Deduction under Income Tax Chapter VI-A

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Gross Total Income vs. Total Income

Gross Total Income (GTI) means the aggregate of income computed under each head as per
provisions of the Act
GTI is computed after giving effect to the provisions for clubbing of incomes and set off of losses,
but before making any deductions under Chapter VIA of the Act
In order to compute Total Income, deductions under Chapter VIA are considered and adjusted
from GTI
The aggregate amount of deductions under Chapter VIA cannot exceed GTI of the assessee

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Major Sections under Chapter VI-A

80C
80CCC
80CCG

80D
80DD
80E
80G
80TTA
80U
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Section 80C
80C
80CCC
80CCG

80D
80DD
80E
80G
80TTA
80U
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Section 80C
Available for individual or a Hindu undivided family
The total limit under this section is Rs 1.50 lakh from Financial Year (FY) 2014-15
Before FY 2014-15 the limit was Rs. 1 Lakh
Deduction is available if made investments or utilized money for below mentioned purpose:
Life Insurance Premium - Policy must be in the assesse's or spouse's or any child's name (child may be
dependent/independent, minor/major, or married/unmarried). For a HUF, it may be on life of any member
of HUF
Sum paid under non commutable deferred annuity for an individual on the life of the assesse, spouse or any
child
Sum deducted from salary payable to Government Servant for securing deferred annuity for self-spouse or
child. Payment limited to 20% of salary
Contribution made under Employee's Provident Fund Scheme or Recognized Provident Fund
Contribution to a 15 year Public Provident Fund (PPF). Under the PPF scheme, maximum contribution is Rs
1,50,000 from Assessment Year 2015-16

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Section 80C
Contribution to PPF for individual can be in the name of the assesse, the spouse or any child. For a HUF, it
can be in the name of any member of the family
Sum deposited in Five Year Deposit Scheme in Post Office
Amount deposited under Senior Citizens Saving Scheme
Subscription to any notified securities/notified deposits scheme. e.g. NSS

Subscription to any National Savings Certificate e.g. NSC VIII issue and IX issue. Accrued Interest (which is
considered reinvested) also qualifies for deduction for any year (except the last year)
Contribution to Unit Linked Insurance Plan of LIC Mutual Fund e.g. Dhanraksha 1989 and contribution to
Unit Linked Insurance Plan of UTI
Contribution to notified Pension Fund set up by Mutual Fund or UTI

Sum paid as subscription to Home Loan Account Scheme of the National Housing Bank or contribution to
any notified deposit scheme/pension fund set up by National Housing Bank
Subscription to deposit scheme of a public sector, company engaged in providing housing finance (public
deposit scheme of HUDCO)

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Section 80C
Payments of installments or part payments or repayment of loan taken for buying or constructing residential
house property. Also allowed for stamp duty, registration fees and other expenses for purpose of transfer of
such property to the assesse. However, if the property is 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
Contribution to notified annuity Plan of LIC (e.g. Jeevan Dhara and Jeevan Akshay) or Units of UTI / notified
Mutual Funds
Subscription to equity shares/ debentures forming part of any approved eligible issue of capital made by a
public company or public financial institutions
Tuition fees paid to any school, college, university or other educational institution situated within India for
the purpose of full time education of any two children (including payments for play school, pre nursery and
nursery)
Subscription to any notified bonds of NABARD (National Bank for Agriculture and Rural Development)

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Section 80CCC
80C
80CCC
80CCG

80D
80DD
80E
80G
80TTA
80U
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Section 80CCC
The deduction u/s 80CCC is available to an individual assessee
Also available to a non resident individual
Another condition for claiming deduction u/s 80CCC is that the amount of contribution paid in
respect of which deduction has to be claimed, must have been paid out of the income chargeable
to tax of the concerned individual assessee
Contributions made towards pension plans of LIC or other insurers are eligible for deduction u/s
80CCC
The amount of deduction u/s 80CCC together with deduction available u/s 80C is maximum Rs.
1.5 Lacs

