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Thumbs up DEDUCTIONS - January 4th, 2008

DEDUCTIONS

STRUCTURE
12.0 Objectives
12.1 Introduction
12.2 Deductions from gross total income
12.3 Basic rules governing deductions under sections 80C to 80U
12.4 Deductions
12.5 Deductions to encourage savings
12.5.1 Deduction in respect of life insurance premium, etc.80C
12.5.2 Deduction in respect of pension fund 80CCC
12.5.3 Deduction in respect of contribution to pension scheme of
central government 80CCD
12.6 Deductions for certain personal expenditure
12.6.1 Deduction in respect of medical insurance premium 80D
12.6.2 Deduction in respect of maintenance including medical
treatment of dependent who is a person with disability - section
80DD
12.6.3 Deduction in respect of medical treatment - section 80DDB
12.6.4 Deduction in respect of repayment of loan taken for higher
education - section 80E.
12.6.5 Amount of rent paid - section 80GG
12.7 Deductions for socially desirable activities
12.7.1 Donation to certain funds, charitable institution etc.
(section 80G)
12.8 Deductions for persons with disability
12.8.1 Deduction allowed to a person with disability - section 80U
__________________________________________________ ________________
12.0 OBJECTIVES
After studying the Unit you should be able to:
• List the deductions available from gross total income
• Know who is eligible for deduction
• List the conditions for claiming deduction
• Calculate the amount of each deduction
__________________________________________________ ______
12.1 INTRODUCTION
Indian tax laws contain certain provisions, which are intended to act as an
incentive for achieving certain desirable socio-economic objectives. These
166
provisions are contained in Chapter VIA and are in the form of deductions
(80C TO 80U) from the Gross Income. By reducing the chargeable income,
these provisions reduce the tax liability, increase the post-tax income and thus
induce the tax-payers to act in the desired manner. This unit is intended to
give a broad idea of such deductions.
__________________________________________________ _____________
12.2 COMPUTATION OF NET INCOME
To compute the net income of the assessees, first of all we compute the
income under the five head. The provisions for the same have been already
discussed in the previous units. The aggregate of income under each head is
known as “gross total income”. Certain deductions which are not deductible
under any particular head of income are allowed out of gross total income to
arrive at the total income liable to tax.
Total income is accordingly computed as under:
1. Income from salaries ___
2. Income from House property ___
3. Profits and Gains of Business and Profession ___
4. Income from capital gains ___
5. Income from other sources ___
____________
Gross Total Income = ____
____________
Less deduction under Chapter VI-A(80C TO 80U)(-) ------
____________
Total income ___
____________
These deductions are discussed in the following sections.
12.3 BASIC RULES
Following are the basic rules for deduction
1.The aggregate amount of deductions under sections 80C to 80U cannot
exceed gross total income(gross total income after excluding long term
capital gains, short term capital gain under section 111A, winnings from
lottery, crossword puzzles etc.)
2.These deductions are to be allowed only if the assessee claims these
and gives the proof of such investments/ expenditure/ income.
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12.4 CATEGORIES OF DEDUCTIONS
There are various kinds of deductions. Some of them are to encourage savings,
some are for certain personal expenditure, a few are for socially desirable
activities, and some are for economic growth. For the sake of better understanding
we have categorized them into four kinds. They are
• To encourage savings
• For certain personal expenditure
• For socially desirable activities
• For physically disabled persons
We will be discussing them one by one
__________________________________________________ ________________
12.5 DEDUCTIONS TO ENCOURAGE SAVINGS
The government wants to encourage the habit of people to save for the rainy day.
To give impetus to savings these deductions are given on certain investments or
certain expenditure made by the assessee. Deduction is allowed when the saving
is invested but normally any withdrawal is treated as income in the year of
withdrawal.
__________________________________________________ ________________
12.5.1 DEDUCTION IN RESPECT OF LIFE INSURANCE
PREMIA, ETC. (SEC. 80C)
A new section 80C has been inserted from the assessment year 2006-07 onwards.
Section 80C provides deduction in respect of certain expenditure/ investments
(which are specified in this section) paid or deposited by the assessee in the
previous year.
Deduction under this section is available only to individual & Hindu Undivided
Family.
Gross Qualifying Amount
The following payments/investments qualify for deduction under this section.
The total amount of investments made during the P.Y. under these below
mentioned schemes is known as Gross Qualifying Amount ( GQA )
1.Life Insurance premium paid on a policy taken on his own life, life of the spouse
or any child (child may be dependent/ independent ). In the case of a Hindu
undivided family, policy may be taken on the life of any member of the family.
The premium paid should be maximum of 20% of sum assured .
2. Any sum deducted from salary payable to a Government employee for the
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purpose of securing him a deferred annuity (subject to a maximum of 20% of
salary)
3. Contribution towards statutory provident fund and recognized provident fund.
4. Contribution towards 15 year public provident fund (maximum of Rs 70,000).
5. Contribution towards an approved superannuation fund
6. Subscription to National Savings Certificates, VIII Issue .
7. Contribution for participating in the Unit-Linked Insurance Plan (ULIP) of Unit
Trust of India..
8. Contribution for participating in the unit-linked insurance plan (ULIP) of LIC
Mutual Fund (i.e. Dhanraksha plan of LIC Mutual Fund)
9.Payment for notified annuity plan of LIC (i.e. Jeevan Dhara, Jeevan Akshay
New Jeevan Dhara ,etc ) or any other insurer.
10. Subscription towards notified units of Mutual Fund or UTI
11. Contribution to notified pension fund set up by Mutual Fund or UTI .
12. Any sum paid (including accrued interest) as subscription to Home Loan
Account Scheme of the National Housing Bank
13. Any sum paid as tuition fees to any university/college/educational institution
in India for full time education.
Amount of deduction
We add the amounts invested / spent in above mentioned schemes and this amount
is known as Gross qualifying amount. The amount deductible is
a) Gross qualifying amount; or
b) Rs 1,00,000
Whichever is less
__________________________________________
12.5.2 DEDUCTION IN RESPECT OF PENSION FUND
(SEC. 80CCC)
If the following conditions are fulfilled an assessee may claim deduction under this
section
• The taxpayer is an individual
• During the previous year, he has paid/deposited a sum under an annuity
plan of the Life Insurance Corporation of India or any other insurer for
receiving pension.
• If deduction has not been claimed under section 80C.
Amount of deduction
If the aforesaid conditions are satisfied, then
a) the amount deposited
Note:-The maximum deduction under sections 80C, 80CCC and 80CCD
is Rs 1,00,000.
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b) or Rs. 10,000,
whichever is lower, is deductible.
Tax treatment of pension received
The pension amount received by the assessee or his nominee as pension
will be taxable in the year of the receipt.
