Calculation of Total Income: Deductions under Chapter VI
Total income or taxable income can be obtained after deducting the eligible deduction u/c VI A from gross total income.
(1) Following portion of gross income cannot be adjusted against deductions VI A
Long term capital gain
Short Term capital gain due to transfer of shares and mutual funds ( after the applicability of security transaction tax )
Income arises from winning lottery and horse racing
Income of some heads related with section 115
(4) Aggregate Sum of all deductions cannot be more than Gross Total Income
5) To claim the deductions submission of supporting document is the responsibility of assessee.
6) Investment for Claiming deduction can be made from income of any financial year
Some of important applicable deductions under chapter VI A
80C - Investment in saving scheme (initially allowed u/s 88 ) such as GPF / PPF / LIC / GIS / PLI / NSC / NABAD Bond / ELSS , Tuition fees of children and repayment of house loan principal , without any interim limit, maximum up to a limit of RS 1 Lac including Bank FD For 5 year or more
80CCC - Premium amount deposited in pension scheme of govt./ private insurance co., maximum up to Rs 10, 000/- yearly for F.Y. 05-06 . But this limit is increased up to Rs. 1 Lac from the F. Y. 06-07
80CCD – Contribution of assessee ( individual ) / employer in pension scheme of central govt. up to the limit of 10% of salary
80CCE – Investment done u/s 80C, 80CCC and section 80CCD combined should not be more than Rs.100,000/-
80D – Premium paid for medical insurance scheme for self, husband/wife, or children maximum up to Rs 15000/- and additional Rs 15000 will be allowed for medical insurance for mother, father from FY 08-09 ( but if age of insured person is more than 65 then maximum up to Rs 20000/-)
80DD - Deduction of rs 50000/- against expense or insurance premium occurred on treatment of dependent disable (deduction applicable up to Rs 75000(Rs. 1lacs) in case of serious disability .
No mater actual expenses may be less . )
80E - Payment of interest of Education loan taken for higher deduction of self or spouse of children: without any maximum limit of payment.
80G - Donation given in PM/CM relief fund , fully exempted.
80U – If assessee him/her self, is completely blind or physically or mentally disable permanently then deduction or Rs 50,000 / 100, 000 is allowed
Details of some important deduction allowable under chapter VI A are given as following
Section 80ccc :- Deductions relating to investment done in pension fund : -
Investment in Pension scheme of LIC or Annuity Pension scheme of approved private insurance co. up to max Rs. 10000 is allowed as deduction . But this limit is increased up to Rs. 1 lacs. Amount received by an assessee or his nominee as pension, bonus or interest will be fully taxable in the receiving year. Investment made under the in scheme, cannot be claimed U/s 80c again.
Details of deductions allowed under section 80C
From F. Y.2005-06 under new section 80C individual and HUF can invest maximum up to Rs 100000 (without any interim limit ), in the same savings scheme, and claim deduction. Investment in these schemes can be done by income earned from any year .
Important schemes /head for investment/expenses
Limit of investment applicable
U/s 80C In financial year 2008-09
Investment against purchase of NSC , due interest
On earlier purchased NSC (excluding interest of 6th year )
Max up to Rs 1 Lac
Contribution of employee in GPF/PPF/ PPF
Max up to Rs 1 lac.
Premium paid during the year in life insurance scheme
of Govt/ Private insurance co., postal insurance and ULIP
scheme of UTI for self husband/ wife and children
(married –unmarried and major/ minor ) maximum up to
Amount paid in the form of tuition fees of child studying
in college, university school or other educational institute (excluding development fee or donation fee )deduction
applicable up to 2 children only.
Max up to Rs 1 lac.
Investment of 5 years and above in scheduled Bank /
Post office as fixed deposit.
Max up to Rs 1 lac.
Sr. Citizen Deposit Scheme of post office
Max up to Rs 1 lac.
Equity linked tax saving scheme of mutual fund
Max up to Rs 1 lac.
