FROM TOTAL INCOME
the gross total income there are certain deductions which go to
reduce the taxable income. Very briefly they are explained.
IN RESPECT OF PENSION FUNDS U/S 80CCC.
effect from A.Y. 1997-98, a new section namely 80CCC has been enacted
which provides that if an assessee being an individual pays or deposits
any amount out of his income chargeable to tax to effect or keeps
in force a contract for any annuity plan of Life Insurance Corporation
of India for receiving pension from the fund referred to in section
10(23AAB) he shall be allowed a deduction of the amount deposited
or Rs. 10,000 whichever is less.
the assessee or his nominee receives any pension or any money on
the surrender of whole or part of the policy, the same shall be
taxable in the year of receipt in the hands of the recipient. However,
as per section 10(10A), any payment in commutation of pension received
from LIC, will be exempt w.e.f. A.Y. 1997-98.
the assessee shall not be entitled to claim a rebate u/s 88 for
the premium paid on the above policy if he has claimed deduction
IN RESPECT OF MEDICAL INSURANCE PREMIUM U/S 80-D.
SOD of the Income-tax Act provides for a deduction upto Rs. 10,000
from the total income of a tax payer, being an individual or a HUF,
in respect of any sum paid by cheque, to effect or keep in force
an insurance policy on the health of the individual and his family
members (including dependant parents). Witheffect from A.Y. 2000-01
and subsequent years, the monetary limit of deduction under section
80-D, has been raised from its present level of Rs. 10,000 to Rs.
15,000 if the amount is paid to keep in force an insurance on the
health of the assessee or his wife or her husband or dependent parents
and who is a senior citizen. In the case of a H.U.F. the enhanced
limit is available if policy is on the health of member of H.U.F..
FOR PHYSICALLY HANDICAPPED & DISABLED DEPENDENT U/S. 80DD.
of Rs. 15,000 u/s 80DD was allowed to an individual or HUF in respect
of expenditure incurred on medical treatment of a handicapped dependent.
Similarly, u/s 80DDA a separate deduction to a parent or guardian
in respect of deposits upto Rs.20,000 made in specified schemes
of Life Insurance Corporation & Unit Trust of India was available
to provide for the future needs of the said dependent.
old sections 80DD and 80DDA have been merged into a new see. 80DD.
Now, w.e.f. 1-4-2000 i.e. for A.Y. 2000-01 and subsequent years,
a total deduction of Rs.40,000 will be available to the parent or
guardian in respect of either medical expenditure incurred on medical
treatment of or for the future needs of the disabled or handicapped
FOR MEDICAL TREATMENT QF SERIOUS AILMENTS U/S 80DDB.
effect from A.Y. 1997-98 a new section 80DDB has been enacted which
provides that if a resident individual or H.U.F. actually incurs
expenditure for the medical treatment of specified serious disease
or ailment for himself or a dependant relative or a member of HUF
then a sum of Rs.40,000 w.e.f. 1.4.2000 i.e. for A.Y.2000-01 and
subsequent year(s), shall be allowed as deduction.
the expenditure incurred is in respect of the assessee or his wife
or her husband or dependent parents and who is a senior citizen
then w.e.f. 1,4.2000 i.e. for A.Y.2000-01 and subsequent year(s)
the limit of Rs.40,000 would stand increased to Rs.60,000. In the
case of a H.U.F. the enhanced limit is available if expenditure
is for specified medical treatment of member oftheH.U.F..
availing this deduction a certificate in prescribed form has to
FOR REPAYMENT OF LOAN TAKEN FOR HIGHER EDUCATION U/S 80E.
80E provides for a deduction upto Rs.40,000 w.e.f. A.Y. 2001-02
and subsequent year(s), in respect of repayment of loan or interest
on such loan, taken for higher education by an individual. The loan
is to be taken by him from any financial institution or any approved
charitable institution for the purpose of pursuing his higher education.
deduction is allowed in respect of the initial assessment year and
seven assessment years immediately succeeding the initial assessment
year or until the loan referred to above together with interest
there upon is repaid by the assessee in full, whichever is earlier.
IS AN APPROVED FINANCIAL INSTITUTION OR CHARITABLE INSTITUTION?
Institution" means a banking company to which the Banking Regulation
Act, 1949 applies or any other institution which the Central Government
may notify and a "Charitable Institution" means a notified
institution u/s 10(2C) or u/s 8OG(2)(a) established for charitable
IS 'HIGHER EDUCATION' AND INITIAL ASSESSMENT YEAR?
education" means full-time studies for any graduate or postgraduate
course in engineering,medicine, management, or for postgraduate
course in applied sciences or pure sciences, including mathematics
and statistics and Initial assessment year' means assessment year
in which the assessee starts repaying the loan or interest.