_______________________________________
__________________________________________________ ________________
12.5.3 DEDUCTION IN RESPECT OF CONTRIBUTION
TO PENSION SCHEME OF CENTRAL GOVERNMENT
(SEC. 80CCD)
This section is for allowing deduction to new central Government employees, if
the following conditions are satisfied:
• The taxpayer is an individual
• He is employed by the Central Government on or after January 1, 2004.
• He has in the previous year paid or deposited any amount in his account
under a pension scheme notified by the Central Government.
Amount of Deduction
The amount deductible is
a) The total employee’s contribution and employer’s contribution to the
notified pension scheme during the year.
b) Or 10% of salary of the employee.
Whichever is less
The aggregate amount of deduction under sections 80C, 80CC and 80CCD
cannot exceed Rs. 1,00,000.
CHECK YOUR PROGRESS
Activity A
State True or False
Salary means basic salary including dearness allowance if under the terms of
employment.
Note;-The aggregate deduction under sections 80C, 80CCC and 80CCD cannot
exceed Rs.1, 00,000.
170
a) Contribution towards Public Provident Fund qualifies for deduction under
Section 80 C.
b) The aggregate of investments made in schemes qualifying for deduction under
Section 80 C is known as Gross Total Income
c) The aggregate amount of deduction under section 80 C, 80 CCC & 80CCD
cannot exceed Rs1, 50,000.
d)The maximum deduction under section 80 CCD in respect of pension scheme of
Central Government is 10% of salary.
__________________________________________________ ________________
12.6 DEDUCTIONS FOR CERTAIN PERSONAL
EXPENDITURE
__________________________________________________ ________________
Under Section 80-D, 80-DD ,80-DDB 80-E and 80-GG of IT Act 1961 some
deductions are allowed in respect of personal expenditure such as Medical
Insurance, Medical treatment of handicapped dependent, etc. These deductions are
allowed to give impetus to threshold areas like education ,health & housing. Let us
now discuss them one by one.
12.6.1 DEDUCTION IN RESPECT OF MEDICAL
INSURANCE PREMIA SEC 80D
If the following conditions are satisfied then an assessee may claim deduction
under this section.
• The taxpayer is an individual or a Hindu undivided family .
• Insurance premium is paid by the taxpayer in accordance with the
scheme framed in this behalf by the General Insurance Corporation of
India and approved by the Central Government. The scheme is known
as “mediclaim” insurance policy.( The amount deposited in a similar
scheme of any other insurer who is approved by the Insurance
Regulatory and Development Authority shall also be eligible for
deduction.)
• The aforesaid premium is paid by cheque
• Mediclaim policy is taken on the health of the taxpayer, on the health of
spouse, dependent parents or dependent children of the taxpayer. In
case of HUF on the health of any member of the family
Amount of Deduction:
If all the aforesaid conditions are satisfied, then the
a) insurance premium paid
b) or Rs. 10,000
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whichever is lower, is deductible.
The aforesaid limit has been increased to Rs. 15,000 where the assessee or spouse
or dependent parents or any member of the family is a senior citizen (i.e. one who
is resident and at least of 65 years of age at any time during the previous year) and
medical insurance is taken for such senior citizen.
__________________________________________________ ________________
12.6.2 DEDUCTION IN RESPECT OF DEPENDENT
RELATIVE SECTION 80 DD
Following are the provisions under this section:
• This deduction is available to only Individuals and HUF, who is resident
in India.
• This deduction is given to the assessee if a person with disability is
dependent upon him.
• A person with disability means disabilities like autism, cerebral palsy,
mental retardation, etc. as specified in Persons with Disabilities Act 1995.
• The assessee has incurred expenditure by way of medical treatment
(including nursing), training and rehabilitation of a disabled dependent:
or/and
• He has paid or deposited any amount under any scheme framed by the
LIC of India or any other insurer for the payment of an annuity or a lump
sum amount for the benefit of such dependent in the event of the death of
the assessee.
• For claiming the deduction the assessee shall have to furnish a certificate
by the prescribed medical authority with the return of income.
Amount of Deduction
If the above mentioned conditions are satisfied the amount of deduction is fixed at
Rs. 50,000 irrespective of actual expenditure.
In case of a person with severe disability (over 80 %) a higher deduction of Rs.
75,000 shall be allowed irrespective of actual expenditure.
Illustration 12.1
During the P.Y. 2005-06, the gross total income of Mr. X is Rs 4,00,000. During
the P.Y. he pays the following premiums on Mediclaim insurance policy by
cheque. Calculate the amount of tax benefit under section 80 D.
Explanation: Dependent means
i) In case of an individual, the spouse children, parents, brothers, sisters of the
individual or any of them.
ii) In case of HUF, a member of the HUF wholly or mainly dependent on such
individual or HUF for support and maintenance.
172
Amount (in Rs)
1. Mr. X 6,000
2. Mrs. X 4,000
3. Son (not dependent) 3,000
4. Daughter (dependent) 2,000
5. Father (not dependent) 1,500
6. Mother (dependent) (age 68 years & resident in India) 2,000
Solution
The insurance premium paid for son and father will not qualify for deduction
under section 80 D as they are not dependent upon Mr. X.
Amounts qualifying for deduction are:-
Amount (in Rs)
Mr. X 6,000
Mrs. X 4,000
Daughter 2,000
Total 12,000 ( limited to 10,000)
Additional deduction for mother 2,000
Hence total deduction under section 80 D is Rs (10,000 + 2,000) = Rs 12,000
CHECK YOUR PROGRESS
Activity B
X is a resident individual. During the P.Y. 2005-06 he spends Rs 25,000 towards
medical treatment of his father who is wholly dependent upon him. The disability
is one which comes under Persons with Disability Act, 1995. A copy of certificate
is also submitted. Determine the amount of deduction under section 80DD for the
A.Y. 2006-07.
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12.6.3 DEDUCTION IN RESPECT OF MEDICAL
TREATMENT SECTION 80DDB
Deduction is available if following are satisfied
• Assessee is an individual or HUF resident in India.
173
• The assessee has actually paid for the medical treatment of specified
disease or ailment, for himself or any dependent* or in case of HUF any
member of the family.
• The assessee furnishes a certificate, in the prescribed form from prescribed
authority, along with the return of income.
Amount of deduction
i) a) The amount paid
b)or Rs. 40,000
whichever is less;
ii) Where the amount is paid in relation to a senior citizen the deduction shall be
allowed for the amount paid or Rs. 60,000 whichever is less.
iii)The deduction shall be reduced by the amount received, if any, under an
insurance from an insurer for the medical treatment of person mentioned in this
section or reimbursed by the employer.