Repayment of housing loan (taken for purchase .
construction of house from approved institution ) principal and necessary expenses as stamp duty, registration fees etc.
Max up to Rs 1 lac.
Now to get deduction up to Rs 100000/- u\s 80c, compulsion of investing specific amount in specific scheme has been removed so assesee can invest any amount in any scheme of his choice . Suppose you are paying Rs 30000/- as tuition fees of your children, then your will get full deduction of Rs 30000/- (previously it was up to Rs. 24000/-) and if your are paying Rs. 50000/- as housing loan principle , you will get full deduction of Rs. 50000/- (previously it was up to Rs. 20000/-)
Section 80 CCD :- From 1/04/2004, contribution of employee govt. or private and employer and self employed persons (included from 01/04/2009) in notified (Central Govt .) pension scheme will be allowed as deduction , to asesee, for employee the maximum allowable limit will be -10% of salary (basic +DP+DA ) is separately.
Section 80CCE :- The aggregate amount of deductions U/s 80C , 80CCCand 80CCD are subject an overall limit of Rs 100000/- as deduction from income.
Section 80 D :- Deduction in reference to investment make in health insurance scheme premium paid for medical insurance scheme for self, husband/ wife. Or children max. Rs 15000 and additional up to 15000 will be allowed for medical insurance form mother father from Fy 08-09 ( But if the age of the insured person is more than 65 years in the FY , then deduction of Max Rs. 20000 shall be allowed ). But payment of premium should be from the same year’s taxable income and through cheque. DD/on line payment i.e. other than cash
Section 80DD :- Deduction of investment o expenses made with reference to medical treatment of dependent handicapped or for the maintenance with reference to medical treatment and maintenance of dependent handicapped, in case of general disability rs. 50000/- and in case of serious disability Rs. 75000/- ( Rs 100000/- from 01/04/2010) will be applicable for deduction (no matter whether the actual expense or investment is less ). According to person with disability act 1995 disability more than 40% is called as general disability and disability more than 80% is called as serious disability.
Deductions are applicable only if the following conditions are fulfilled
1)Assesse has to spend some amount for treatment/ training/rehabilitation of dependent handicapped.
2)Assessee has invested some amount in the schemes (for benefit of handicapped person) such as Jeevan Vishwas/ Jeevan AAdhar scheme of LIC or approved insurance companies or Unit Trust`s scheme for disable persons
3) Dependent handicapped means :- Life partner, children , brother , sister or dependent parents of assessee
4)For any disability of following type the person will be assumed as handicapped
i) Permanent physical disability due to –absence of more than (50%) one limb. Unable to hear sound of 71 decibel or more , or permanently dump.
ii) If a person is having I.Q . less than 50 , then he will be assumed mentally disable (On a test with a mean of 100 and standard deviation of 15 such as the Wechsler scale )
iii) If the viewing capacity is per following and cannot be cured then the blindness will be assumed as permanent physical disability.
All with corrections
Better eyes Worse eye
A 6/60-4/60 field of vision 1/10-20 3/60 to Nil
B 3/60 to 1/60 or field of vision 100 F.C, at foot to Nil
C F. C. at one foot to Nil or F.O.V. 100 F.C, at foot to Nil or F.O.V.100
D Total absence of sight
Total absence of sight
(5) Assessee has to produce permanent disability certificate from a competent Medical Practitioner working a Govt. Hospital .
(6) Assessee has to give written declaration in which it is mentioned about medical expenses and investments made by him. But DDO cannot force assessee to produce bill or voucher against the expenses.
22.7 Section 82DDB :- Deduction of amount spent for Medical treatment of serious disease for self or dependent person :-
1)As per rule 11 of income tax act, for treatment of serious illness during the year, amount actually spent or Rs. 40 , 000 (for senor citizen Rs60 ,000) , whichever is less , will be treatment of illness, it will also be deducted.
