Deductions from Gross Total

Income
Income From Salary  The aggregate income
after giving the effect of
Income From House Property Clubbing of income and
Set Off of Losses is called
Profits and Gains from Business and Profession Gross Total Income

Capital Gains  Tax is calculated on Total

Income
Income From Other Sources Why
Deductions  Deductions cannot
Gross Total Income ??? exceed the Gross Total
Income. If Gross Total
Less : Deductions under Section 80C to 80U Income is negative no
deductions can be
Total Income claimed
Income From Salary
Income From House Property
Profits and Gains from Business and Profession
Capital Gains
Income From Other Sources
Gross Total Income
Less : Deductions under Section 80C to 80U
Deductions are not available from
the following incomes:
1. All Long Term Capital Gains
which are separately taxed at
flat rate of 20%
2. Short Term Capital Gain on sale
of STT paid listed shares which
are separately taxed at flat rate
of 15%
3. Winnings from lotteries,
crossword puzzles, horse races,
card games etc. which are
separately taxed at flat rate of
30%
These incomes will be excluded
before claiming deduction under
Section 80C to 80U

Total Income
 • Individual and HUF can claim 80C deduction
Sec 80C – • Maximum amount of deduction is Rs.1,50,000

Recap

• LIC Premium of self, spouse and children

Eligible (whether dependent or not)
• Contribution to Employees Provident Fund(EPF)

Investments/ and Public Provident Fund (PPF)

• Repayment of Housing loan

Payments
• Investment in NSC, Sukanya Samriddhi Scheme
• Tution Fees of Children
 • Eligible Payment- An amount
Section paid/deposited by an individual under
80CCC annuity plan of LIC for receiving pension

• Maximum deduction is Rs.1,50,000

• If 80C is also applicable then
Amount of combined limit of 80C and 80CCC is
Deduction Rs.1,50,000

Tax • Pension received on

Treatment maturity will be
taxable
of Pension
 Deduction under Section 80 C
ILLUSTRATION
Contribution to PPF 1,10,000
• The gross total income of Mr. X for the A.Y.
2018-19 is Rs. 5, 00,000. He has made the Payment of tuition fees 45,000
following investments/payments during the Repayment of housing loan 25,000
F.Y. 2017-18
PARTICULARS Rs. Total 1,80,000
Contribution to PPF 1,10,000 But deduction u/s 80C is restricted 1,50,000
Payment of tuition fees to 45,000 to Rs.1,50,000
Apeejay School , New Delhi, for
education of his son studying in Deduction under Section 80 CCC
class XI
Repayment of housing loan taken 25,000 Contribution to approved pension 1,05,000
from standard chartered Bank fund of LIC
Contribution to approved pension 1,05,000
fund of LIC Total 2,55,000
But deduction u/s 80C and
80CCCcannot exceed Rs.1,50,000

Final Deduction for 17-18 1,50,000

• Compute the eligible deduction under
 Why
Section • Individual and HUF can claim Mediclaim
80D Policy

• Mediclaim insurance premium

• Contribution to Central Government
Eligible Health Scheme (CGHS)
• Preventive Health Check Up (Max
Payments Rs.5,000)

• Any mode other than

Mode of cash
• Preventive health check
Payment up may be paid in cash
Type of Payment For Whom Taken Maximum Additional Deduction Total
Deduction Deduction
1. Mediclaim Insurance Self 25,000 5,000 25,000/
Premium Spouse (If either of column 2 30,000
2. Contribution to CGHS Dependent Children people are senior citizens
3. Preventive Health Check Up i.e. above the age of 60
years)

1. Mediclaim Insurance Parents (whether 25,000 5,000 25,000/

Premium dependent or not) (If either of column 2 30,000
2. Preventive Health Check Up people are senior citizens
i.e. above the age of 60
years)

1. Medical expenditure of Self 30,000 - 30,000

super senior citizen (above 80 Spouse
years) if Mediclaim policy is not Parents (whether
taken on them dependent or not)

1. Mediclaim Insurance Any member of HUF 25,000 5,000 30,000

Premium (If either of column 2
people are senior citizens
i.e. above the age of 60yrs
Multi Year Insurance Policy

