CHRIST

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Unit 6: Income from Other Sources, Computation of GTI & Deductions

u/s. 80

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Deductions u/s. 80
A. Deductions in respect of Certain Payments (Sec. 80C to 80GGC)
B. Deductions in respect of certain Incomes (Sec. 80 IA to 80 U)

● Deductions from GTI is either incentives to save for future or a kind of relief to the assessee
● Deductions under each head of income is to meet expenses which are necessary

● Note: The following are not eligible for deduction u/s/ 80:
○ Short term capital gain arising on transfer of equity shares of a Company or units of equity oriented
fund where transaction is covered under ‘Securities Transaction Tax’ (STT)
○ Long term capital gain
○ Casual income falling under sec. 56(2)(ib) i.e. Winnings from lotteries, crossword puzzles, races
including horse races, card games, and other games of any short form gambling or betting.
○ Incomes referred under sec. 115A, 115AB, 115AC, 115AD, 115BBA & 115D. i.e. Dividend,
Interest received in foreign currencies, Royalty/technical fees by a non resident, Income from
overseas financial organization, Income of notified Foreign Institutional Investors,
○ GTI For deductions = GTI – LTCG – STCG Covered – Income from sec.115 – Casual incomes
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Sec. 80 C (Applicable to Individual & HUF)

● Deposits made in Provident Funds

● Payment of Life Insurance Premium
○ Actual Premium paid/20% of sum assured (For policy issued before 1-4-2012
○ Actual Premium paid/10% of sum assured (Policy issued after 1-4-2012
○ Actual Premium paid/15% of sum assured (issued after 1-4-2013 on person with disability/disease)
○ LIP can be obtained in the name of the assessee, spouse and children (whether minor/major, dependent or
independent)
● Amount deducted out Govt employee’s salary towards deferred Annuity (Not exceeding 20%
of salary)
● Payment towards group insurance
● Deposits in approved Superannuation Fund
● Deposits made in ULIP
● Amount invested in NSC- VIII or IX
● Amount invested in NSS – 1992
● Amount paid to LIC under Jeevan Dhara, Jeevan
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Contd...

● Amount invested in notified Pension Fund

● Amount deposited in National Housing Bank
● Deposit in Sukanya Samridhi Account
● Term Deposits with Banks
● Amount deposited in Equity Linked Saving Scheme (ELSS)
● Repayment of Housing Loan
● Payment of Tuition Fees of TWO children
● Amount invested in Equity shares/debentures
● Amount invested in Units of Mutual Fund
● 5 Year Term Deposit with Post Office
● Contribution of employees to Cent Govt National Pension Scheme (NPS)

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Exercise 1

● From the following particulars of Mr. Arun, compute the amount of deduction u/s. 80C for the
PY 2019-20:

1. Life Insurance Premium paid on own policy (30,000), on life of wife (10,000), on life of father
(10,000), on life of married daughter and her husband (10,000); all policies were taken in 2010
2. Contributions to RPF Rs. 2000 p.m.
3. Deposit in PPF Rs. 45,000
4. Group Insurance Premium Rs. 3000
5. Invest in NSC-VIII issue out of agricultural income Rs. 10,000
6. Repayment of Housing Loan from LIC Rs. 4,000 p.m (including 1,000 as interest)
7. Accrued interest on NSC-VIII issue Rs. 4,000
8. Insurance premium on life of minor son paid on 2-4-2020 Rs. 8,000

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Deduction u/s. 80 CCC – Contribution to Pension Fund (applicable only to

Individual)

● Deposits made to LIC or any other insurer

● Deposit made out of income chargeable to tax

● Rate of deduction is Actual Amount or 1,50,000 whichever is lesser

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80 CCD – Contribution to NPS of Central Govt (applicable to Individual only)

● Employed on or after 1-4-2004 by Central Govt or any Other employer

● 80CCD (1): Employee’s own contribution or 10% of salary whichever is less

● 80CCD (2): Contribution of Employer or 10% of salary (14% in case of Cent. Govt Employee)

● If Self-Employed: Actual Contribution or 20% of GTI

● 80CCD(1B): Addition deduction of Rs. 50,000

● Deduction u/s. 80CCD = Deduction u/s. 80CCD (1) + Additional Deduction u/s. 80CCD
(1B) + Deduction in respect of employer’s contribution u/s. 80CCD (2)

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80 D- Medical Insurance Premia, Preventive Health Check-Up,

Contribution to Cent. Govt. Health Scheme (CGHS) (Applicable to Individual &
HUF)
● Medical insurance premia/Preventive Health Check up paid for Self, Spouse, Dependent
Children, Parents
● Premia should not be paid in cash

● Actual Premia + Preventive Health Check up (Rs. 5,000) OR Rs. 25,000 (in case of senior
citizen Rs. 50,000) – For Self/Spouse/Dependent Children

● Actual Premia + Preventive Health Check up OR Rs. 25,000 (in case of senior citizen Rs.
50,000) – For Parent/Parents

● Medical Expenditure of Senior Citizen: Max. Rs. 50,000 for medical expenditure is allowed

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80 DD: Maintenance & Medical Treatment of a Dependent with disability

(Applicable to Individual & HUF)

● A fixed deduction of Rs. 75,000 from GTI

● A fixed deduction of Rs. 1,25,000 from GTI (if severe disability)

● Dependent includes spouse, children, parents, brothers and sisters

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80DDB: Medical Treatment (applicable to Individual & HUF)

● Medical expenses are actually paid for such disease or ailments (Neurological diseases, Cancer,
AIDS, Chronic Renal Failure, Hemophilia, Thalassaemia)

● Amount actually incurred or Rs. 40,000 whichever is less (if Non-Senior Citizen)

● Amount actually incurred or Rs. 1,00,000 whichever is less (if Senior Citizen)

● Note: Deduction will be allowed only when a copy of the prescription is prescribed by a
Neurologist, Urologist, haematologist, immunologist or such other specialist

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Sec. 80 E Interest towards education loan

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80 G: Donations to certain funds, Charitable institutions, etc.