* The definition of ‘Dependent’ is the same as in the above section.
_______________________________________
12.6.4 DEDUCTION IN RESPECT OF REPAYMENT OF
LOAN TAKEN FOR HIGHER EDUCATION - SECTION
80E
Deduction is available if:-
• Assessee is an individual.
• He has taken a loan from any financial institution (bank) or an approved
charitable institution.
• The loan is taken is for the purpose of pursuing his higher education.
• During the previous year he has repaid some amount as interest on such
loan.
• Such amount is paid out of his income chargeable to tax.
Amount of deduction
• a) The entire amount paid by way of interest on such loan
b)or Rs.40,000
whichever is less is deductible in this section.
Period of Deduction
Further, the deduction shall be allowed for the previous year in which the
assessee starts repaying the loan or interest thereon and seven previous years
immediately succeeding it or until the loan together with interest thereon is
paid by the assessee in full ,whichever is earlier.
Higher education means full-time studies for any graduate or post-graduate
course in engineering, medicine, management or for post-graduate course in
applied science or pure sciences including mathematics and statistics.
174
___________________________________________
12.6.5 AMOUNT OF RENT PAID - SECTION 80GG
This deduction is allowed to an individual assessee in respect of rent paid by him
for an accommodation used for his residential purposes provided the following
conditions are fulfilled:
• The assessee is either a self-employed person or such a salaried employee who
is not in receipt of house-rent allowance from any source.
• The actual rent paid by him is in excess of 10% of his total income.
• He or his spouse or minor children or the HUF, of which he is a member, do
not own any residential accommodation at the place where the assessee
resides, performs the duties of his office or employment or carries on his
business or profession. Where, however, the assessee owns any residential
accommodation at any other place and claims the concessions of self-occupied
house property for the same, he will not be entitled to any deduction u/s 80GG
even if he does not own any residential accommodation at the place where he
ordinarily resides, performs the duties of his office or employment or carries
on his business or profession.
• The assessee files a declaration in Form No. 10BA regarding the payment of
rent.
Amount of Deduction
The assessee, who fulfils the above mentioned conditions, is allowed a deduction
equal to least of the following three:
• excess of actual rent paid over 10% of adjusted gross total income:
• 25% of his adjusted gross total income; and
• Rs. 2,000 p.m.
Illustration 12.2:
A’s gross total income is Rs. 1,80,000. Deductions allowed u/s 80D and 80C are
Rs. 9,000 and Rs. 12,000 respectively. He pays a rent of Rs. 3,500 p.m. for a
Note:
Deduction under this section can be claimed even if accommodation at
concessional rent is provided by the employer. In such a case the deduction will
be given if the actual rent paid by the employee exceeds 10% of his total
income. Where a rent-free house is provided to the employee, no deduction will
be allowed under this section.
Adjusted Gross Total income( Adj.GTI) for this purpose means his gross
total income minus long-term capital gain, short term capital gain taxable u/s
111A, and all deductions u/s 80CCC to 80U except any deduction under this
section.
175
three-roomed set. He does not own any residential accommodation. Compute his
total income for the assessment year 2006-2007.
Solution
Rs. Rs.
Gross total income 1,80,000
Less: Deduction u/s
80D - MIP etc. 9,000
80C – Insurance etc. 12,000
80GG - Rent Paid 24,000 45,000
Total Income 1,35,000
Note:
Adj. GTI = Rs [1,80,000 ( GTI) – 9,000 (80D) -12,000 (80C) ] = Rs. 1,59,000
Deductions u/s 80GG will be the least of the following:
i) Rs. 2,000 p.m. Rs.24,000
ii) Rent paid (Rs 42,000) - 10% of Adj.GTI ( Rs. 1,59,000) Rs.26,100
iii) 25% of Adj. GTI (Rs, 1,59,000) Rs 39,750
Rs. 24,000 is the least, hence, deductible
__________________________________________________ ________________
12.7 DEDUCTIONS FOR SOCIALLY DESIRABLE
ACTIVITIES
There are various funds created by Governments to take care of natural calamities
like earthquake, floods, etc. Similarly certain funds have been created to promote
social & economic welfare, & education. To promote these funds and so that
people contribute liberally to these funds, deduction has been provided in Section
80G for donations given by assessee to these funds.
____________________________________________
12.7 .1 DONATION TO CERTAIN FUNDS,
CHARITABLE INSTITUTION ETC. (SECTION 80G)
To encourage donations for social cause all assessees are entitled to this deduction
from their gross total income, if the donation is made in the previous year to the
following funds or charitable institutions. For the sake of convenience we have
divided the donations into four categories depending on the quantum of
deduction.
A. Donations made to following are eligible for 100% deduction without any
qualifying limit.
1. Prime Minister’s National Relief Fund
2. National Defence Fund
3. Prime Minister’s Armenia Earthquake Relief Fund
176
4. The Africa (Public Contribution - India) Fund
5. The National Foundation for Communal Harmony
6. Approved university or educational institution of national
eminence
7. The Chief Minister’s Earthquake Relief Fund, Maharashtra
8. Donations made to Zila Saksharta Samitis.
9. The National Blood Transfusion Council or a State Blood
Transfusion Council.
10. The Army Central Welfare Fund or the Indian Naval Benevolent
Fund or The Air Force Central Welfare Fund.
B) Donations made to the following are eligible for 50% deduction without
any qualifying limit.
1. Jawaharlal Nehru Memorial Fund
2. Prime Minister’s Drought Relief Fund
3. National Children’s Fund
4. Indira Gandhi Memorial Trust
5. The Rajiv Gandhi Foundation.
C) Donations to the following are eligible for 100% deduction subject to
qualifying limit (i.e. 10% of adjusted gross total income).
1. Donations to the Government or a local authority for the purpose
of promoting family planning.
2. Sums paid by a company to Indian Olympic Association
D) Donations to the following are eligible for 50% deduction subject to
the qualifying limit (i.e. 10% of adjusted gross total income).
1. Donation to the Government or any local authority to be utilized
by them for any charitable purposes other than the purpose of
promoting family planning.
Amount of deduction
The quantum of deduction is as follows :-
Category A- 100 % of amount donated
Category B -50 % of the amount donated in the funds
Category C – 100% of the amount donated in the funds subject to maximum limit
of 10% of Adjusted GTI.
Category D – 50% of the amount donated in the funds subject to maximum limit
of 10% of Adjusted GTI.
The total of these deductions under categories A,B,C, & D is the quantum of
deduction under this section without any maximum amount.
Adjusted gross Total income for this purpose means his gross total income
minus long-term capital gain, short term capital gain taxable u/s 111A, and
all deductions u/s 80CCC to 80U except any deduction under this section.
