INCOME TAX MATERIAL

Deduction & Total Income

Unit 9 – Deductions
Deductions under chapter VI -A is restricted to Gross Total Income & deduction cannot be carry forward.

Deduction under chapter VI-A is not allowed against LTCG, LTCG u/s 112A, STCG u/s 111A &
special rates of tax income.
Part A : Payment Related Deductions

Sec 80C : Specified Investments

a. Eligible Assessee: Individual & HUF
b. Amount of deduction Rs.1,50,000 [Maximum Limit]
c. Eligible Investments:
1. Life insurance premium:
Amount deduction
If policy issued before 01-04-2012 a. Premium paid
b. 20% of Policy value
Whichever is lower
If policy issued on or after 01-04-2012 a. Premium paid
b. 10% of Policy value
Whichever is lower
If policy issued on or after 01-04-2013 for a. Premium paid
person with disability u/s 80U or person b. 15% of Policy value
suffering from specified disease (u/s 80DDB) Whichever is lower

2. Amount deposited in Public Provident Fund (PPF)

(For assesse, spouse, children)
3. Employee’s contribution to Statutory Provident Fund, Recognised Provident fund (SPF & RPF)
4. Amount invested in NSC as well as interest accrued on NSC.
5. Repayment of loan taken banks & financial institution for purchase or construction of House.
6. Fixed deposit in a scheduled bank or post office for 5 years or more.
7. Tuition fees paid for education of children.
[Max 2 children for full time education in India]
8. Deposit in notified bonds of NABARD
9. Deposit in Senior Citizen Saving Scheme.
10. Contribution towards Unit Linked Insurance Plan (ULIP)
11. Notified units of Mutual Funds or UTI.
12. Notified pension scheme of UTI or MF.
13. Deposit in Sukanya Samridhi Scheme A/c. [for individual himself/herself or any girl child of
individual or girl child for whom such individual is a legal guardian]
14. Stamp duty, registration fee for acquisition of house property.

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Sec 80CCC: Contribution to Pension Fund of LIC or other insurance company

Eligible Assessee: Individual
Amount of Deduction: Max Rs.1,50,000
Sec 80CCD: Contribution to Pension scheme of Central Govt. / New pension Scheme/ Atal Pension Yojna
Eligible Assesee: Individual
Amount of deduction
Salaried Employee Other Individuals
Employees contribution **** Assesee’s contribution ****
10% of salary **** 20% of GTI ****
Whichever is lower Whichever is lower
.
Sec 80CCD(1B): Additional deduction upto Rs.50,000 shall be allowed other than contributions u/s
80CCD(1).
Sec 80CCD(2): Employers contribution to NPS for the benefit of Employee
Employer contribution is first taxable under the head salary in hands of Employee & then he gets deduction
u/s 80CCD(2) Contribution is by
Central Government being Employer Other Employer
a. Employers Contribution **** c. Employers Contribution ****
b. 14% of salary **** d. 10% of salary ****
Whichever is lower Whichever is lower
Sec 80CCE : Aggregate deduction u/s 80C+80CCC+80CCD(1) is restricted to Maximum Rs.1,50,000

Sec 80D: Deduction in respect of Medical insurance premium, central govt. Health Scheme, Preventive Health
checkup & Medical Treatment
• Eligible Assesse: Individual & HUF
• For whom:
Individual – Self, House, Parents & dependent children
HUF – Any member of HUF.
• Mode of payment
Any mode other than cash, but payment of preventive health checkup can be made in cash.
• Amount of deduction
Individual HUF
Category – A Self, Spouse, Dependent Parents Members
Children
a. Medical insurance premium Yes Yes Yes
b. CG Health Scheme Yes  
c. Preventive Health checkup Yes Yes 
General deduction (a+b+c) Max Rs.25,000 Max Rs.25,000 Max Rs.25,000

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+
Additional deduction (when medical Max Rs.25,000 Max Rs.25,000 Max Rs.25,000
insurance policy taken on the life of
senior citizen) Age 60 or more

Category - B
Medical Expenditure of senior Max Rs.50,000 Max Rs.50,000 Max Rs.50,000
citizen (age 60 or more) &
Mediclaim premium not paid for
such person.
Maximum deduction (A+B) Max Rs.50,000 Max Rs.50,000 Max Rs.50,000

Notes:
1. Aggregate payment for preventive health checkup of self, spouse, dependent children & parents to the
extent of Rs.5,000. However the said deduction of Rs.5,000/- is within the overall limit of Rs.25000 or
Rs. 50,000/-.
2. Deduction where premium for health insurance is paid lump sum.
Appropriate fraction of lump sum premium allowance as deduction: In a case where Mediclaim
premium is paid in lumpsum for more than one year, then, the deduction allowable under this section
for each of the relevant previous year would be equal to the appropriate fraction of such lump sum
payment.
Sec 80DD: Deduction in respect of Medical treatment & Maintenance of Handicapped dependent relative.
a. Eligible Assessee: Resident Individual & HUF
b. Amount of deduction: Flat deduction
i. Normal disability = Rs.75,000
ii Severe diability = Rs.1,25,000
c. Assessee should incur expenses on medical treatment or deposit any amount for maintenance of such
handicapped dependent relative
d. Relative Individual – spouse, brother, sister, children, mother, father.
HUF – Any member of HUF.
Sec 80DDB: Deduction in respect of medical treatment of specified diseases
a. Eligible Assessee: Resident Individual / HUF
b. Amount of deduction
Actual Expenses ****
Or
Maximum Rs.40,000/Rs.1,00,000 ****
Whichever is lower

