In Computing the total income of an assessee there shall be allowed from gross total income deductions as specified u/s 80C and 80U. Income after deductions is known as Total Income or in other words taxable income. It may be computed as under:
Income from Salaries
PLUS Income from House Property
PLUS Income from Business or Profession
PLUS Income from Capital Gain
PLUS Income from Other Sources
PLUS Clubbing of Income, which belong to Others
PLUS Set off and carry forward losses
GROSS TOTAL INCOME (GTI)
LESS Deductions under Sections 80C to 80U
TOTAL INCOME (TI)
The se deductions are however not allowed from the following incomes although these are part of GTI
(a) Long Term Capital Gain
(b) Winning of Lotteries, races
Total amount of deductions cannot exceed GTI calculated as above
SECTION 80C: Deduction for the investments made and saving done: Deduction shall be allowed to an individual (whether resident or non resident) or HUF (whether resident or non resident). These saving and investment can be made from taxable income or from exempted income. Deduction shall be lower of:
(a) Investment and saving done OR
(b) Maximum of Rs.100000 pa.
The Investments which are allowed for for the deductions u/s aforesaid section are as follows:
1.National Saving Certificate
2.Deposits in post Office Schemes
3.Public Provident Fund
5.Investment in Ulip Plans
6.Mutual Fund Units of UTI
7.National Housing Bank
8.Life Insurance Premium
10.Repayment of Loan for House
11.Investment In Eligible Issue
15.Bonds of NABARAD
SECTION 80CCC: Deduction in respect of contribution to certain pension fund.
(a) Deduction under this section is alowed from the AY 97-98
(b) Deductions is available only to an Individual who can be either resident or can be non-resident.
(c) Deduction is available if individual has in the PY deposited any amount out of his taxable income towards annuity
Plan of LIC or any other insurer
(d) Deduction is allowed in the PY in which such sum has been deposited
(e) Deduction is lower of the amount paid or Rs.100000 PA
(f) The amount which is received by assessee himself or any of his nominees out of this scheme shall be taxable in
the hands of the recipient in the year of receipt.
SECTION 80 CCD: Deduction in respect of contribution to new pension scheme of Central Govt or any other employer
A Section 80CCD has been inserted to provide for the deduction from the total income for individual who have joined the service of central govt or any other employer or or after 1/1/2004. Under this scheme every employee joining or or after 1/1/2004 has to contribute to the new scheme and the matching contribution is made by the central govt. However, the contribution made by the central govt shall be deemed to be income u/s 17(1) i.e. under the head of salary. The amount of deduction under this section shall be equal to sum aggregate of:
(1) Max of 10% of the salary which is the contribution of employee into the new pension scheme and
(2) Max of 10% of the salary, which is the contribution of central govt. into the new pension scheme
(a) Salary means Basic Salary + DA if forming part of the salary for the retirement benefits
(b) When employee or his nominee receives the amount from such pension on account of closure of the account
then the amount received shall be fully taxable in the year of the receipt.
SECTION 80CCE: Limit on deductions under 80C, 80CCC and 80CCD: The aggregate amount of deductions under 80C, sectiion 80CCC and dection 80CCd shall be lower of:
(a) Aggregate of deductions of section 80C, 80CCC, 80CCD or
SECTION 80 D : Deduction in respect of Health Insurance is allowed to an Individual or a Hindu undivided family for the payment made for health insurance by any mode other than cash out of his taxable income . In case of an individual deduction shall be the aggregate of the following:
(a) The whole of the amount paid as a premium for the insurance on the health of self or his family but subject to
maximum of Rs.15000 p.a.
(b) The whole of the amount paid as a premium for the insurance on the health of the parent or parents of the
assessee but subject to the maximum of Rs.15000 p.a.
Explanation : Family means the spouse and dependant children of the assessee:. In case of HUF deduction shall be the whole of the amount paid as a premium for the insurance on the health of any member of HUF but subject to maximum of Rs. 15000 p.a.In all the above cases if the insured person is a senior citizen them maximum deduction shall be Rs.20000 p.a. The insurer for this section can be the General Insurance Corporation of India or any other insurer approval by the IRDA.