177
Illustration 12.3 : X, an Indian citizen gives the following particulars of his
income and expenditure for the previous year 2005-2006.
Rs.
Business income 1,10,000
Long term capital gain 2,00,000
Short term capital gain on sale of shares taxable u/s 111A 10,000
Other short-term capital gain 5,000
Donation to the Prime Minister’s National Relief Fund 11,000
Donation to the Government of India for promotion of
family planning 3,000
Donation to an approved institution 12,000
Payment of medical insurance premium on own life 5,000
Determine the net income X for the assessment year 2006-2007
Solution:
Computation of Total Income of X
Rs.
Business Income 1,10,000
Capital gain: Long-term 2,00,000
Short-term u/s 111A 10,000
Other short-term 5,000
________
Gross Total Income 3,25,000
Deduction u/s 80D 5,000
Less: Deduction: u/s 80G 18,000 23,000
Total Income 3,02,000
Note:
Deduction u/s 80G is computed as under:
A Donation to PMNRF fully qualifies for deduction
and the rate of deduction is 100% 11,000
Qualifying amount of donations for family planning and Approved
Institution cannot exceed 10%of Adjusted gross total income
[i.e. 3,25,00 - 2,00,000(LTCG) - 10,000(STCG) - 5,000( 80 D)] of
Rs. 1,10,000 = Rs. 11,000
C Deduction on donation for family planning
on Rs. 3,000 @ 100% 3,000
D Deduction on other donation Rs.8,000 @ 50% 4,000
Total 18,000
178
CHECK YOUR PROGRESS
Activity C
The gross total income of Mr. Ram Lal is Rs. 2,00,000. The total deductions
under Sections 80C to 80U except 80G is Rs. 20,000. He has paid the following
sums to certain funds and charitable institutions:
(i) Indira Gandhi Memorial Trust Rs. 5,000 (ii) Delhi Municipal
Corporation to be utilized for promoting family planning Rs. 20,000
Compute deduction u/s 80G regarding donations.
(Ans. Rs. 21,500 )
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12.8 DEDUCTION ALLOWED TO A PERSON
WITH DISABILITY - SECTION 80U
To help a disabled person by reducing his tax burden, this section has been
incorporated. Following are the provisions.
• The assessee is an individual being a resident
• He is a person with disability.
• He is certified by the medical authority to be a person with disability, at any
time during the previous year.
• He furnishes a certificate issued by the medical authority in the prescribed
form along the return of income
Amount of deduction
A fixed deduction of
Rs. 50,000 in case of a person with disability
Rs. 75,000 in case of a person with severe disability.( having any
disability over 80%)
CHECK YOUR PROGRESS
Activity D
Tulsi is a person with disability. He submits the following particulars of his
income for the previous year 2005-2006.
179
Rs.
Business Income 1,10,000
Long Term Capital Gains 1,20,000
Lottery Winning (gross) 80,000
During the year he paid Rs. 12,000 (through crossed cheque) as medical insurance
premium for self and deposited Rs. 5,000 in public provident fund.
Compute his total income for the assessment year 2006-07
(Ans. Total Income Rs 2,45,000)
12.9 SUMMARY
Under the income tax act first of all income under each head is computed. The
aggregate of income under each head is known as ‘Gross Total Income’. Out of
this gross total income certain deductions are allowed which are in the nature of
incentives aimed at achieving certain socio economic objectives. The income after
such deductions is called ‘Total Income’.
These deductions are either for certain savings or for certain personal expenditure.
Saving based deductions are 80-C ( certain investments towards LIC, PF, etc)
80CCC( pension fund), 80CCD( Pension scheme of central Government).
Deductions based on personal expenditure are 80D( Medical insurance),
80DD(Medical treatment of disable dependent) 80DDB( Medical treatment of
specified disease) 80E ( Repayment of loan taken for higher education) and
80GG(Deduction for rent paid).Certain deductions are for socially desirable
activities like 80 G for donations to certain funds , charitable institutions, etc.
There is a special deduction for a person with disability under section 80U
One important point to remember is that the total of all deductions under these
sections 80C to 80U cannot exceed the gross total income.
12.8 GLOSSARY
Deductions: Permissible amount under sections 80C to 80U by which the gross
total income is reduced to arrive at the total income liable to tax.
Contribution : To give money towards a particular aim or purpose
Subscription: To pay to an organization to receive a product
Accrued: Increase in amount over a period of time
Aggregate: Formed by adding together several amounts
Nominee : Person officially given a position or job
Autism: a failure to develop social abilities language and other communication
skills to the usual level
Cerebral palsy :Physical condition involving permanent tightening of the
muscles which is caused by damaging of the brain
Rehabilitation: To return to a good healthy condition
180
Pre-decease: when a person dies before the other person
Donation: To give without wanting anything in exchange
__________________________________________________ ________________
12.9 SELF ASSESSMENT EXERCISE
Q1. Fill in the blanks
i) Repayment of loan for higher studies under section 80E is allowed to the extent
of Rs ---------- every year for ----- years.
ii) The maximum deduction u/s 80GG shall be limited to Rs---------- p.m.
iii) Deduction under 80D in respect of medical insurance premia is allowed to an
------------------ or ---------------.
iv) Deduction under section 80CCC is allowed to the extent of Rs------------.
v) Deduction under section 80G in respect of donations is allowed to --------------.
Q2. Match the following
Table A Table B
i) 80C a) Deduction allowed to a person with disability
ii)80G b) Deduction for repayment of loan for higher
studies
iii)80U c) Deduction in respect of medical treatment of a
specified disease
iv)80DDB d) Deduction in respect of LIC premia ,etc
v)80E e) Deduction in respect of certain donations to
certain funds/ charitable institution ,etc
Q3. Write short notes on:
(a) Deduction under section 80GG in respect of amount of rent paid
(b) Deduction u/s 80DD in respect of medical treatment of dependent who is a
person with disability.
____________________________________________
12.10 SUGGESTED READINGS
1.Bhagwati Prasad, Law and practice of Income Tax, Navaman
Prakashan, Aligarh.
2. Mahesh Chandra & S.P. Goyal, Income Tax Law and practice,
Himalaya Publishing House, Delhi
3. Vinod K. Singhania, Monica Singhania, Students Guide to Income Tax,
Taxmann Publications Private Ltd.
