Nature of Deduction in Income Tax

SNO SECTION1 80CCC 2 80CCD 3 80CCF 4 80CCG 5 80D 6 80DD The handicapped dependent should be a dependent relative suffering from a permanent disability (including blindness) or menta lly retarded, as certified by a specified physician or psychiatrist. Note: A person with severe disability means a person with 80% or more of one or more disabilities as outlined in section 56(4) of the “Persons with Disabilities (Equal opportunit ies, Protection of Rights and Full Participation) Act. NATURE OF DEDUCTIONS REMARKS Payment of premium for annuity plan of LIC or any other insurer Deduction is available upto a maximum of Rs. 1,00,000/ Deposit made by an employee in his pension account to the extent of 10% of his salary Subscription to long term infrastructure bonds Investment under Rajiv Gandhi Equity Savings Scheme , 2013 Payment of medical insurance premium. Deductio n is available upto Rs. 15,000/ for self/ family and also upto Rs. 15,000/- for insurance in respect of parent/ par ents of the assessee.In case of senior citizens, a deduction upto Rs.20,000/- shall be available under this Section. Insurance premiume of senior citizen parent/ parents of the a ssessee also eligible for enhanced deduction of Rs. 20000/- Deduction of Rs.40,000/ — In respect of (a) expendi ture incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent relativ e. (b) Payment or deposit to specified scheme for maintena nce of dependent handicapped relative. W.e.f. 01 .04.2004 the deduction under this section has been enhanced t o Rs.50,000/- Further, if the dependent is a person with severe disability a deduction of Rs.1,00,000/– shall be available under this sectionBudget 2015 has Further Proposed to hike the limit from A.Y. 2016-17 to Rs. 75000 from existing Rs. 50,000/- and for person with severe disability to Rs. 1.25 lakh from existing Rs. 1 Lakh. The premium must be deposited to keep in force a co ntract for an annuity plan of the LIC or any other insurer for receiving pension from the fund . The Finance Act 2015 has enhanced the ceiling of deduction under Se ction 80CCC from Rs. 100,000 to Rs. 1,50,000 with effect from A.Y. 2016- 17 Where the Central Government makes any contribution to the pension account, deduction of such contribution to the extent of 10% of salary shall be allowed. Further, in any year where any amount is received f rom the pension account such amount shall be charged to tax as income of that previous year. Subscription made by individual or HUF to the exten t of Rs. 20,000 to notified long term infrastructure bonds is exempt from A.Y. 2011-12 onwards. This deduction is discontinued w.e.f. A.Y. 2013-14 . The deduction was 50 % of amount invested in such equit y shares or RS 25,000, whichever is lower . The maximum Investment permissible for claiming d eduction under RGESS is Rs. 50,000 . The benefit is in addition to deduction available u/s Sec 80C. The premium is to be paid by any mode of payment other than cash and the insurance scheme should be framed by the General Insurance Corporation of India & approved by the Central Govt. or Scheme fra med by any other insurer and approved by the Insurance Regulatory & Development Authority. The premium should be paid in respect of health insurance of th e assessee or his family members. The Finance Act 2008 has also provided ded uction upto Rs. 15,000/- in respect of health insurance premium paid by the ass essee towards his parent/parents. w.e.f. 01.04.2011, contributions ma de to the Central Government Health Scheme is also covered under this section. 7 80DDB 8 80E 9 80EE 10 80G 11 80GG 12 80TTA Expenditure must be actually incurred by resident assessee on himself or dependent relative for medical treatment of specifi ed disease or ailment . The diseases have been specified in Rule 11DD. A certificate in form 10I is to be furnished by the assessee from a specialist working in a Government hospital .Budget 2015 has Proposed for the purpose of claimi ng deduction under the section assessee will be required to obtain a p rescription from a specialist doctor instead of Certificate. This provision has been introduced to provide relie f to students taking loans for higher studies. The payment of the interest thereon will be allowed as deduction over a period of upto 8 years . Further, by Finance Act, 2007 deduction under this section shall be available not only in respect of loan for pursuing higher education by self but also by spouse or children of the assessee.W.e.f. 01.04.2010 higher education mea ns any course of study pursued after passing the senior secondary examinat ion or its equivalent from any recognized school, board or university. Vide Finance Act 2013, an individual is allowed a deduction upto a limit o f Rs 1,00,000 being paid as interest on a loan taken from a Financial Institution, sanctioned during the period 01-04- 2013 to 31-03-2 014 (loan not to exceed Rs 25 lakhs) for acquisition of a residential house whose value does not exceed Rs 40 lakhs. However the deduction is available if the as sessee does not own any residential house property on the date of sanction of the loan. The various donations specified in Sec. 80G are eligible for deduction upto either 100% or 50% with or without restriction as provided in Sec. 80G. (1) Assessee or his spouse or minor child should not own residential accommodation at the place of employment . ( 2) He should not be in receipt of house rent allowance . (3) He should not have a self-occupied residential premises in any other place. Section 80TTA is introduced wef A.Y. 2013-14 to pro vide deduction to an individual or a Hindu undivided family in respect o f interest received on deposits (not being time deposits) in a savings account held with banks, cooperative banks and post office . The deduction is restricted to Rs 10,000 or actual interest whichever is lower . Deduction of Rs.40,000/- in respect of medical expe nditure incurred.W.e.f. 01.04.2004, deduction under thi s section shall be available to the extent of Rs. 40,000/- or the amount actually paid, whichever is less.In case of senior citizens, a deduction upto Rs.60,000/ - shall be available under this Section.Budget 2015 has proposed deduction of Rs. 80000/- for seniot citizen aged 80 year or More from A.Y. 2016-17 Deduction in respect of payment in the previous yea r of interest on loan taken from a financial institution or approved charitable institution for higher studies. Deduction in respect of interest on loan taken for residential house property Donation to certain funds, charitable instituti ons etc. - Deduction available is the least of (i) Rent paid less 10% of total income (ii) Rs.2000 per month (iii) 25% of total income. Deduction in respect of interest on deposits in sav ings account. 