IN RESPECT OF DONATIONS FOR CHARITABLE PURPOSES U/S 80-G
relief in respect of donations to certain funds, approved educational
institution(s) of national importance, charitable institutions etc.
is admissible u/s 80-G of the Act. It will have to be claimed by
the tax payers at the time of assessment and is not to be allowed
by the Tax-Deducting-Authority. The qualifying amount for deduction
will be 50% of the amount.
80-G now also provides for 100% deduction for donations to Zila
Saksharta Samitis constituted in the districts under the Chairmanship
of the District Collectors for the purpose of improving primary
education in rural or semi-urban areas (towns with a population
not exceeding one lakh according to the latest census) for literacy
and post-literacy efforts.
where contributions are made to a university or any approved educational
Institution of national importance, or Chief Minister's Earth Quake
Relief Fund, Maharashtra; or to approved institutions promoting
family planning; or the Prime Minister's National Relief Fund, the
Africa Fund, and the National Foundation for Communal Harmony, etc.
are eligible @100%.
deduction of hundred percent of donations made by tax payers to
a fund set up by a State Government for the medical relief of the
poor; National or State Blood Transfusion Councils and Defence Services
Funds for welfare of their personnel is available. For e.g. organisations
like the National Council of Blood Transfusions, Army Central Welfare
Fund, Indian Naval Benevolent Fund, and Air Force Central Welfare
FOR DONATIONS MADE TO NATIONAL SPORTS FUND.
percent deduction for donations made to National Sports Fund is
also available u/s 80-G. This has been done for raising the standard
of sports and games to international levels, easy access to world
class facilities, equipment and scientific backup to sports persons
and to facilitate availability of funds for the promotion of sports
and games in the country. Deduction for donations made to National
Cultural Fund on similar lines @ 100% deduction is also available
for deduction made to the National Cultural Fund.
FOR DONATIONS MADE TO INDIAN OLYMPIC ASSOCIATION.
the development of infrastructure for sports 85 games in the Country
and for their sponsorship, an assessee company can derive w.e.f.
1.4.2001 i.e. for A.Y.2001-02 and subsequent year(s), the benefit
of 100% deduction u/s 80G for donations to Indian Olympic Association
or any other notified association.
PER CENT DEDUCTION TO DONATIONS MADE TO THE NATIONAL TRUST FOR WELFARE
OF PERSONS WITH AUTISM, CEREBRAL PALSY, MENTAL RETARDATION AND MULTIPLE
80G of the Income-tax Act, allows a deduction of 50% of the contribution
in the computation of income of the donor. However, in respect of
donations to certain funds, 100% deduction is allowed.
alleviating the suffering of those with autism, cerebral palsy,
mental retardation and multiple disabilities, with effect from 1st
April, 2002, ie. in relation to the A.Y. 2002-2003 and subsequent
years, now the benefit of 100% deduction is provided to donations
made to the National Trust for Welfare of Persons with Autism, Cerebral
Palsy, Mental Retardation and Multiple Disabilities.
FOR HOUSE RENT PAID U/S 80-GG.
assessee is entitled to a deduction u/s 8OGG in respect of house
rent paid by him for his own residence, subject to the following
assessee has not been in receipt of any house rent allowance specifically
granted to him which qualifies for exemption under section 10(13A) of
b) he will
be entitled to a deduction in respect of house rent paid by him in excess
of 10 percent of his total income, subject to a ceiling of 25 percent
thereof or Rs.2,000 per month, whichever is Less. The
total income for working out these percentages will be computed
before making any deduction U/S 8OGG;
c) the assessee does not own
any residential accommodation himself or by his spouse or minor
child or where such assessee is a member of a Hindu Undivided
Family, by such family, at the place where he ordinarily resides
or performs duties of his office or carries on his business
or profession; or
ii) at any
other place, any residential accommodation being accommodation in the
occupation of the assessee.
the accommodation occupied by him for the purpose of his own residence
is in any of the following places: -
Ahmedabad, Allahabad, Amritsar, Bangalore, Bhopal, Calcutta, Coimbatore,
Delhi, Faridabad, Gwalior (Lashkar), Hyderabad, Indore, Jabalpur, Jaipur,
Kanpur, Lucknow, Ludhiana City, Madurai, Nagpur, Patna, Pune, Srinagar,
Surat, Vadodra (Baroda) or Varanasi (Banares) or the urban agglomeration
of each of such places; or
Calicut, Cochin, Ghaziabad, Hubli-Dharwad, Madras, Sholapur, Trivandrum
FOR REMUNERATION RECEIVED IN FOREIGN CURRENCY FROM EMPLOYER U/S
the case of an individual who is a citizen of India a deduction
is allowable if total income includes any remuneration received
by him in convertible foreign exchange from a foreign employer or
an Indian concern for any services rendered by him outside
deduction u/s 80RRA, had provided for a deduction equal to 50 per
cent of such income or remuneration or 75 per cent of such income
or remuneration as is brought into India, whichever is higher.