4. Girish Ahuja & Ravi Gupta, Simplified Approach to Income Tax and
Sales Tax, Sahitya Bhawan Publishers and Distributors Ltd., Agra
5.Dinkar Pagare, Law and practice of income tax, Sultan Chand and
sons
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Re: DEDUCTIONS - February 9th, 2011

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Re: DEDUCTIONS - October 3rd, 2012

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Jitendra Mazee
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Re: DEDUCTIONS - February 25th, 2016

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Originally Posted by faaiz View Post
DEDUCTIONS

STRUCTURE
12.0 Objectives
12.1 Introduction
12.2 Deductions from gross total income
12.3 Basic rules governing deductions under sections 80C to 80U
12.4 Deductions
12.5 Deductions to encourage savings
12.5.1 Deduction in respect of life insurance premium, etc.80C
12.5.2 Deduction in respect of pension fund 80CCC
12.5.3 Deduction in respect of contribution to pension scheme of
central government 80CCD
12.6 Deductions for certain personal expenditure
12.6.1 Deduction in respect of medical insurance premium 80D
12.6.2 Deduction in respect of maintenance including medical
treatment of dependent who is a person with disability - section
80DD
12.6.3 Deduction in respect of medical treatment - section 80DDB
12.6.4 Deduction in respect of repayment of loan taken for higher
education - section 80E.
12.6.5 Amount of rent paid - section 80GG
12.7 Deductions for socially desirable activities
12.7.1 Donation to certain funds, charitable institution etc.
(section 80G)
12.8 Deductions for persons with disability
12.8.1 Deduction allowed to a person with disability - section 80U
__________________________________________________ ________________
12.0 OBJECTIVES
After studying the Unit you should be able to:
• List the deductions available from gross total income
• Know who is eligible for deduction
• List the conditions for claiming deduction
• Calculate the amount of each deduction
__________________________________________________ ______
12.1 INTRODUCTION
Indian tax laws contain certain provisions, which are intended to act as an
incentive for achieving certain desirable socio-economic objectives. These
166
provisions are contained in Chapter VIA and are in the form of deductions
(80C TO 80U) from the Gross Income. By reducing the chargeable income,
these provisions reduce the tax liability, increase the post-tax income and thus
induce the tax-payers to act in the desired manner. This unit is intended to
give a broad idea of such deductions.
__________________________________________________ _____________
12.2 COMPUTATION OF NET INCOME
To compute the net income of the assessees, first of all we compute the
income under the five head. The provisions for the same have been already
discussed in the previous units. The aggregate of income under each head is
known as “gross total income”. Certain deductions which are not deductible
under any particular head of income are allowed out of gross total income to
arrive at the total income liable to tax.
Total income is accordingly computed as under:
1. Income from salaries ___
2. Income from House property ___
3. Profits and Gains of Business and Profession ___
4. Income from capital gains ___
5. Income from other sources ___
____________
Gross Total Income = ____
____________
Less deduction under Chapter VI-A(80C TO 80U)(-) ------
____________
Total income ___
____________
These deductions are discussed in the following sections.
12.3 BASIC RULES
Following are the basic rules for deduction
1.The aggregate amount of deductions under sections 80C to 80U cannot
exceed gross total income(gross total income after excluding long term
capital gains, short term capital gain under section 111A, winnings from
lottery, crossword puzzles etc.)
2.These deductions are to be allowed only if the assessee claims these
and gives the proof of such investments/ expenditure/ income.
167
12.4 CATEGORIES OF DEDUCTIONS
There are various kinds of deductions. Some of them are to encourage savings,
some are for certain personal expenditure, a few are for socially desirable
activities, and some are for economic growth. For the sake of better understanding
we have categorized them into four kinds. They are
• To encourage savings
• For certain personal expenditure
• For socially desirable activities
• For physically disabled persons
We will be discussing them one by one
__________________________________________________ ________________
12.5 DEDUCTIONS TO ENCOURAGE SAVINGS
The government wants to encourage the habit of people to save for the rainy day.
To give impetus to savings these deductions are given on certain investments or
certain expenditure made by the assessee. Deduction is allowed when the saving
is invested but normally any withdrawal is treated as income in the year of
withdrawal.
__________________________________________________ ________________
12.5.1 DEDUCTION IN RESPECT OF LIFE INSURANCE
PREMIA, ETC. (SEC. 80C)
A new section 80C has been inserted from the assessment year 2006-07 onwards.
Section 80C provides deduction in respect of certain expenditure/ investments
(which are specified in this section) paid or deposited by the assessee in the
previous year.
Deduction under this section is available only to individual & Hindu Undivided
Family.
Gross Qualifying Amount
The following payments/investments qualify for deduction under this section.
The total amount of investments made during the P.Y. under these below
mentioned schemes is known as Gross Qualifying Amount ( GQA )
1.Life Insurance premium paid on a policy taken on his own life, life of the spouse
or any child (child may be dependent/ independent ). In the case of a Hindu
undivided family, policy may be taken on the life of any member of the family.
The premium paid should be maximum of 20% of sum assured .
2. Any sum deducted from salary payable to a Government employee for the
168
purpose of securing him a deferred annuity (subject to a maximum of 20% of
salary)
3. Contribution towards statutory provident fund and recognized provident fund.
4. Contribution towards 15 year public provident fund (maximum of Rs 70,000).
5. Contribution towards an approved superannuation fund
6. Subscription to National Savings Certificates, VIII Issue .
7. Contribution for participating in the Unit-Linked Insurance Plan (ULIP) of Unit
Trust of India..
8. Contribution for participating in the unit-linked insurance plan (ULIP) of LIC
Mutual Fund (i.e. Dhanraksha plan of LIC Mutual Fund)
9.Payment for notified annuity plan of LIC (i.e. Jeevan Dhara, Jeevan Akshay
New Jeevan Dhara ,etc ) or any other insurer.
10. Subscription towards notified units of Mutual Fund or UTI
11. Contribution to notified pension fund set up by Mutual Fund or UTI .
12. Any sum paid (including accrued interest) as subscription to Home Loan
Account Scheme of the National Housing Bank
13. Any sum paid as tuition fees to any university/college/educational institution
in India for full time education.
Amount of deduction
We add the amounts invested / spent in above mentioned schemes and this amount
is known as Gross qualifying amount. The amount deductible is
a) Gross qualifying amount; or
b) Rs 1,00,000
Whichever is less
__________________________________________
12.5.2 DEDUCTION IN RESPECT OF PENSION FUND
(SEC. 80CCC)
If the following conditions are fulfilled an assessee may claim deduction under this
section
• The taxpayer is an individual
• During the previous year, he has paid/deposited a sum under an annuity
plan of the Life Insurance Corporation of India or any other insurer for
receiving pension.
• If deduction has not been claimed under section 80C.
Amount of deduction
If the aforesaid conditions are satisfied, then
a) the amount deposited
Note:-The maximum deduction under sections 80C, 80CCC and 80CCD
is Rs 1,00,000.
169
b) or Rs. 10,000,
whichever is lower, is deductible.
Tax treatment of pension received
The pension amount received by the assessee or his nominee as pension
will be taxable in the year of the receipt.
