insurance premium to be paid under the medical insurance scheme of General Insurance Corporation. It is known as "Mediclaim" insurance policy.
3. The payment of the premium is paid by cheque.
4. It is paid out of income chargeable to tax.
From the assessment year 2013-14, section 80D has been amended to include any payment made by an assessee on account of prevention health check up of Self, spouse, parents or dependent children during the previous year as eligible for deduction within the overall limit prescribed in the section. However the deduction shall not exceed in the aggregate a sum of rupees 5000/-. Payment on account of prevention health check up can be by any more including cash.
Section 80DD : Expenditure for Medical, Nursing and Rehabilitation -
Deduction under Section 80DD is available toward the maintenance including medical treatment of the dependant being a person with disability.
Here the dependant means the spouse, children, parents, brothers and sisters of the individual or any of them.
The "disability" shall have the meaning assigned to it in section 2 (i) of the person with disabilities (equal opportunity, protection of right and full participation) act, 1995.
Section 80DDB : Expenditure for Medical Treatment -
The deduction under section 80DDB is in respect of medical treatment, The expenditure is actually incurred for medical treatment of the assessee himself of mainly dependent husband / wife, children, parents, brother and sister.
From assessment year 2013-14 the qualifying age for the senior citizen has been reduced from 65 years to 60 years for the purpose of section 80DDB.
Section 80E : Interest of loan taken for higher education -
The deduction in respect of repayment of loan taken for higher education.
Conditions :
1. The assessee is an individual
2. The loan must be taken for notified Banking Company or Financial Institutions
3. The loan must be taken for the higher education
4. Such amount to be paid out of the income chargeable to tax.
Section 80G : Donations to certain funds, charitable institutions -
The deduction under section 80G in respect of the donations to certain funds, charitable institution etc. The donation means the person gives money to another without any material return, voluntarily and without any consideration.
For the deduction from the gross income of the assessee, the proof should be provided of the payment made as donation.
Section 80G has been amended with effect from the assessment year 2013-14 so as specify their in that any payment exceeding rupees 10,000/- shall only be allowed as a deduction if such sum is paid by any more other than cash.
Section 80GG : Payment in respect of rent paid -
The provision of section 80GG towards the deduction of rent paid by the assessee in the previous year.
The condition are as below :
1. Tax prayer is an individual
2. The taxpayer is self employed
3. The following person should not own any residential accommodation at the place where the taxpayer resides, performs the duties of the office :
1. The tax payer
2. His / her spouse
3. His / her minor child
4. The HUF of which the tax payer is member.
Section 80GGA : Donations to the Scientific research or Rural development -
The deduction is allowable the certain donation given by the tax payers to the scientific research of rural development.
Section 80GGB :Contributions by companies to political parties -
The deduction is allowable in respect of contributions given by companies to political parties.
Section 80GGC :Contribution by any person to political parties -
The deduction is allowable in respect of contribution given by any person to political parties.
Section 80IA : Profits and Gains from undertaking or Enterprises engaged in infrastructure development etc. -
Deduction under this section in respect of profits and gains from undertaking or Enterprises engaged in infrastructure development etc.
Section 80IAB : Profits and Gains by an undertaking or an Enterprises engaged in development of special economic zone (SEZ). -
Deduction under this section in respect of profits and gains by an undertaking or an enterprise's engaged in the development of special economic zone.
Section 80IB : Profits and Gains from certain industrial undertaking other than infrastructure development undertaking. -
Under this section deduction in respect of profit and gains from certain industrial undertaking other than infrastructure development undertaking.
Conditions for deduction from tax :
1. It should be new undertaking
2. It should not be formed by transfer of old plant and machinery.
3. Manufacture or production should be started within a stipulated time limit.
4. It should employ 10/20 workers.
5. Return of income should be submitted on or before due date of submission of return of income.
The deduction u/s 80IB is available to the following industries :
1. Business of an industrial undertaking
2. Operation of ship
3. Hotels
4. Industrial research
5. Production of mineral oil
6. Development and building housing projects
7. The business processing, preservation and packing of fruits, vegetables or integrated, handling, storage and transportation of food gain units.