● A) No Limit Donations:
National Defence Fund, PM’s Armenia Earthquake Relief Fund, National Children’s Fund, The Africa
Fund, National Foundation for communal harmony, University/Educational Institution of National
Eminence, CM’s Earthquake Relief Fund Maharashtra, National/State Blood Transfusion Council, Army
Central Welfare Fund, AP’s CM Cyclone Relief Fund, National Illness Assistance Fund, National Sports
Fund, National Cultural Fund, Technology and Application Fund, Swachh Bharat Kosh, Clean Ganga,
National Fund for Drug Abuse, etc.
● B) 50 % Deduction:
○ PM’s Drought Relief Fund, Indira Gandhi Memorial Trust, Rajiv Gandhi Foundation, Jawaharlal Nehru
Memorial Fund,
● C) 50% Deduction subject to 10 % of Adjusted GTI
PM’s Students’ Aid Fund/PM’s Folk Arts Fund, Donations to State/Central/Local Authority/Charitable
organizations/authority constituted for development of housing and planning cities and
towns/corporations set up to protect interests of minorities, donation to Govt for promotion of Family
planning, amount given for repair/renovation oof any temple, mosque, gurduwara, church notified as
place of historic, archeological or artistic importance, amount given by a company to Indian Olympic
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Adjusted GTI for 80 G computation

● Adjusted GTI = GTI – (All other deductions u/s. 80 C to 80 U except 80 G + Non Taxable
Incomes + LTCG + STCG (STT) + Income from 115 A, 115AB, 115 AC & 115 AD)

● Conditions for 80 G:
○ No donation in cash if exceeding Rs. 2000
○ No donations to individuals
○ 80 G can be claimed if only the institution/Fund is approved by commissioner of Income Tax
○ Donations from Non-Taxable income do not qualify for 80 G claims
○ No donations to Political Party (A company is eligible u/s. 80 GGB @ 100%)

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Exercise
● Ms. Soni’ GTI is Rs. 40,00,000. She had made the following donations during the year ending
on 31-3-2021:
○ To PM’s National Relief Fund 1,00,000
○ To National Defence Fund 2,00,000
○ To a temple for public worship for it’s repair 2,00,000
○ To a college for construction of a block 1,00,000
○ To a University with National Eminence 5,00,000
○ To a poor student 10,000
○ To Municipal Committee 1,00,000
○ To an institution engaged in promoting family planning 1,00,000
○ To Swachh Bharat Kosh 50,000
○ To Indira Gandhi Memorial Trust 50,000
○ To BBMP 50,000
Compute the Total income if GTI includes Rs, 8,00,000 of LTCG, Rs, 1,00,000 of Agricultural Income, Rs. 50,000
of STCG (STT)
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Sec. 80 TTA Interest on deposits of Saving Account

● Eligible to Individual other than Senior Citizen & HUF

● Not applicable to Term Deposits

● Deposits made in Banks/Cooperative Society involved in Banking/Post Office are eligible

● Actual amount of interest or Rs. 10,000, whichever is less

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Sec. 80 U Deduction to a person with disability

● Rs. 75,000 (If the assessee suffers 40 % - 80% disability)

● Rs. 1,25,000 (If the assessee suffers more than 80% disability)

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Rates of Tax for PY 2020-21 (AY 2021-22)

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Tax Rebate U/s. 87A (AY 2021-22)

● A resident individual having total income up to Rs. 5,00,000 shall be allowed a rebate of tax as
under:

○ Least of the following two:

■ Rs. 12,500 (or)
■ Tax calculated on Total Income as per prescribed rates

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Surcharge

Total Income Rate

Rs. 50 Lakhs to 1 crore 10%
Rs. 1 crore to 2 crores 15%
Rs. 2 crores to 5 crores 25%
Exceeding Rs. 5 crores 37%

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Computation of Tax Liability

● Compute the amount of tax payable for the AY 2021-22 in the following cases:
○ A) Total Income of Mr. X is Rs. 5,20,064
○ B) Income of Mr. Y (A resident senior citizen) is Rs. 5,20,064
○ C) Income of Mr. Z (a resident super senior citizen) is Rs. 5,20,064
○ D) Income of Mr. A is as under:
■ Income from salary Rs. 7,20,000
■ Income from STCG (subject to STT) Rs. 30,000
■ Income from LTCG Rs. 40,000
■ Winnings from lottery Rs. 50,000
■ Contribution to PPF Rs. 1,00,000; towards Life insurance Rs. 75,000; Medical insurance Rs.
30,000

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