_______________________________________
__________________________________________________ ________________
12.5.3 DEDUCTION IN RESPECT OF CONTRIBUTION
TO PENSION SCHEME OF CENTRAL GOVERNMENT
(SEC. 80CCD)
This section is for allowing deduction to new central Government employees, if
the following conditions are satisfied:
• The taxpayer is an individual
• He is employed by the Central Government on or after January 1, 2004.
• He has in the previous year paid or deposited any amount in his account
under a pension scheme notified by the Central Government.
Amount of Deduction
The amount deductible is
a) The total employee’s contribution and employer’s contribution to the
notified pension scheme during the year.
b) Or 10% of salary of the employee.
Whichever is less
The aggregate amount of deduction under sections 80C, 80CC and 80CCD
cannot exceed Rs. 1,00,000.
CHECK YOUR PROGRESS
Activity A
State True or False
Salary means basic salary including dearness allowance if under the terms of
employment.
Note;-The aggregate deduction under sections 80C, 80CCC and 80CCD cannot
exceed Rs.1, 00,000.
170
a) Contribution towards Public Provident Fund qualifies for deduction under
Section 80 C.
b) The aggregate of investments made in schemes qualifying for deduction under
Section 80 C is known as Gross Total Income
c) The aggregate amount of deduction under section 80 C, 80 CCC & 80CCD
cannot exceed Rs1, 50,000.
d)The maximum deduction under section 80 CCD in respect of pension scheme of
Central Government is 10% of salary.
__________________________________________________ ________________
12.6 DEDUCTIONS FOR CERTAIN PERSONAL
EXPENDITURE
__________________________________________________ ________________
Under Section 80-D, 80-DD ,80-DDB 80-E and 80-GG of IT Act 1961 some
deductions are allowed in respect of personal expenditure such as Medical
Insurance, Medical treatment of handicapped dependent, etc. These deductions are
allowed to give impetus to threshold areas like education ,health & housing. Let us
now discuss them one by one.
12.6.1 DEDUCTION IN RESPECT OF MEDICAL
INSURANCE PREMIA SEC 80D
If the following conditions are satisfied then an assessee may claim deduction
under this section.
• The taxpayer is an individual or a Hindu undivided family .
• Insurance premium is paid by the taxpayer in accordance with the
scheme framed in this behalf by the General Insurance Corporation of
India and approved by the Central Government. The scheme is known
as “mediclaim” insurance policy.( The amount deposited in a similar
scheme of any other insurer who is approved by the Insurance
Regulatory and Development Authority shall also be eligible for
deduction.)
• The aforesaid premium is paid by cheque
• Mediclaim policy is taken on the health of the taxpayer, on the health of
spouse, dependent parents or dependent children of the taxpayer. In
case of HUF on the health of any member of the family
Amount of Deduction:
If all the aforesaid conditions are satisfied, then the
a) insurance premium paid
b) or Rs. 10,000
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whichever is lower, is deductible.
The aforesaid limit has been increased to Rs. 15,000 where the assessee or spouse
or dependent parents or any member of the family is a senior citizen (i.e. one who
is resident and at least of 65 years of age at any time during the previous year) and
medical insurance is taken for such senior citizen.
__________________________________________________ ________________
12.6.2 DEDUCTION IN RESPECT OF DEPENDENT
RELATIVE SECTION 80 DD
Following are the provisions under this section:
• This deduction is available to only Individuals and HUF, who is resident
in India.
• This deduction is given to the assessee if a person with disability is
dependent upon him.
• A person with disability means disabilities like autism, cerebral palsy,
mental retardation, etc. as specified in Persons with Disabilities Act 1995.
• The assessee has incurred expenditure by way of medical treatment
(including nursing), training and rehabilitation of a disabled dependent:
or/and
• He has paid or deposited any amount under any scheme framed by the
LIC of India or any other insurer for the payment of an annuity or a lump
sum amount for the benefit of such dependent in the event of the death of
the assessee.
• For claiming the deduction the assessee shall have to furnish a certificate
by the prescribed medical authority with the return of income.
Amount of Deduction
If the above mentioned conditions are satisfied the amount of deduction is fixed at
Rs. 50,000 irrespective of actual expenditure.
In case of a person with severe disability (over 80 %) a higher deduction of Rs.
75,000 shall be allowed irrespective of actual expenditure.
Illustration 12.1
During the P.Y. 2005-06, the gross total income of Mr. X is Rs 4,00,000. During
the P.Y. he pays the following premiums on Mediclaim insurance policy by
cheque. Calculate the amount of tax benefit under section 80 D.
Explanation: Dependent means
i) In case of an individual, the spouse children, parents, brothers, sisters of the
individual or any of them.
ii) In case of HUF, a member of the HUF wholly or mainly dependent on such
individual or HUF for support and maintenance.
172
Amount (in Rs)
1. Mr. X 6,000
2. Mrs. X 4,000
3. Son (not dependent) 3,000
4. Daughter (dependent) 2,000
5. Father (not dependent) 1,500
6. Mother (dependent) (age 68 years & resident in India) 2,000
Solution
The insurance premium paid for son and father will not qualify for deduction
under section 80 D as they are not dependent upon Mr. X.
Amounts qualifying for deduction are:-
Amount (in Rs)
Mr. X 6,000
Mrs. X 4,000
Daughter 2,000
Total 12,000 ( limited to 10,000)
Additional deduction for mother 2,000
Hence total deduction under section 80 D is Rs (10,000 + 2,000) = Rs 12,000
CHECK YOUR PROGRESS
Activity B
X is a resident individual. During the P.Y. 2005-06 he spends Rs 25,000 towards
medical treatment of his father who is wholly dependent upon him. The disability
is one which comes under Persons with Disability Act, 1995. A copy of certificate
is also submitted. Determine the amount of deduction under section 80DD for the
A.Y. 2006-07.
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12.6.3 DEDUCTION IN RESPECT OF MEDICAL
TREATMENT SECTION 80DDB
Deduction is available if following are satisfied
• Assessee is an individual or HUF resident in India.
173
• The assessee has actually paid for the medical treatment of specified
disease or ailment, for himself or any dependent* or in case of HUF any
member of the family.
• The assessee furnishes a certificate, in the prescribed form from prescribed
authority, along with the return of income.
Amount of deduction
i) a) The amount paid
b)or Rs. 40,000
whichever is less;
ii) Where the amount is paid in relation to a senior citizen the deduction shall be
allowed for the amount paid or Rs. 60,000 whichever is less.
iii)The deduction shall be reduced by the amount received, if any, under an
insurance from an insurer for the medical treatment of person mentioned in this
section or reimbursed by the employer.