Where deduction has been allowed u/s 80CCC, deduction u/s 80C will not be available in respect
of the payment towards such annuity plan

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Section 80CCG
80C
80CCC
80CCG

80D
80DD
80E
80G
80TTA
80U
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Section 80CCG
A new scheme was introduced to encourage flow of saving in financial instruments and improve
the depth of domestic capital market
Also aims to promote an equity culture in India
Expected to widen the retail investor base in the Indian securities markets and further the goal of
financial stability and financial inclusion
The Scheme is named after the former Prime Minister of India Mr. Rajiv Gandhi
Provide for a one time deduction to a resident individual
Who acquires listed equity shares in a previous year in accordance with a scheme notified by the
Central Government

The deduction was 50 % of amount invested in such equity shares or 25,000, whichever is lower
Maximum deduction of 50,000 in such listed equity shares
Gross total income of the assessee for the relevant assessment year should be less than or equal
to 10 lakh

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Section 80CCG
Assessee should be a new retail investor as per the requirement specified under the notified
scheme
The investment should be made in such listed investor as per the requirement specified under the
notified scheme
Minimum lock in period in respect of such investment is three years from the date of acquisition
in accordance with the notified scheme

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Section 80DD
80C
80CCC
80CCG

80D
80DD
80E
80G
80TTA
80U
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Section 80D
This deduction is allowed only to an individual (resident / non resident/ Indian citizen/ foreign
citizen) or a Hindu undivided family (resident/ non resident)
Payment is made towards premium for mediclaim policy
Fixed benefit policies like personal accident and critical illness policies do not qualify for this
deduction
In case of the individual taxpayer, following payment also qualifies for the deduction
Payment made to the Central Government Health Scheme
Preventive health check-up will also qualify towards this deduction
Payment has to be made by a mode other than cash (e.g. credit card, cheque, net banking etc.)
Deduction under Section 80D is not allowed for payment through cash
However, payment on account of preventive health check-up can be made by any mode (including
cash)

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Section 80DD
80C
80CCC
80CCG

80D
80DD
80E
80G
80TTA
80U
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Section 80DD
To be claimed by Resident Individual/HUF
May be ordinary resident Indian or Not ordinary resident Indian
May be foreign citizen or Indian citizen
Non resident can not claim this deduction.

Incurs any expenditure for the medical treatment, training and rehabilitation of a disabled
dependant or
Deposits any amount in schemes like Life Insurance Corporation for the maintenance of a disabled
dependent
Deduction of Rs 50,000 is available

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Section 80E
80C
80CCC
80CCG

80D
80DD
80E
80G
80TTA
80U
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Section 80E
Available to an individual, not to HUF or other type of Assessee
Amount of interest paid is eligible for deduction
No cap on the amount to be deducted
No benefit available on the repayment of principal amount of the loan

If Interest is been paid during the previous year and was paid out of income chargeable to tax
Interest should have been paid on loan taken by him
Loan from any financial institution or any approved charitable institution for pursuing his higher
education

Interest on Loan taken from relatives or friends will not be eligible

Higher education means any course of study pursued after passing the Senior Secondary
Examination or its equivalent from any school, board or university recognized by the Central
Government or State Government or local authority or by any other authority authorized by the
Central Government or State Government or local authority to do so

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Section 80E
Loan should have been taken for the purpose of pursuing higher studies of Individual , Spouse,
Children of Individual or of the student of whom individual is legal Guardian
Parents are also eligible to claim deduction of interest paid by them on loan taken for their
childrens education
Deduction shall be allowed in computing the total income in respect of the initial assessment year
and seven assessment years immediately succeeding the initial assessment year or until the
interest is paid by the assessee in full, whichever is earlier
The tax benefits on education loan are only valid once you start the repayment and moreover
they are only available up to eight years

If loan tenure exceeds eight years, cannot claim for deductions beyond eight years