2)As per rule 11 DD of income tax act disease some notified as
2)Assessee has to produce a certificate in a prescribed format (10-1 ) . by specialist doctor of related disease working in a Govt Hospital , in which disease should be mentioned . It is also mandatory to give details of the amount spent.
3)Dependent person means :- Life partner, children, brother, sister, dependent parents of assessee (individual and HUF )
22.8 section 80G :- Deductions related to donations given to charitable or religious institution
A)100 % deduction on donations given to following institutions :-
PM relief fund * National disease relief fund * Fund Constituted for technical development * national defenses fund *Governor or CM relief fund * notified educational institute or university of national level * Notified fund by state government to help poor for better health * Notified district co –operative committee in rural and urban areas to promote primary education and literacy.
B)50 % deduction on donations given to following institutions :-
·Pm draught relief fund * National Children fund * India Gandhi memorial trust Rajeev Gandhi Foundation .
C)100% deduction on donations given to following institutions :-
any govt. or approved local administration . institute , association constituted for promoting family planning
D)50% deduction with condition on donations given to following institutions : -
Any Govt. or approved local administration , institution or association constituted for providing health other family planning * Approved charitable institutions u/s 80G
(5) * Notified Temple , Mosque, Gurudwara, Church (places of historical, mythological and artistic importance )for their renovation approved by Central Govt.
Condition :- Total amount of donations given to institution in & and (d) should no t be more than 10% of adjusted gross total income.
Section 80E Deduction in respect of interest paid on Education loan to be allowed to the parents/ spouse also .As such, any of 4 , i.e. Parents/ Father or Mother or Spouse (Wife respect to the interest paid on loan for the higher education U/S 80E. The beneficiary may be dependent or independent. If the loan is taken for higher education from approved financial or charitable institution and payment made form his taxable income then deduction is allowed without upper limit subject to the following conditions :-
a)Higher education means – all fields of study, including vocational studies, pursued after completion of schooling
b)Deduction will be allowed upto a maximum of 8 years from the first payment date.
Section 80GG :- Deduction in reference to payment of house rent
Amount paid by assessee (includes those employees also who are not getting house rent
allowance ) as house rent is allowed for deduction for the amount on whichever is less from the following
Rent paid – 10 of taxable income or
25% of taxable income or
Yearly rent @ 2000 per month
For applicability of deduction one has to fulfil the following criteria :
A)Assessee should not have house on his /life partners or children’s name at his working place. House at other than working place should not be in a position so that its yearly rental value may be zero
B)As per rule 11B assessee has to give a declaration in prescribed form no . 10BA
22.11 Section 80GGA : - Donation given for scientific research or rural development.
A)This deduction will be allowed for those assesses who are not getting any income from business or profession
B)Donation amount will be 100% exempted
C)Donation should be given to following institution
i)Scientific/ social science or educational research institution , college, university ,
Association approved u/s 35(i) ) (ii).
ii)Organizations engaged in rural development u/s 35CC.
iii)Organizations engaged in conservation of natural resources u/s 35AC, 35CCB
iv)Fund constituted by Central Govt. for rural development u/s 35CCA.
v)National urban poverty uprooting fund of Central Govt. u/s 35AC (i) (d)
Section 80 GGB : - Donation given to political party by Indian Companies :-
Donation given to political party `s registered U/s section 29A and electoral trust of people representation act 1951 will be fully deductible.
Section 80 GGC :- Donation given to political parties by any person : Donation given to political parties registered U/s section 29A of People Representation Act 1951 and electoral trust (excluding local organization and corporation ) will be fully deductible
Section 80U :- Deduction relating to permanent physical/ mental disability :- if assessee himself is handicapped then in case of general Disability RS 50000 /- and in Case of Serious disability Rs. 100000/- will be allowed for deduction . No matter the amount actually spent or invested is less. AS per Persons with Disability act 1995 disability more than 40% is called as general disability and disability more than 80% is called as serious disability.