8. Multiplex theatres
9. Convention centre
10. Operating and maintaining a hospital in rural area.
Section 80IC : Profits and gains of certain undertakings or enterprises in certain special category of states. -
This section has been inserted from the assessment year 2004-05.
The deduction under this section is available in respect of the profits and gains of certain under taking or enterprises in certain special category of states, The special category of states are himachal pradesh, uttarakhand, sikkim and north - eastern states.
Section 80ID : Profits and gains from new hotels and convention centres in NCT of delhi and adjoining areas. -
Under this section the deduction is allowable in respect of profits and gains from new hotels and convention centres in NCT of delhi and adjoining areas.
Section 80IE : Profits and gains from specified undertaking in North-eastern states. -
Under section 80IE, deduction is allowable in respect of profit and gain from specified undertaking in North-eastern states.
Section 80JJA : Profits and gains from the business of processing of bio degradable waste.-
Under section 80JJA deduction in respect of profit and gains from the business of processing of bio degradable waste.
Section 80JJAA : Employment of new workmen -
Section 80 JJAA has been inserted to encoverage employment. The deduction is available towards the employment of new workmen. The amount of deduction is equal to 30% of "additional wages "paid to the new "workmen "employed by the assessee in the previous year.
Section 80L : Deduction under this section is not available from the assessment year 2006 - 07.
Section 80LA : Income of Offshore Banking units and International Financial Services Centre.-
The deduction is available in respect of certain income of Offshore banking units and International Financial Services Centre.
The conditions are as follows :
1. A scheduled bank and having a Offshore banking unit in a special economic zone.
2. A foreign bank and having Offshore banking unit in a special economic zone.
3. A unit of International Financial Services centre
Section 80 O : Under section 80 O deduction in respect of the royalties from certain foreign Enterprises is not available from the assessment year 2005-06.
Section 80 P : Income from the Co-operative Societies -
The deduction is allowable toward the income from the co-operative societies.
The following amounts of the profits attributable to any one or more of the following activities are allowed as deduction under this section :
1. Carrying on the business of Banking or providing credit facilities to the its members or
2. A cottage industry
3. Marketing of the agriculture produce grown by its members
4. Purchase of Agricultural implements, seeds, livestock or other article intended for agriculture for the supplying them to its members
5. Processing without the aid of power of the agricultural produce of its members
6. Fishing or allied activities, catching, curing, processing, preserving, storing or marketing of fish for the purpose of supplying them to its members.
Section 80QQB : Royalties income etc. of authors of certain books or other than text books -
The deduction under section 80QQB is allowable in respect of the royalty income etc. of authors of certain books or other than text books. The author may be joint author. The books authored by him is the work of literary, artistic or scientific nature.
The book shall not include brochures, commentaries, Diaries, guide, journal, magazine, newspaper, pamplates, textbooks for schools, tracts and other publication of similar nature by whatever name called.
Section 80R : No deduction under this section is available from the assessment year 2005-06 in respect of remuneration from certain foreign sources in the case of professors, teachers etc.
Section 80RR : No deduction under this section is available from the assessment year 2005-06 in respect of remuneration receiving from services rendered outside India.
Section 80RRB : Deduction inserted from the assessment year 2004-05. The deduction is allowable in respect of royalty on patents.
Section 80TTA : Deduction in respect of interest on deposites in saving account -
Section 80TTA ay has been amended with effect from assessment year 2013-14. It provide deduction up to Rupees 10,000/- in aggregate to an assessee (being a individual or HUF.) in respect on any income by way of interest on deposit in a saving account with a banking company or a co-operative society engage in carrying on the business of banking or post office.
Section 80U : Person with disability -
Under section 80U, the detection is allowable to the person who suffer 40% or more than 40% any disability given below :
1. Blindness
2. Low vision
3. Leprosy-cured
4. Hearing impairment
5. Locometer disability
6. Mental retardation
7. Mental illness.