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Section 80E
Loan should be in the name of Individual
If parents, spouse or sibling has taken the loan for your studies, then individual not entitled to get
tax benefit
The loan includes not only tuition or college fees but also other incidental expenses for pursuing
such studies like hostel charges, transport charges etc
Repayments of education loan NOT covered under Section 80C
Course may be in or outside India

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Section 80G
80C
80CCC
80CCG

80D
80DD
80E
80G
80TTA
80U
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Section 80G
Section 80G has been introduced by Government to give tax benefits on donations
The amount donated towards charity attracts deduction under section 80G of the
Income Tax Act, 1961

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Section 80G
Available to all kind of Assessee
Donations made to foreign trusts do not qualify for deduction
Donation to Political Parties is not eligible for deduction
Only donation made to made to prescribed funds and institutions qualify for deduction

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Section 80G
Deduction of Donation
Under Section 80G

Without any
Maximum Limit

100%
deduction of
the amount
donated

50%
deduction of
the amount
donated

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Subject to Maximum Limit

of 10% of adjusted gross
total income

100%
deduction of
the amount
donated

50%
deduction of
the amount
donated

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Without any Maximum / Qualifying Amount

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Donations with 100% deduction without any qualifying limit

Prime Ministers National Relief Fund National
Defense Fund Prime Ministers Armenia Earthquake Relief Fund
The Africa (Public Contribution India) Fund
The National Foundation for Communal Harmony

Approved university or educational institution of national eminence

The Chief Ministers Earthquake Relief Fund, Maharashtra
Donations made to Zila Saksharta Samitis
The National Blood Transfusion Council or a State Blood Transfusion Council

The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central
Welfare Fund
Army Central Welfare Fund, Indian Naval Ben. Fund, Air Force Central Welfare Fund
National Illness Assistance Fund

Chief Ministers or Lt. Governors Relief Fund

National Sports Fund National Cultural Fund

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Donations with 100% deduction without any qualifying limit

Government or local authority or institution or association towards promoting family planning
Central Government's Fund for Technology Development & Application
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple
Disabilities

Indian Olympic Association or other such notified association

Andhra Pradesh Chief Ministers Cyclone Relied Fund

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Donations with 50% deduction without any qualifying limit

Jawaharlal Nehru Memorial Fund
Prime Ministers Drought Relief Fund
National Childrens Fund
Indira Gandhi Memorial Trust

The Rajiv Gandhi Foundation Donations to government or local authority for charitable purposes
(excluding family planning)
Authority or corporation having income exempt
Donations for repair/ renovation of notified places of worship

World Vision India

Udavum Karangal

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With Maximum / Qualifying Limit of 10% of Adjusted Gross Income

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Maximum / Qualifying Limit

The qualifying limits u/s 80G is 10% of the adjusted gross total income
The limit is to be applied to the adjusted gross total income
The adjusted gross total income for this purpose is the gross total income (i.e. the sub total of
income under various heads) reduced by the following:
Amount deductible under Sections 80CCC to 80U (but not Section 80G)
Exempt income
Long-term capital gains
Income referred to in Sections 115A, 115AB, 115AC, 115AD and 115D, relating to non-residents and foreign
companies

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Donations with 100% deduction with qualifying limit

Donations to the Government or a local authority for the purpose of promoting family planning
Sums paid by a company to Indian Olympic Association

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Donations with 50% deduction with qualifying limit

Donation to the Government or any local authority to be utilized by them for any charitable
purposes other than the purpose of promoting family planning

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Section 80TTA
80C
80CCC
80CCG

80D
80DD
80E
80G
80TTA
80U
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Section 80TTA
Available if total income of an assessee includes any income by way of interest on deposits in a
savings account with
Bank
Co-operative society engaged in carrying on business of banking
Post Office

Maximum Deduction Rs 10,000

Available for Individual or a Hindu undivided family,

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Section 80U
80C
80CCC
80CCG

80D
80DD
80E
80G
80TTA
80U
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Section 80U
Deduction available in case of a person with disability
Certified by the medical authority to be a person with disability
Deduction
Severe Disability

Rs 100,000

Others

Rs 50,000

Furnish a copy of the certificate issued by the medical authority in the prescribed form and
manner

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Deduction in relation to royalty, copyright, etc.