13 80U 14 87A 15 80RRB 16 80QQB Payment limited to 20% of salary. For individual, can be in the name of self/spouse, any child & Certificate should be obtained on prescribed format from a notified ‘Medical authority’Finance Act 2013 has provided relief in the form of rebate to individual taxpayers, resident in India, who are in lower income bracket, i. e. having total income not exceeding Rs 5,00,000/-. The amount of rebate is Rs 2000/- or the amount of tax payable, whichever is lower. WEF A.Y. 2014-15 . The following investments/payments are inter alia e ligible for deduction u/s 80C:- This section has been introduced by the Finance Act , 2005.This section provides deduction from total income in respect of various investments/ expenditures/payments in respect of which tax rebat e u/s 88 was earlier available. The total deduction under this section is limited to Rs. 1.50 lakh only. Deduction of Rs.50,000/- to an individual who suffers from a physical disability (including blindness) or mental retardation . Further, if the individual is a person with severe disability, deduction of Rs.75,000/- shall be avail able u/s 80U .W.e.f. 01.04.2010 this limit has been raised to Rs. 1 lakh .Budget 2015 proposed to amend section 80U to rai se limit of deduction in respect of a person with disa bility from Rs. 50,000/ to Rs. 75,000 and for person with severe disability from 1,00,000/ to 1,25,000/ Rebate Of Rs 2000 For Individuals Having Total Income Upto Rs 5 Lack.Deduction in respect of any income by way of royalty in respect of a patent registered on or after 01.04.2003 under the Patents Act 1970 shall be available as :- Rs. 3 lacs or the income received, whichever is les s . Deduction in respect of royalty or copyright income received in consideration for authoring any book of literary, artistic or scientific nature other than text book shall be available to the extent of Rs. 3 lacs or income received, whichever is less . Contribution by employee to a Recognised Provident Fund or an approved superannuation fund. NATURE OF INVESTMENT Life Insurance Premium Sum paid under contract for deferred annuity Sum deducted from salary payable to Govt. Servant f or securing deferred annuity for self, spouse or child . Contribution made under Employee’s Provident Fund Scheme. Contribution to PPF The assessee who is a patentee must be an individual resident in India . The assessee must furnish a certificate in the prescribed form duly signed by the prescribed authority alongwith the return of income. The assessee must be an individual resident in India who receives such income in exercise of his profession. To avail of this ded uction, the assessee must furnish a certificate in the prescribed form along with the return of income. REMARKS – in case of individual, on life of assessee, as sessee’s spouse and any child of assessee. – in case of HUF, on life of any member of the HUF In case of individual, on life of the individual, i ndividual’s spouse and any child of the individual (however, contract should not con tain an option to receive cash payment in lieu of annuity) i) Eligible issue of capital means capital issued by a public co./ Public financial institution for utilizing the proceeds wholly & exc lusively towards purposes of any business referred in Sec. 80IA(4). Available in respect of any two children. This has been included in Section 80C by the Financ e Act 2006. For HUF, it can be in the name of any member of the family. It may be noted that the aggregate amount of deduct ions under sections 80C, 80CCC and 80CCD are subjec t to an overall ceiling of Rs. 1.50 lakh. Tuition fees paid at the time of admission or other wise to any school, college, university or other educational in stitution situated within India for the purpose of full time education. This has been included in Section 80C by the Financ e Act 2007 and has come into effect from 1.4.2008. Any term deposit for a fixed period of not less than five years with the scheduled bank. Subscription to notified bonds issued by NABARD Payment made into an account under the Senior Citiz ens Savings Scheme Rules, 2004. Payment made as five year time deposit in an accoun t under the Post Office Time Deposit Rules, 1981 17 80C Contribution to notified deposit scheme/Pension fun d set up by the National Housing Bank. Certain payment made by way of instalment or part p ayment of loan taken for purchase/ construction of residen tial house property. Condition has been laid that in case the property i s transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year. Subscription to units of a Mutual Fund notified u/s 10(23D) Subscription to deposit scheme of a public sector c ompany engaged in providing housing finance. Any subscription to Equity shares/ Debentures formi ng part of any eligible issue of capital by a Public compan y/ Public Financial Institution, wherein.Subscription to any notified savings certificates.Contribution to Unit Linked Insurance Plan of LIC M utual Fund. Contribution to Sukanya Samriddhi Account Opened in the Name of Daughters. This has been introduced vide Finance Act 2014 wef A.Y. 2015-16 This has been introduced by Finance Act, 2008 and s hall come into effect from 1.4.2009. Subscription to any notified securities/notified de posits scheme. e.g. NSC VIII issue.e.g. Dhanrakhsa 1989