SECTION 80 DD : Deduction in respect of maintenance of a dependent who is a person with disability. Disability for this section would mean:
2. Low vision
3. Leprosy - Cured meaning person who has been cured of leprosy but is siffering from loss of sensation in feet or
4. Hearing Impairment
5. Locomotor disability means disability of bones, joints or muscles leading to substantial restriction of the
movement of the limbs
6. Mental retardation means incomplete development of mind, which is specially characterized by subnormality of
7. Mental illness
SECTION 80DDB : Deduction in respect of Medical treatment
(a) Deductions can be claimed by resident individual or resident HUF for the expenditure on the medical treatment
incurred on himself or on dependent and in case of HUF for the expenditure on the medical treatment on any
member of the family.
(b) This medical expenditure should be on the specified diseas as prescribed by the board in this behalf
(c) Dependant means in case of Individual spouse, children parents, brothers and sisters but excluding grandparents
and grandchildren and in case of HUF a member of HUF
(d) Such person should be wholly and mainly dependent for support and maintenance on such individual or HUF
(e) Dependent should not claim deduction under section 80U
(f) Deduction shallbe for the amount actually spent or Rs.40000 whichever is less
(g) But deduction is actual amount spent for 60000 whichever is less in case of senior citizen
(h) No Deduction shall be allowed unless certificate from neurologist, an ancologist, a hematologist or other such
specialist who is working in a govt hospital has been obtained and furnished along with ROI under section 139.
(I) The deduction under this section shall be reduced by the amount received from any insurer or reimbursed by
employer for the medical treatment of the assessee or dependent.
SECTION 80E : Deduction in respect of repayment of loan taken for higher education
(a) Deduction is available to an individual being a resident or non-resident
(b) Deduction is available if loan has been taken for self or for family members for pursuing higher studies. Family
members shall include self, spouce and children of assessee.
(c) Deduction is avaialable in respect of the amount of interest on the education loan, which has been paid by
individual in the previous year.
(d) Higher education means full time studies for any graduate or postgraduate course in engineering, medicine and
management or for postgraduate course in applied science or pure science including matematics and statistics.
(e) This amount should have been paid out of his taxable income
(f) The loan should have been taken from any financial institution or a charitable institiution.
SECTION 80G : Deduction in respect of donation : Deduction under this section is allowed to all assesses, whether company or non-company, whether resident or non-resident and whether having income under head profits of business or not. Essential condition to claim deduction under this section are:
(I) The donation should be of a sum of money. Donation in kind does not qualify for deduction
(2) The proof of payment has to be furnished alongwith ROI
SECTION 80GG : Deduction in respect of the rent paid
(a) Deduction is allowed to an individual who is self-employed or if he is an employee and is not entiled to HRA from
(b) Deduction is allowed for the amount of rent paid by individual for any furnished or unfurnished accomodation
(c) Deduction is allowed if assessee himself, or spouse, minor child or HUF of which he is a member does not own
any residential accomodation at the place of accomodation
(d) No claim for any self occupied house should be made
(e) Adjusted tital income means GTI less LTCG less all deduction of section 80 except section 80GG
(f) Amount of deduction shall be the least of teh following:
(I) Rent paid in excess of 10% of Adjusted Gross Total Income
(2) 25% of the Adjusted Gross Total Income
(3) Rs.2000 per month
SECTION 80GGA: Deduction of the donation for scientific research or rural development
(a) The deduction under this section is available to all assessee whether resident or non-resident for the amount
donated for the purpose of scientific research
(b) This deduction is allowed if GTI does not include income under head PGBP
(c) If deduction is claimed under this section then no dediction shall be allowed for such payment under any other
provision of this act
(d) The deduction is 100% of the sum paid to following institutions:-
(I) Approved scientific research association, university, college or other institution to be used for scientific
(II) Approved university, collegeor other institution for research in social science or statistical research
(III) Association engaged in any approved program for rural development or notified national urban poverty
(iv) Public Sector Company or a local authority etc for carrying out any eligible project
(v) Association engaged in conservation of natural resources or forestation
SECTION 80GGB: Deduction from GTI is allowed to India company for any sum contributed in the previous year to any political party. This amount can be contributed as donation or subscription made to a polictical party and expenditure on advertisement in brochure, pamphlet etc. published by a political party.
