Deductions from the Gross Total Income of Individuals and Hindu Undivided Family

 Deductions from the Gross Total Income of Individuals and Hindu Undivided Family

Sections 80C to 80U of the Income Tax Act specifies the deductions to be made from the gross total income of an assesses. Gross total Income means the total income, under all the five heads of Income i.e.

Salary Income

Income from House Property

Profit and gain of Business or Profession Income

Capital Gains and

Income from Other Sources.

The gross total income is to be arrived at before allowing any deduction under Chapter VI A and after setting of unabsorbed losses, depreciations, etc of the earlier years. While deductions u/s 80C to 80GGC are in respect of certain payments made by the assesseee, while the deductions u/s 80IA to 80RRB & 80TTA are in respect of certain incomes. 

It may be noted that the aggregate amount of the deductions under chapter VI-A should not, in any case exceed the gross total income.

DEDUCTIONS IN RESPECT OF CERTAIN PAYMENTS:   

Section 80C

 Sections 80C(1) provides that the assesses being an individual or a HUF, will be allowed a deduction from gross total income of an amount not exceeding RS.1,50,000, in respected of amount paid or deposited in the previous year.

Section 80C(2) provides that following sum paid or deposited by an individual or HUF, at any time during the previous year, qualifies for deductions u/s80C(1)

1. Life Insurance Premium Paid:

(a) Life Insurance Premium paid by an individual on his/her life or on life of his /her spouse or on life of any child (including adult child and a married daughter. Vide circular no 574 dated 22.08.1990 185ITR (St.) 31) of such individual; and

(b) by a Hindu undivided Family, on life of any member of the family

Please remember that amount of any premium on an insurance policy issued on or before 31.03.2012, eligible for deduction is limited to 20% 0f the actual capital sum assured, i.e. premium paid in excess of 20% will not qualify for the deduction.

Likewise policy issued on or after 1st April 2012 eligible amount of deduction will be 10% of the capital sum assured.

Illustration: Mr. A has taken an insurance policy of Rs. 10,00,000 10 years and paid premium of Rs. 1,20,000 every year will get deduction of Rs. 1,00,000 only being 10% of the sum assured.

2. Payment for deferred annuity.

Payment made by and individual, on his her life or on life of his/her spouse or life of any child including adult children and a married daughter, of such individual, under contract for a deferred annuity.

3. Contribution made by an individual to any provident fund to which the Provident Fund Act, 1925 applies,

4. Contribution to Public Provident Fund Scheme,1968 in an account standing in the name of individual, the wife or husband and any child of such individual.

5. Contribution made by an employee to a recognized provident fund,

6. Contribution by an employee to an approved superannuation fund.

7. Subscription to any such security of Central Government or any such deposit scheme as may be notified.

8. Subscription to any such saving certificate of the Government Saving Certificate Act 1959 as may be notified.

9. Contribution made, in the name of any person mentioned below, for participation in the Unit-Linked Insurance Plan 1971

(a) in the case of an individual, the wife or husband and any child of such individual

(b)  in the case of an HUF, any member there of

10. Contribution made in the name of any person mentioned below for participation in the   Unit Linked Insurance Plan of the L.I.C. Mutual Fund

11. Payment made to effect or to keep in force a notified deferred annuity plan of  LIC (like New Jeevan Dhara, New Jeevan Dhara 1, New Jeevan Akshay, New Jeevan  Akshay – I, New Jeevan Akshay II, III plan or

Any other insurer i.e. Annuity Plan of ICICI Prudential Life insurance Co,  Plan of Tata AIG Ltd., and approved Tata AIG Retire Annuity Plan,

12. Subscription to any units of Mutual Fund,

13. Contribution by an individual to notified Pension Fund set up by any mutual  fund, Reliance Retirement Fund, HDFC Retirement Saving Fund,

14. Subscription to notified Deposit scheme of the National Housing Bank i.e. Home loan account scheme, a contribution to notified pension fund set up by the National Housing Bank,

15. Any sum paid by an individual as a Tuition Fees ( excluding any payment toward any development fees, donation or payment of similar nature of any two children

16. Payment for the purpose of purchase or construction of residential house property This will include any installment or part payment of the amount due under any self financing or other scheme of any development authority / housing board/ other similar authority or to any assesses from

a. Central/ State Government or

b. Any bank including a co operative bank

c. Life Insurance Corporation of India,

d. National Housing Bank

e. Any public limited company or co operative society engaged in the business of financing the construction of houses

f. The assessee’s employer

17. Subscription to equity shares or debentures forming part of any eligible issue  of capital approved by the board on an application made by such public company

18. Subscription to any units of any mutual fund referred to in Section 10(23D) and approved by the board

19. Any sum deposited in accordance with notified scheme of term deposit for a   fixed period of not less then 5 years with a schedule bank