* The definition of ‘Dependent’ is the same as in the above section.
_______________________________________
12.6.4 DEDUCTION IN RESPECT OF REPAYMENT OF
LOAN TAKEN FOR HIGHER EDUCATION - SECTION
80E
Deduction is available if:-
• Assessee is an individual.
• He has taken a loan from any financial institution (bank) or an approved
charitable institution.
• The loan is taken is for the purpose of pursuing his higher education.
• During the previous year he has repaid some amount as interest on such
loan.
• Such amount is paid out of his income chargeable to tax.
Amount of deduction
• a) The entire amount paid by way of interest on such loan
b)or Rs.40,000
whichever is less is deductible in this section.
Period of Deduction
Further, the deduction shall be allowed for the previous year in which the
assessee starts repaying the loan or interest thereon and seven previous years
immediately succeeding it or until the loan together with interest thereon is
paid by the assessee in full ,whichever is earlier.
Higher education means full-time studies for any graduate or post-graduate
course in engineering, medicine, management or for post-graduate course in
applied science or pure sciences including mathematics and statistics.
174
___________________________________________
12.6.5 AMOUNT OF RENT PAID - SECTION 80GG
This deduction is allowed to an individual assessee in respect of rent paid by him
for an accommodation used for his residential purposes provided the following
conditions are fulfilled:
• The assessee is either a self-employed person or such a salaried employee who
is not in receipt of house-rent allowance from any source.
• The actual rent paid by him is in excess of 10% of his total income.
• He or his spouse or minor children or the HUF, of which he is a member, do
not own any residential accommodation at the place where the assessee
resides, performs the duties of his office or employment or carries on his
business or profession. Where, however, the assessee owns any residential
accommodation at any other place and claims the concessions of self-occupied
house property for the same, he will not be entitled to any deduction u/s 80GG
even if he does not own any residential accommodation at the place where he
ordinarily resides, performs the duties of his office or employment or carries
on his business or profession.
• The assessee files a declaration in Form No. 10BA regarding the payment of
rent.
Amount of Deduction
The assessee, who fulfils the above mentioned conditions, is allowed a deduction
equal to least of the following three:
• excess of actual rent paid over 10% of adjusted gross total income:
• 25% of his adjusted gross total income; and
• Rs. 2,000 p.m.
Illustration 12.2:
A’s gross total income is Rs. 1,80,000. Deductions allowed u/s 80D and 80C are
Rs. 9,000 and Rs. 12,000 respectively. He pays a rent of Rs. 3,500 p.m. for a
Note:
Deduction under this section can be claimed even if accommodation at
concessional rent is provided by the employer. In such a case the deduction will
be given if the actual rent paid by the employee exceeds 10% of his total
income. Where a rent-free house is provided to the employee, no deduction will
be allowed under this section.
Adjusted Gross Total income( Adj.GTI) for this purpose means his gross
total income minus long-term capital gain, short term capital gain taxable u/s
111A, and all deductions u/s 80CCC to 80U except any deduction under this
section.
175
three-roomed set. He does not own any residential accommodation. Compute his
total income for the assessment year 2006-2007.
Solution
Rs. Rs.
Gross total income 1,80,000
Less: Deduction u/s
80D - MIP etc. 9,000
80C – Insurance etc. 12,000
80GG - Rent Paid 24,000 45,000
Total Income 1,35,000
Note:
Adj. GTI = Rs [1,80,000 ( GTI) – 9,000 (80D) -12,000 (80C) ] = Rs. 1,59,000
Deductions u/s 80GG will be the least of the following:
i) Rs. 2,000 p.m. Rs.24,000
ii) Rent paid (Rs 42,000) - 10% of Adj.GTI ( Rs. 1,59,000) Rs.26,100
iii) 25% of Adj. GTI (Rs, 1,59,000) Rs 39,750
Rs. 24,000 is the least, hence, deductible
__________________________________________________ ________________
12.7 DEDUCTIONS FOR SOCIALLY DESIRABLE
ACTIVITIES
There are various funds created by Governments to take care of natural calamities
like earthquake, floods, etc. Similarly certain funds have been created to promote
social & economic welfare, & education. To promote these funds and so that
people contribute liberally to these funds, deduction has been provided in Section
80G for donations given by assessee to these funds.
____________________________________________
12.7 .1 DONATION TO CERTAIN FUNDS,
CHARITABLE INSTITUTION ETC. (SECTION 80G)
To encourage donations for social cause all assessees are entitled to this deduction
from their gross total income, if the donation is made in the previous year to the
following funds or charitable institutions. For the sake of convenience we have
divided the donations into four categories depending on the quantum of
deduction.
A. Donations made to following are eligible for 100% deduction without any
qualifying limit.
1. Prime Minister’s National Relief Fund
2. National Defence Fund
3. Prime Minister’s Armenia Earthquake Relief Fund
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4. The Africa (Public Contribution - India) Fund
5. The National Foundation for Communal Harmony
6. Approved university or educational institution of national
eminence
7. The Chief Minister’s Earthquake Relief Fund, Maharashtra
8. Donations made to Zila Saksharta Samitis.
9. The National Blood Transfusion Council or a State Blood
Transfusion Council.
10. The Army Central Welfare Fund or the Indian Naval Benevolent
Fund or The Air Force Central Welfare Fund.
B) Donations made to the following are eligible for 50% deduction without
any qualifying limit.
1. Jawaharlal Nehru Memorial Fund
2. Prime Minister’s Drought Relief Fund
3. National Children’s Fund
4. Indira Gandhi Memorial Trust
5. The Rajiv Gandhi Foundation.
C) Donations to the following are eligible for 100% deduction subject to
qualifying limit (i.e. 10% of adjusted gross total income).
1. Donations to the Government or a local authority for the purpose
of promoting family planning.
2. Sums paid by a company to Indian Olympic Association
D) Donations to the following are eligible for 50% deduction subject to
the qualifying limit (i.e. 10% of adjusted gross total income).
1. Donation to the Government or any local authority to be utilized
by them for any charitable purposes other than the purpose of
promoting family planning.
Amount of deduction
The quantum of deduction is as follows :-
Category A- 100 % of amount donated
Category B -50 % of the amount donated in the funds
Category C – 100% of the amount donated in the funds subject to maximum limit
of 10% of Adjusted GTI.
Category D – 50% of the amount donated in the funds subject to maximum limit
of 10% of Adjusted GTI.
The total of these deductions under categories A,B,C, & D is the quantum of
deduction under this section without any maximum amount.
Adjusted gross Total income for this purpose means his gross total income
minus long-term capital gain, short term capital gain taxable u/s 111A, and
all deductions u/s 80CCC to 80U except any deduction under this section.