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Notes:
1. Assesee should incur expenses on medical treatment or deposit any amount for maintenance of such
handicapped dependent relative.
2. Relative Individual – Spouse, brother, sister, children, mother, and father.
3. In case of HUF – Any member of HUF
Sec – 80U Deduction for handicapped assesse
a. Eligible Assessee: Resident Individual
b. Amount of deduction: Flat deduction
Normal Disability : Rs.75,000
Sever Disability : Rs.1,25,000

Sec - 80E Sec - 80EE

Assessee Individual Individual
Loan Loan for pursuing his higher education for Loan for acquisition of residential house
himself or his relative property
Amount of Interest amount for a period of 8 consecutive Max Rs.50,000
deduction years starting first deduction should be claimed u/s24(b) of
house property (upto 2,00,00o) & remaining
int deduction u/s 80EE
Conditions a. Loan should be taken from bank or financial
institution for acquisition of residential
property
b. Purchase price of house upto Rs.50 lakh
c. Loan should be sanctioned between 1-4-
2016 to 31-3-2017
d. Loan amount upto Rs.35 lakh
e. Assessee does not own any residential
house on date of sanction of loan.

80EEA 80EEB
Assessee Individual Individual
Loan Loan for acquisition of residential house Loan for electric vehicle
property
Amount of Max Rs.1,50,000 Max Rs.1,50,000
deduction first deduction should be claimed u/s24(b) of
house property (upto 2,00,00o) & remaining
int deduction u/s 80EE

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Conditions a. Loan should be taken from bank or financial
institution for acquisition of residential
property
b. Purchase price of house upto Rs.45 lakh
c. Loan should be sanctioned between 1-4-
2019 to 31-3-2020
d. The individual should not be eligible to
claim deduction u/s 80EE
e. Assessee does not own any residential
house on date of sanction of loan.
a. Loan should be taken for purchase of an
electric vehicle.
b. Loan should be sanctioned between 1-4-
2019 to 31-3-2023
c. Loan should be sanctioned by a FI (bank or
specified NBFC’s)
d. The assesse should be an individual.

Donation
Sec – 80G
a. Eligible assesse: Any person
b. Quantum of deduction:
I I. Donation qualifying for 100% deduction, without any qualifying limit
1. The National Defence Fund set up by the central government
2. Prime Minister’s National Relief Fund
3. Prime Minister’s Armenia Earthquake Relief Fund
4. The Africa (Public Contributions-India) Fund
5. The National Children’s Fund
6. The National Foundation for Communal Harmony
7. Approved University or educational institution of national eminence
8. Chief Minister’s Earthquake Relief Fund, Maharashtra
9. Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of
the Gujarat earthquake
10. Any Zila Saksharta Samiti constituted in any district for improvement of primary education in
villages and towns and for literacy and post-literacy activities
11. National Blood Transfusion Council or any State Blood Transfusion Council
12. Any State Government Fund set up to provide medical reliefs to the poor
13. The Army Central Welfare Fund or Indian Naval Benevolent Fund or Air Force Central Welfare
Fund
14. The Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
15. The National illness Assistance Fund
16. The Chief Ministers Relief Fund or Lieutenant Governor’s Relief Fund in respect of any state or
union territory
17. The National Sports Fund set up by the Central Government
18. The National Cultural Fund set up by the Central Government

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19. The Fund for Technology Development and Application set up by the Central Government
20. Nation Trust for welfare of persons with Autism, Cerebal Palsy, Mental Retardation and Multiple
Disabilities
21. The Swach Bharat Kosh
22. The Clean Ganga
23. The National Fund for Control of Drug Abuse

II Donation qualifying for 50% deduction, without any qualifying limit

1. The Jawaharlal Nehru Memorial Fund
2. Prime Minister’s Drought Relief Fund
3. Indira Gandhi Memorial Trust
4. Rajiv Gandhi Foundation

III Donation qualifying for 100% deduction, subject to qualifying limit

1. The government or to any approved local authority, institution or association for promotion of
family planning.
2. Sum paid by company as donation to the Indian Olympic Assocaition or any other
association/institution established by the govt for development of infra for sports or games, or the
sponsorship of sports and games in India.