Mediclaim plans provided by your

employer or on policies taken by you
ILLUSTRATION Actual Deduction
• Mr. A, aged 40 years, paid medical payment Allowed
insurance premium of Rs. 20,000 during For Self and Spouse
the P.Y.2017-18 to insure his health as
well as the health of his spouse. 1. Medical insurance 20,000
premium for self and spouse
• He also paid medical Insurance
premium of Rs. 27,000 during the year 2. Contribution to CGHS 3,600
to insure the health of his father, aged 3. Preventive Health Check 3,000
63 years, who is not dependent on him.
Total 26,600 25,000
• He contributed Rs 3,600 to Central
Government Health Scheme during the For Senior Citizen Father
year. 1. Medical insurance 27,000
• He has incurred Rs 3,000 in cash on premium
preventive health check-up of himself 2. Preventive Health Check 4,000
and his spouse and Rs 4,000 by cheque
on preventive health check-up of Total *(Since Father is 31,000 *30,000
his father senior citizen)
• Compute the deduction allowable Total Deduction u/s 80D 55,000
under section 80Dfor the A. Y. 2018-19.
ILLUSTRATION
• For the previous year 2017-18, the business income of X (age:29 years ) is Rs.11,47,000.
During the year ,he pays the following by cheque to get tax benefit –
Insured person Mediclaim Insurance
Premium
X 22,000
Mrs. X (not dependent upon X) 4,500
Son (not dependent upon X) 800
Daughter (not dependent upon X) 2,500
Parents of the Tax payer –
Father (age:62 years , resident in India, not dependent upon X) 11,000
Mother (age:59 years, dependent upon X ) 36,000

Others –
Grandparents ( dependent upon X ) 500
Father of Mrs. X ( dependent upon X ) 800
Brother ( dependent upon X ) 900

• Besides, X pays Rs. 1,16,000 towards pension fund of LIC. Find out the net income of X for
the assessment year 2018-19
 Actual Deduction
payment Allowed
Medical insurance premium for Self, Spouse and
children
X 22,000
Mrs. X 4,500
Son and Daughter (not dependent) NIL
Total 26,500 25,000
Medical insurance premium for Parents and Others
Father - Not Dependent (Senior Citizen) 11,000
Mother –Dependent 36,000
Grandparents, Father in-law and dependent brother Not Eligible
Total *(Since Father is senior citizen) 47,000 *30,000

Total Deduction u/s 80D 55,000

TOTAL INCOME OF Mr. X
Business Income 11,47,000
GROSS TOTAL INCOME 11,47,000
Less: Deductions u/s 80
1. Section 80D 55,000
2. Section 80 CCC (Allowed upto Rs.1,50,000) 1,16,000
TOTAL INCOME 9,76,000
 Spouse,
Section • Individual and HUF can claim
Children,
Parents,
80DD Brothers and
sisters

• Expenditure on medical
treatment/training/ rehabilitation of
Eligible dependent relative suffering from
Payments disability (40%)

• Fixed deduction of
Rs.75,000
Amount of • Higher deduction of
Deduction Rs.1,25,000 if disability is
severe(80%)
ILLUSTRATION
• X (age :36 years ), a resident individual, has income of Rs.7,30,000 (i.e., Rs.
4,45,000 from a business in Delhi and Rs. 2,85,000 from a property in Bombay )
during the previous year 2017-18. Find out his net income for the assessment year
2018-19 :
• Life insurance premium on own life (policy since 2011) paid by X in cash on
March31,2018 (sum assured Rs. 2,00,000) Rs. 33,334
• Contribution towards pension fund of LIC Rs.11,000
• Mediclaim insurance premium on the life of Rs.29,000
dependent father (age :64 years)paid by
cheque on April 20,2017
• Mediclaim insurance premium on the life of Rs.7,000
dependent handicapped brother paid by cheque on April 26,2017