177
Illustration 12.3 : X, an Indian citizen gives the following particulars of his
income and expenditure for the previous year 2005-2006.
Rs.
Business income 1,10,000
Long term capital gain 2,00,000
Short term capital gain on sale of shares taxable u/s 111A 10,000
Other short-term capital gain 5,000
Donation to the Prime Minister’s National Relief Fund 11,000
Donation to the Government of India for promotion of
family planning 3,000
Donation to an approved institution 12,000
Payment of medical insurance premium on own life 5,000
Determine the net income X for the assessment year 2006-2007
Solution:
Computation of Total Income of X
Rs.
Business Income 1,10,000
Capital gain: Long-term 2,00,000
Short-term u/s 111A 10,000
Other short-term 5,000
________
Gross Total Income 3,25,000
Deduction u/s 80D 5,000
Less: Deduction: u/s 80G 18,000 23,000
Total Income 3,02,000
Note:
Deduction u/s 80G is computed as under:
A Donation to PMNRF fully qualifies for deduction
and the rate of deduction is 100% 11,000
Qualifying amount of donations for family planning and Approved
Institution cannot exceed 10%of Adjusted gross total income
[i.e. 3,25,00 - 2,00,000(LTCG) - 10,000(STCG) - 5,000( 80 D)] of
Rs. 1,10,000 = Rs. 11,000
C Deduction on donation for family planning
on Rs. 3,000 @ 100% 3,000
D Deduction on other donation Rs.8,000 @ 50% 4,000
Total 18,000
178
CHECK YOUR PROGRESS
Activity C
The gross total income of Mr. Ram Lal is Rs. 2,00,000. The total deductions
under Sections 80C to 80U except 80G is Rs. 20,000. He has paid the following
sums to certain funds and charitable institutions:
(i) Indira Gandhi Memorial Trust Rs. 5,000 (ii) Delhi Municipal
Corporation to be utilized for promoting family planning Rs. 20,000
Compute deduction u/s 80G regarding donations.
(Ans. Rs. 21,500 )
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12.8 DEDUCTION ALLOWED TO A PERSON
WITH DISABILITY - SECTION 80U
To help a disabled person by reducing his tax burden, this section has been
incorporated. Following are the provisions.
• The assessee is an individual being a resident
• He is a person with disability.
• He is certified by the medical authority to be a person with disability, at any
time during the previous year.
• He furnishes a certificate issued by the medical authority in the prescribed
form along the return of income
Amount of deduction
A fixed deduction of
Rs. 50,000 in case of a person with disability
Rs. 75,000 in case of a person with severe disability.( having any
disability over 80%)
CHECK YOUR PROGRESS
Activity D
Tulsi is a person with disability. He submits the following particulars of his
income for the previous year 2005-2006.
179
Rs.
Business Income 1,10,000
Long Term Capital Gains 1,20,000
Lottery Winning (gross) 80,000
During the year he paid Rs. 12,000 (through crossed cheque) as medical insurance
premium for self and deposited Rs. 5,000 in public provident fund.
Compute his total income for the assessment year 2006-07
(Ans. Total Income Rs 2,45,000)
12.9 SUMMARY
Under the income tax act first of all income under each head is computed. The
aggregate of income under each head is known as ‘Gross Total Income’. Out of
this gross total income certain deductions are allowed which are in the nature of
incentives aimed at achieving certain socio economic objectives. The income after
such deductions is called ‘Total Income’.
These deductions are either for certain savings or for certain personal expenditure.
Saving based deductions are 80-C ( certain investments towards LIC, PF, etc)
80CCC( pension fund), 80CCD( Pension scheme of central Government).
Deductions based on personal expenditure are 80D( Medical insurance),
80DD(Medical treatment of disable dependent) 80DDB( Medical treatment of
specified disease) 80E ( Repayment of loan taken for higher education) and
80GG(Deduction for rent paid).Certain deductions are for socially desirable
activities like 80 G for donations to certain funds , charitable institutions, etc.
There is a special deduction for a person with disability under section 80U
One important point to remember is that the total of all deductions under these
sections 80C to 80U cannot exceed the gross total income.
12.8 GLOSSARY
Deductions: Permissible amount under sections 80C to 80U by which the gross
total income is reduced to arrive at the total income liable to tax.
Contribution : To give money towards a particular aim or purpose
Subscription: To pay to an organization to receive a product
Accrued: Increase in amount over a period of time
Aggregate: Formed by adding together several amounts
Nominee : Person officially given a position or job
Autism: a failure to develop social abilities language and other communication
skills to the usual level
Cerebral palsy :Physical condition involving permanent tightening of the
muscles which is caused by damaging of the brain
Rehabilitation: To return to a good healthy condition
180
Pre-decease: when a person dies before the other person
Donation: To give without wanting anything in exchange
__________________________________________________ ________________
12.9 SELF ASSESSMENT EXERCISE
Q1. Fill in the blanks
i) Repayment of loan for higher studies under section 80E is allowed to the extent
of Rs ---------- every year for ----- years.
ii) The maximum deduction u/s 80GG shall be limited to Rs---------- p.m.
iii) Deduction under 80D in respect of medical insurance premia is allowed to an
------------------ or ---------------.
iv) Deduction under section 80CCC is allowed to the extent of Rs------------.
v) Deduction under section 80G in respect of donations is allowed to --------------.
Q2. Match the following
Table A Table B
i) 80C a) Deduction allowed to a person with disability
ii)80G b) Deduction for repayment of loan for higher
studies
iii)80U c) Deduction in respect of medical treatment of a
specified disease
iv)80DDB d) Deduction in respect of LIC premia ,etc
v)80E e) Deduction in respect of certain donations to
certain funds/ charitable institution ,etc
Q3. Write short notes on:
(a) Deduction under section 80GG in respect of amount of rent paid
(b) Deduction u/s 80DD in respect of medical treatment of dependent who is a
person with disability.
____________________________________________
12.10 SUGGESTED READINGS
1.Bhagwati Prasad, Law and practice of Income Tax, Navaman
Prakashan, Aligarh.
2. Mahesh Chandra & S.P. Goyal, Income Tax Law and practice,
Himalaya Publishing House, Delhi
3. Vinod K. Singhania, Monica Singhania, Students Guide to Income Tax,
Taxmann Publications Private Ltd.
4. Girish Ahuja & Ravi Gupta, Simplified Approach to Income Tax and
Sales Tax, Sahitya Bhawan Publishers and Distributors Ltd., Agra
5.Dinkar Pagare, Law and practice of income tax, Sultan Chand and
sons
Hey friend, thanks for such a nice detailed information on tax deduction and it would be really helpful for many people. I have also got something which will describe the tax deduction in more details so please download and check my presentation.
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