20. Deposit in an account under the Senior Citizens Savings Scheme Rules 2004

21. Deposit as 5 year time deposit in an account under the Post Office Time Deposit Rules 1981.

DEDUCTION IN RESPECT OF CONTRIBUTION TO CERTAIN PENSION FUNDS

Section 80CCC

Under this section deduction is available to only individual. The assesses has in the previous year paid or deposited any amount out of his income chargeable tax, to effect or keep in force contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension.Any amount standing to the credit of the assesses in a fund is received by him on account of the surrender of the plan or in part or as pension received from plan shall be deemed to be the income of assesses

However commuted amount received as pension on maturity is exempt.

Deduction permissible Rs. 1,50,000

DEDUCTION IN RESPECT OF CONTRIBUTION TO PENSION SCHEME OF CENTRAL GOVERNMENT

Section 80CCD

Any person being an individual, employed by the Central Government or any other employee or any other individual deposited any amount in his account under a pension scheme will get deduction of Rs. 50,000 over and above of Rs. 1,50,000 aggregate amount of Section 80C, 80CCC & 80CCD(1)

DEDUCTION IN RESPECT OF HEALTH INSURANCE PREMIUM

Section 80D

Any person being individual or a Hindu Undivided Family have paid on account of preventive health check-up other than cash, in the previous year out of his income chargeable to tax, for health check-up of assesses, his family ( spouse or depended children) or parents, will get deduction from his gross total income as under.

For individual below the age of 60 years                                                   Rs. 25,000

For senior citizen above the age of 60 years                                             Rs. 30,000

From Assessment Year 2019-20   for senior citizen                                Rs. 50,000

In the case of an individual payment for preventive health check-up Rs.  5,000

Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability

Section 80DD

The assesses is either individual or HUF and is a resident in India incurred any expenditure for the medical treatment , training and rehabilitation of a dependant being a person with disability, paid or deposited any amount under a scheme framed in this behalf, deduction of Rs. 75,000 subject to the production of certificate issued by the medical authority.

Deduction in respect of medical treatment etc.

Section 80DDB

The assesses is either an individual or HUF and is a resident of India actually incurred any  expenditure during the previous year for the medical treatment of specified disease or ailment prescribed in rule 11DD(1), of the Income Tax Rules, for himself or a dependant or for the member of HUF will get deduction as under:

Below the age of 60 years                                                                          Rs. 40,000

Above the age of 60 years but below 80 years                                       Rs. 60,000

Above the age of 80 years very senior citizen                                        Rs. 80,000

Deduction in respect of interest on loan taken for higher education

Section 80E

Any individual has paid any amount in the previous year, out of his income chargeable to tax, by way of interest on loan ( not repayment of  loan) taken by him from any financial institutions, bank or any approved charitable institutions for the purpose of pursuing his higher education or also for the purpose of higher education of his relative, the deduction will be allowed 100% of the interest paid on loan taken without any monetary limit. Such deduction is allowable from gross total income of the initial assessment year and for 7 successive assessment years or until the interest on such loan is paid by him in full whichever is earlier.

Deduction in respect of interest on loan taken for residential house property

Section 80EE

Any individual, who has taken a loan from financial institution for the purpose of acquisition of residential property during financial year 2016-17, and the amount of loan sanction does not exceed Rs. 35,00,000 and the value of property does not exceed Rs.50,00,000 and individual does not own any residential house property on the date of sanction of the loan, the assesses will get deduction of maximum Rs. 50,000 for the assessment years 2017-18 to 2019-20.

Deduction in respect of donation to certain funds, charitable institutions etc,

Section 80 G

Deduction under this section is broadly classified in to four categories:

A. Donations on which 100% deduction is allowed without any qualifying limit

B. Donations on which 50% deduction is allowed without qualifying limit

C. Donations on which 100% deduction is allowed subject to qualifying limit

D. Donations on which 50% deduction is allowed subject to qualifying limit.

A. Donations on which 100% deduction is allowed without any qualifying limit

01. National Defense Fund set up by the Central Government

02. Prime Minister’s National Relief Fund

03. Prime Minister’s Armenia Earthquake Relief Fund

04. Africa (Public Contributions – India)Fund

05. National Children’s Fund

06. National Foundation for Communal Harmony

07. A University or any educational institution of national eminence as may be approved by the prescribed authority in this behalf

08. Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat

09. Jilla Saksarta Samiti

10. National or State Blood Transfusion Council

11. Any fund set up by State Government to provide medical relief to the poor

12. Any Army, Naval and Air Force Central Welfare Fund

13. National Illness Assistance Fund

14. Chief Minister’s Relief Fund

15. National Sports Fund

16. National Cultural Fund

17. Fund for Technology Development

18. National Trust for Welfare of different persons

19. Swachh Bharat Kosh set up by Central Government

20. Clean Ganga Fund set up by Central Government

21. National Fund for Control of Drug Abuse constituted under Narcotic Drugs Act

B. Donations on which 50% deduction is allowed without qualifying limit

01. Jawaharlal Nehru Memorial Fund

02. Prime Minister’s Drought Relief Fund

03. National Children’s Fund

04. Indira Gandhi Memorial Trust

05. Rajiv Gandhi Foundation

06. Donations for repairs/renovation of notified places of worship

07. World Vision India

C. Donations on which 100% deduction is allowed subject to qualifying limit

01. Fund to be utilized for the purpose of promoting family planning

02. Any sum paid by the assesses, being a Company to the Indian Olympic Association

03. Development of infrastructure for sports and games

04. The sponsorship of sports and games, in India

D. Donations on which 50% deduction is allowed subject to qualifying limit

01. Donations to govt./local authority for charitable purposes

02. Authority / corporation having income exempt under erstwhile section or Section 10(26BB)

03. Any other fund or any institution to which this section applies

04. Donations for the renovation or repair of any such temple, mosque, gurudwara, church or other place as is notified by Central Government

Calculation of Qualifying Limit:

Qualifying Limit u/s 80G is 10% of adjusted gross total income.

Calculation of Gross Total Income:

01. Gross Total Income

02. Less: Amount deductible u/s 80C to 80U but not u/s 80G

03. Less : Exempt Income

Deduction in respect of rent paid

Section 80GG

In computing the total income of an assesses, not being an assesses having any income falling with in clause (13A) of Section 10(i.e. getting HRA), there shall be deducted any expenditure  incurred by him which shall be lower of following:

• 5,000 per month
• 25% of adjusted total income
• Actual rent(-) 10% of adjusted total income

Provided that nothing in this section shall apply to an assesses in any case where any residential accommodation is

• Owned by the assesses or by his/her spouse or minor child or, where such assesses is a member of HUF, by such family at the place where he ordinarily resides, or performs duties of his office or employment or carries on his business or profession; or
• Owned by the assesses at any other place, being accommodation in the occupation of the assesses, the value of which is to be determined under clause(a) of subsection (2) or, as the case may be, clause (a) of subsection (4) of section 23.

Deduction in respect of certain donations for scientific research or rural development

Section 80GGA

Under this section deduction is allowed to any person whose Gross Total Income does not include income from  Profit and Gain from Business or Profession.

Deduction is allowed for contribution made for following:

• For scientific research or statistical research as allowed to a business person u/s 35
• For rural development for which business person will get deduction u/s 35CCA

No deduction shall be allowed if contribution is made for amount exceeding Rs.10,000 in cash

Deduction in respect of contributions given by companies to political parties

Section 80 GGB

During the year  any Indian Company has given donation to any political party registered under section 29A of the Representation of the People Act 1951 are eligible for deduction under this section. If the donation has been given in CASH, no deduction will be allowed.

Deduction in respect of contribution given by any person to political parties.

Section 80GGC

In computing total income of an assesses, being any person,( except local authority and every artificial juridical person, wholly or partly funded by the Government) there shall be deducted any amount of contribution made by him, in the previous year, to a political party or an electoral trust:

Provided that no deduction shall be allowed under this section in respect of sum contributed by way of cash.

“Political Party” means a political party registered/s 29A of the Representation of the People Act, 1951.

Deduction in respect of royalty income of authors of certain books other than text books.

Section 80QQB

Any individual, being resident of India and an author, received any income out of  exercise his profession, as royalty or copy right fees will get deduction up to Rs. 3,00,000/ subject to certain conditions.

Deduction in respect of royalty on patentee

Section 80RRB

Any individual, being resident of India being a patentee, received any income by way of royalty on a patent  registered after 31st March, 2003, will get deduction up to Rs.3,00,000/ subject to certain conditions.

Deduction in respect of interest on deposits in savings bank account

Section 80TTA

The gross total income of an Individual or HUF includes any income by way of interest on deposit in savings bank account, deduction of Rs.10,000 is permissible under this section.

Deduction in respect of Senior Citizen interest on deposits in savings bank account

Section 80TTB

The gross total income of Senior Citizen includes any income by way of interest on deposit with savings bank account, deduction of Rs. 50,000 is permissible under this section introduced from Asst. Yr. 2019-20

Deduction in the case of a person with disability

Section 80U

Any individual being resident in India is certified by the Medical Authority in the prescribe form about the disability is entitled for the following deductions from his gross total income.

Rs. 75,000/ and if severs disability find Rs. 1,25,000