• Medical treatment of dependent brother Rs.5,000

TOTAL INCOME OF Mr. X
Income from House Property 2,85,000
Business Income 4,45,000
GROSS TOTAL INCOME 7,30,000
Less: Deductions u/s 80
1. Section 80C (Allowed upto Rs.1,50,000) 33,334
2. Section 80 CCC (Allowed upto Rs.1,50,000) 11,000
3. Section 80D 29,000
(Father is senior citizen, so eligible upto Rs.30,000
Not eligible for Dependent brother)
4. Section 80DD 75,000
(Rs.75,000 will be eligible irrespective of actual expenditure of
Rs.5,000 +20,000 deposit with LIC)
TOTAL INCOME 5,81,666
Section • Individual and HUF can claim
Spouse,
Children,
80DDB Parents,
Brothers and
sisters
• Expenditure on medical
Eligible treatment of specified disease
or ailment of self or
Payments dependent relative

• Actual amount or Rs.40,000

whichever is lower (Rs.60,000
for senior citizen Rs. 80,000 for
Amount of super senior citizen)
Deduction • Deduction will be reduced by
amount reimbursed from
insurance company or employer
• X (35 years ) is a resident individual. During the previous year 2017-18,
he incurs the following expenditure –
Actual Amount Amount
expenditure reimbursed reimbursed by
by insurance employer of X
company
Medical treatment (specified disease )of 30,000 Nil 28,000
X in a Government hospital
Medical treatment (specified disease ) of 14,000 3,000 6,000
Mrs. X in a hospital recognized by Chief
Commissioner

• Salary of X is Rs. 4,00,000 . In the two cases disease is specified in the

rules made by the Board .
• Find out the net income of X for the assessment year 2018-19.
TOTAL INCOME OF Mr. X
Salary Income 4,00,000
GROSS TOTAL INCOME
Less: Deductions u/s 80
1. Section 80DDB 3,000
Actual Expenditure : Rs.30,000 +14,000= 44,000 OR
Rs. 40,000 whichever is lower
Then 40,000 will be reduced by (3,000 + 28,000 +6,000)
reimbursement from insurance company and employer)
So, 40,000 -37,000= 3,000
TOTAL INCOME 3,97,000
Section • Individual can claim
80E Self, Spouse,
and Children

• If loan is taken for study in India

Eligible or outside India from a bank or FI,
interest paid during the year is
Payments allowed as deduction

• Entire interest is deductible

from the year in which the
Amount of individual starts paying interest
Deduction upto 7 years or till repayment
whichever is earlier
Illustration:
• X has taken three education loans on March 1,2017 . The details of which are given
below
Loan 1 Loan 2 Loan 3
For whose education loan was X X Daughter of X
taken
Purpose of loan Full time MBA Part time MCA Full time MBA
Amount of loan 6,00,000 3,00,000 5,00,000
Annual repayment of loan during
the previous year 2017-18 1,00,000 50,000 1,00,000
Annual payment of interest
during the previous year 2017-18
60,000 40,000 55,000

• Find out the amount deductible under section 80E for the assessment year 2018-19.
Repayment of loan NIL
Payment of Interest 1,55,000
Total 1,55,000
AMOUNT DEDUCTIBLE UNDER SECTION 80E 1,55,000
Section • Individual and HUF can claim
80TTA
• Interest on deposit in a saving
Eligible account with banking company, co-
operative society engaged in banking,
Payments post office

• Interest upto Rs.10,000 is

deductible
Amount of • P.O Savings Bank interest upto
Deduction 3,500 (individual name) and
7,000 (joint name) is exempt
Section • Any Taxpayer
80G
• Aggregate of the donations made to any of the
institution /fund
• Donation in kind is not included
Eligible • Donation can be given in cash or by cheque or
Payments draft
• Cash donation of max Rs.2,000 will be allowed