SECTION 80GGC: Deduction from GTI is allowed to all other asseesses except Local authority, any artificial judicial body, which is wholly or partially funded by govt for any sum contributed in the previous year to any political party. This amount can ve contributed for donation or subscription made to a political party or expenditure on advertisement in brochure, pamphlet etc. published by a political party.
SECTION 80JJA : Deduction from PGBP of collection and processing of Bio-Degradable Waste: If GTI of an assessee includes profits and gains from the business of collection and processing of bildegradable waste for generating power of producing fertilizers or biogas then it shall be allowed deductions under this section, which shall be 100% of such profits for 5 consecutive years starting from the year in which business is started.
SECTION 80JJAA: Deduction in respect of the employment of the new workers.
(1) Deduction is allowed only to India Company engaged in the manufacturer or production of any article or thing.
(2) Deduction is thus not allowed to cpmpany engaged in trading of goods
(3) Such industrial undertaking should not be formed by spilliting up of an existing undertaking or its
reconstructions or amalgamation with another undertaking
(4) Assessee should employ new regular workmen during the PY
(5) Amount of deduction is 30% of addition wages paid to new regular workmen employed during the PY and
deduction is available for 3 years starting from the eyar in which employment is provided
(6) Deductions is given on the basis of wages paid to new regular workman employed after initial 100 workmen
(7) Regular workmen do not include a casual or a workman employed for a period of less than 300 days or through
(8) To have deduction under this section a certificate from CA has to obtain certifying that the deduction has been
(9) In case of existing undertaking deduction shal;l be allowed only if there is at least 10% increase in the number
of regular workmen over the existing number of workmen employed on the last day of the preceding.
SECTION 80LA : Deduction to Offshore Banking Units
(A) The deduction is available to an assessee: 1) Being a scheduled bank, which is incorporated in India 2) Owing
offshore banking units in a special economic zone
(B) The deduction shall be allowed from the following incomes which are included in the GTI: 1) Any income from an
offshore banking unit in a special economic zone 2) Any income from business of banking with an industrial
undertaking located in a special economic zone 3) Any income received in FOREX
(C) The amount of deduction shall be 100% of the incomes for 3 consecutively years and 50% of the income for 2
consecutively years styarting from the year when the permission was obtained under the Banking Regulation Act
to set up a branch in special economy zone.
(D) Conditions to be satisfied; 1) A report from CA has to be obtained certifying that deduction has been correctly
been claimed and attached along with ROI 2) A copy of the permission has to be attached along with ROI
SECTION 80QQB: Deduction of rayalty income of authors of certain books other than textbooks
(1) The deduction is available to a resident individual in India and who is author of books
(2) The book should be the work of literary, artistic or scientific in nature
(3) He must derive the income in excercise of his profession
(4) The deduction is not available in respect of the royalty income from textbooks for school, guides,commentaries,
newspapers, journals, pamphlets and other publication of similar nature
(5) If income is earned from outside India then the FOREX should be brought into India within 6 months from the
end of PY or such extended time period as allowed by RBI
(6) The income must be either: (a) From lump sum consideration for the grant of his interest in the copyright of
such book or (b) Of royalty or copyright fee
SECTION 80RRB: Deduction in respect of Royalty on Patent
(1) The deduction is available to a resident individual in India and who is registered as first and true inventor in
respect of an invention i.e. he is a patentee
(2) His patent should be registered on or after 1/4/2004 under the Patent Act 1970
(3) His GTI includes income from such patents
SECTION 80U : Deduction allowed to physically handicapped person:
(a) The assessee claiming the dedcution should be an Individual being a resident and a person with disability
(b) Deductyion shall be given only when he clould satisfy the assessing officer that the disability has the effect of
reducing considerably his capacity to do normal work or engaging in gainful employment or occupation
(c) He is certified ny a medical authoroty to be a person with the disability at any time during the PY and this
certificate has to be furnished along with the ROI. Further this certificate has to be furnished every year in which
this deduction is claimed.
(d) The amount of deduction shall be Rs.50000 in case of a person with a disability and Rs.75000 in case of a
person with severe disability (having disability of over 80%)