IV Donation qualifying for 50% deduction, subject to qualifying limit

1. Any institution or Fund established in India for charitable purposes fulfilling prescribed conditions
2. The government or any local authority for utilization for any charitable purpose other than the
purpose of promoting family planning
3. An authority constituted for housing accommodation or for purpose of planning, development or
improvement of cities, towns, and villages, or both.
4. Any corporation established for promoting the interests of the members of a minority community
5. For renovation or repair of temple, mosque, gurdwara, church or other place of historic,
archaeological or artistic importance or which is a place of public worship

Qualifying limit:
Step 1: Adjusted total income i.e., GTI reduced by the following:
a. Deductions under chapter VI-A, expect under section 80G
b. Short-term capital gain taxable u/s 111A
c. Long-term capital gains taxable u/s 112 & 112A
d. Any income on which income tax is not payable.
Step 2: Calculate 10% of adjusted total income
Step 3: Calculate the actual donation

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Step 4: Lower of Step 2 or Step 3

Step 5: the said deduction is adjusted first against donations qualifying for 100% deduction. Thereafter,
50% of balance qualifies for deduction u/s 80G.

Note: No deduction shall be allowed in respect of donation of any sum exceeding Rs.2,000 unless such sum
is paid by any mode other than cash.
.
Sec – 80 GG
a. Eligible Assessee: Any assessee who is not in receipt of HRA qualifying for exemption u/s 10(13A) from
employer and who pays rent for accommodation occupied by him for residential purpose.
b. Conditions
1. The assesse should not be receiving any HRA.
2. Expenditure incurred by him on rent exceed 10% of hi total income.
3. Accommodation should be occupied by the assesse for the purpose of his own residence.
4. Assessee or his spouse or his minor child or a HUF should not own any accommodation at the place
where he resides or perform duties of his office or employment or carries on his business or
profession.
c. Quantum of deduction:
1. Actual rent paid – 10% of adjusted total income
2. 25% of adjusted total income
3. Rs.5,000 p.m.
Whichever is lower
Sec – 80GGA
a. Eligible assesse: Any assesse not having income under “Profits and gains of business or profession”,
who makes donations to scientific research or rural development.
b. Quantum of deduction: Entire amount of donations.

Note: No deduction shall be allowed in respect of donation of any sum exceeding 10,000 unless such sum is
paid by any mode other than cash.
Sec – 80GGB
a. Eligible assesse: Indian company
b. Quantum of deduction: entire of donation
Sec – 80GGC
a. Eligible assesse: Any person
b. Quantum of deduction: Entire amount of donations.
Political Party means a political party registered under sec – 29 A of The Representation of the People Act,
1951.
Sec – 80JJAA Deduction in respect of Employment of new employees
Eligible Assessee: Any assesse engaged in Business & to whom Sec 44Ab applies (i.e., T/O exceeds Rs.1 cr)

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Amount of deduction: 30% Additional Employee cost (deduction allowed for 3 consecutive years)
Additional Employee cost: total employment paid or payable to additional employees employed during the PY.
1. In case of existing business, additional employee cost shall be Nil, if
a. There is no increase in the total number of employees.
b. Emoluments paid otherwise than by A/C payee Cheque/ Draft/NEFT/RTGS (means paid in cash)
2. In case of New Business – Additional employee cost shall be emoluments paid / payable to employees
employed during that PY.
3. Additional employees do not include –
- Employee whose emoluments > Rs.25,000 p.m.
- Employee employed for less than 240 days in PY (in case of manufacture of apparel or footwear or
leather products then 150 days)
- Employee does not participate in RPF.
- Employee for whom the entire contribution is paid by Government under Employees Pension
Scheme notified in accordance with the provision of Employees Provident Funds & Miscellaneous
Provision Act, 1952.
Note – If an employee is employed during the previous year for less than 240 days or 150 days, as the case may
be, in the immediately succeeding year, he shall be deemed to have been employed in the succeeding year.
Accordingly, the employer would be entitled to deduction of 30% of additional employee cost of such emloyees
in the succeeding year.

Part B : Revenue based deduction

Section Eligible Assessee Eligible Income Permissible Deduction
80QQB Resident Individual, Royalty income etc,. of authors of Income derived in the exercise of
being an author certain books other than text profession or Rs.3,00,000
books. whichever is less.
80RRB Resident Individual Royalty on patents Whole of such income or
being a patentee Rs.3,00,000 whichever is less.
80 TTA Individual or a HUF, Interest on deposits in saving Actual Interest Or
Other than a resident account Rs.10,000
senior citizen Whichever is lower
80 TTB Resident Senior Interest on deposits with banking Actual Interest Or
Citizen company, co-operative society Rs.50,000
engaged in banking or a post Whichever is lower

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➢ Total Income: Total income has to be computed as per the provisions contained in the Income-tax Act,
1961. The following steps has to be followed for computing the total income of an assessee:
Step-1: Determination of residential status.
Step-2: Classification of income under different heads.
Step-3: Computation of income under each head after providing for permissible deductions/exemptions.
Step-4: Clubbing of income of spouse, minor child etc.
Step-5: Set-off or carry forward and set-off of losses.
Step-6: Computation of Gross Total Income.
Step-7: Deductions from Gross Total Income.
Step-8: Computation of Total Income.
Step-9: Application of the rates of tax on the total income.
Step-10: Surcharge/Rebate under section 87A.
Step-11: Health and education cess on income-tax.
Step-12: Advance Tax and Tax Deducted at Source.
Step-13: Tax Payable/ Tax Refundable.

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