Amount of • 50% or 100% (as applicable) of the

Deduction amount of donations
• X (34 years ), a resident individual, submits the following particulars of his income for the
previous year 2017-18
Business income 83,000
Interest on debentures 49,000
Long term capital gains on transfer of gold 4,10,000
Short term capital gain on sale of shares taxable under section 111A 20,000
Other short term capital gain 10,000
Contribution towards public provident fund 40,000
Payment of medical insurance premium on own life 3,000
Donation by cheque to Clean Ganga Fund (N.A. -100%) 4,000
Donation by cheque to Swachh Bharat Kosh (N.A. -100%) 3,000
Donation by cheque to Rajiv Gandhi Foundation (N.A. -50%) 1,000
Donation by cheque to Prime Minister’s Draught Relief Fund (N.A. -50%) 5,000
Donation by cheque to poor boy for higher education 5,000
Donation by cheque of clothes to an approved institution 12,000
Donation by cheque to a charitable institution for construction of a rest house only for a 8,000
particular religious community
Donation by cash to National children fund 40,000
Determine the net income of X for the assessment year 2018-19
Business Income 83,000

Long Term Capital Gains 4,10,000

Short Term capital gains u/s 111A 20,000

Other Short Term Capital Gain 10,000

Interest on debentures 49,000

GROSS TOTAL INCOME 5,72,000

Less: Deduction u/s 80

1. Deduction u/s 80C 40,000

2. Deduction u/s 80D 3,000

3. Deduction u/s 80G 14,950

TOTAL INCOME 5,14,050

Deduction u/s 80G
Donation by cheque to Clean Ganga Fund (N.A. -100%) 4,000
Donation by cheque to Swachh Bharat Kosh (N.A. -100%) 3,000
Donation by cheque to Rajiv Gandhi Foundation (N.A. -50%) (50% of 1,000) 5,00

Donation by cheque to Prime Minister’s Draught Relief Fund (N.A. -50%) (50% of 2,500
5000)
Donation by cheque to poor boy for higher education NOT ELIGIBLE

Donation by cheque of clothes to an approved institution NOT ELIGIBLE

Donation by cheque to a charitable institution for construction of a rest house NOT ELIGIBLE
only for a particular religious community
Donation by cash to National children fund NOT ELIGIBLE
TOTAL 14,950
• Mr. Gurnam, aged 42 years, has salary income (computed) of Rs. 5,50,000 for the previous year
ended 31.03.2018. He has earned interest of Rs. 14,500 on the saving bank account with State
Bank of India during the year.
Compute the total income of Mr. Gurnam for the assessment year 2018-19 from the following
particulars:
• Life insurance premium paid to Birla Sunlife Insurance in cash amounting to Rs. 25,000 for
insurance of life of his dependent parents. The insurance policy was taken on 15.07.2014 and the
sum assured on life of his dependent parents is Rs. 1,25,000.
• Life insurance premium of Rs. 25,000 paid for the insurance of life of his major son who is not
dependent on him. The sum assured on life of his son is Rs. 1, 75,000 and the life insurance policy
was taken on 30.3.2012.
• Life insurance premium paid by cheque of Rs. 22,500 for insurance of his life. The insurance
policy was taken on 08.09.2014 and the sum assured is Rs. 2,00, 000.
• Premium of Rs. 22,000 paid by cheque for health insurance of self and his wife.
• Rs. 1,500 paid in cash for his health check-up and Rs. 3,500 paid in cheque for health check-up
for his parents, who are senior citizens.
• Paid interest of Rs. 6,500 on loan taken from bank for MBA course pursued by his daughter.
• A sum of Rs. 15,000 donated in cash to an institution approved for purpose of section 80G for
Income from Salary 5,50,000
Interest on Saving Bank Deposit 14,500
GROSS TOTAL INCOME 5,64,500
1. Deduction u/s 80C
LIC Premium for dependent parents NA
LIC Premium of major son 25,000
LIC Premium of self (Policy taken after April 2012 so restricted to
10% of policy amount ) (10% of 2,00,000) 20,000 45,000

2. Deduction u/s 80D

Mediclaim insurance of self and wife 22,000
Payment of Health check up- Self 1500 23,500

Payment of Health check up -Parents 3500 3500

3. Deduction u/s 80E (Interest on loan for MBA of daughter) 6,500

4. Deduction u/s 80TTA (Interest on S.B. Account upto Rs.10,000) 10,000 88,500
TOTAL INCOME 4,76,000