from A.Y. 97-98 and subsequent years, this deduction shall now be
equal to 75% of the foreign exchange earnings, which are brought
into India within a period of six months from the end of the previous
year or within such further extended period.
assessee has to furnish a certificate in the prescribed form along
with the return of income for claiming the deduction. The due date
for filing the return of income for such taxpayers is 31st October.
the case of an employee of Central or State Government, or a person
who was immediately before taking up the service outside India,
in the employment of the Central or State Government, the deduction
will be allowed only if the service of the employee is sponsored
by the Central Government.
the case of any other individual, the deduction will be allowed
only if he is a 'technician1 and the terms and conditions
of his service outside India are approved by the Central Government.
This deduction te allowed with reference to the remuneration received
by the individual in foreign currency for services rendered outside
if the remuneration is paid to the Indian technician etc., partly
in Indian currency, that portion will not be taken into account
for purposes of this deduction.
if a part of the remuneration, although paid in foreign currency
relates to service rendered in India, then such part of the
remuneration will also not qualify.
expression "foreign employer" has been defined to mean
(i) the Government of a foreign State; or (ii) a foreign enterprise;
or (iii) any association or body, established outside India.
w.e.f. 1.4.01 i.e. for A.Y.2Q01-02 and onwards this deduction would
stand reduced from 75% of such remuneration to 60% in A.Y. 2001-02,
45% for A.Y. 2002-03, 30% for A.Y. 2003-04 and 15% for A.Y. 2004-05.
U/S SOU FOR ASSESSEE, SUFFERING FROM PHYSICAL DISABILITY.
of Rs.40,000 is allowed while computing the total income of an Individual
suffering from permanent physical disability (including blindness)
or mental retardation. These should be certified by a Government
Hospital. The disability must have the effect of reducing considerably
such individual's capacity for normal work or engaging in a gainful
employment or occupation,
OTHER DEDUCTIONS WHICH ARE ALSO ALLOWABLE ARE AS UNDER: -
Donations to approved scientific/social organisations doing science/statistical
research, rural development, conservation of natural resources, afforestation
or eligible project (Section 80-GGA).
2) Income, of an individual or a Hindu Undivided Family,
by way of deposits in banks and certain other investment incomes
like interest on NSC, NDS, Post Office (Monthly Income
A/C) Rules 1987 upto an aggregate of Rs.9,000 u/s SOL
is available for interest on interest from bank deposits etc.
and an additional deduction upto Rs. 3,000 in respect of interest
on any security of the Central/State Government.
Under section 80R of the Income-tax Act, a professor, teacher
or a research worker rendering service abroad is entitled to a
deduction from the remuneration received from a foreign university,
educational institution, etc., while computing his income chargeable
to tax. This deduction is available to a resident citizen.
With effect from 1st April, 1997, they would be entitled to a deduction
from the remuneration received equal to 75% of the foreign exchange earnings,
which are brought into India within a period of six months from the end
of the previous year or within such further extended period. The assessee
shall have to furnish a certificate in the prescribed form along with
the return of income.Due date for filing the return in the case of such
taxpayers is 31st October. Now w.e.f. 1.4.2001 i.e. from A.Y.2001-02 this
deduction stands reduced from 75% of such remuneration to 60% in A.Y.
2001-02, 45% for A.Y. 2002-03, 30% for A.Y. 2003-04 and 15% for A.Y. 2004-05.
Handshake to employees of a Cooperative Society, a University, a notified
Management Institute or of an I.I.T. would be tax-exempt. The amount received
by an employee from the employer, at the time of voluntary retirement,
calculated in accordance with any scheme or schemes of voluntary retirement
framed under Rule 2BA of the IT Rules 1962, will be exempt subject to
a maximum of Rs.5 lakhs. The other payments like gratuity, leave-encashment
etc. will be governed by the other provisions of IT Act 1961.
5) The government
has set up a fund called 'National Urban Poverty Eradication Fund'.
Donations made to this fund qualify for 100% deduction u/s 80-GGA. This
deduction is only available to tax payers other than those
deriving income from business or profession.
ARE THE LIMITS OF THESE DEDUCTIONS?
sum total of these deductions is limited to the amount of gross
THE DRAWING & DISBURSING OFFICER BOUND TO GIVE CREDIT (WHILE
DEDUCTING TDS FROM SALARIES) FOR DONATIONS?
In respect of donations made for charitable purposes (except
to specified funds like Prime Minister's National Relief Fund] the
tax relief is to be claimed in the income tax return and allowed
by the Assessing Officer if found to be in order.
DOES THE WORD "DEPENDENT" IMPLY?
word dependent means a person who is not dependent for his support
or maintenance on any person other than the assessee.