Deduction u/s 80QQB
Eligibility Deduction in respect of royalty or copyright fees of authors
Maximum Deduction in case of lump sum consideration 100% of the royalty income etc.
subject to a maximum of Rs.3,00,000

Maximum Deduction in other cases In case of royalty or copyright fees, not in lump sum
consideration, maximum deduction is 15% of the value of books sold during the Previous Year

Deduction u/s 80RRB

Eligibility Deduction in respect of royalty on patents

Maximum Deduction 100% of such income subject to a maximum Rs.3,00,000

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Deduction for interest on loan for residential house property

Deduction u/s 80EE
Eligibility Deduction in respect of interest on loan for residential house property
Conditions
Assessee has taken a loan from a financial institution during Financial Year 2013-14, for acquiring residential
house property.
Amount of loan does not exceed Rs.25 lakhs.
Value of house property does not exceed Rs.40 lakhs.
Assessee does not own any residential house property on the date of sanction of loan

Maximum Deduction Interest payable for the previous year shall be deductible for the
Assessment Year 2014-15 subject to a maximum of Rs.1 lakh

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Case Studies on Deductions

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Case 1 Deduction u/s 80C

Mr. N is employed at a gross salary of Rs.8,00,000. He gets Rs.15,000 interest on bank deposit. He
has made the following investment/deposit during the year 2013-2014. Besides, interest of Rs.1,632
on NSC-VIII, (purchased during the year 2008-2009) has been credited on them during the year
2013-2014. Compute deduction u/s 80C for the Assessment Year 2014-2015.

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Case 1 Deduction u/s 80C (Solution)

Computation of Deduction u/s 80C of Mr. N for the Assessment Year 2014-2015

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Case 2 Deduction u/s 80D

Mr. C, manager of L Ltd., has paid Rs.38,000 during the Previous Year 2013-2014 by way of medical
insurance under GIC approved medical policies. The details are given as below:

For himself Rs.6,000

For Mrs. C, a Canadian citizen, resident in Toronto and not dependent on him Rs.5,000
For B, married son living with him and dependent on him Rs.3,000
For D, minor son resident in Toronto and not dependent on him Rs.3,000
For Mrs. B, daughter-in-law, dependent on him Rs.5,000
For E, a minor grandson dependent on him Rs.3,000
For K, father, 67 years, resident and dependent on him Rs.3,000
For M, mother, 66 years, resident in Toronto and dependent on him Rs.6,000
For Grandfather, dependent on him, 95 years of age and resident in India Rs.4,000

C has earned gross salary of Rs.2,50,000 during the year and also earns Rs.95,000 as interest from 7%
Capital Investment Bonds, purchased on 31 May 2004. Compute his eligible deduction u/s 80D for the
Previous Year 2013-2014 assuming the following situations:
I.
II.
III.

Premium is paid by cheque from his salary income.

Premium is paid in cash from his salary income. He holds a valid receipt for cash payment.
Premium is paid by cheque out of interest from 7% Capital Investment Bonds, acquired on 31-5-2004.

IV.

Premium is paid in cash out of interest from 7% Capital Investment Bonds, acquired on 1-6-2004.

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Case 2 Deduction u/s 80D (Solution)

Computation of Deduction for Medical Insurance Premium u/s 80D

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Case 2 Deduction u/s 80D (Solution) contd.

Notes:
Medical insurance premium on spouses health is always eligible irrespective of whether the
spouse is dependent on the assessee or not. The condition of dependency applies only in case of
children and parents.
Medical premium on health of grandson, grandparents, daughter-in-law or son-in-law are not
eligible for deduction u/s 80D.
Only the premium on health of dependent father will qualify for relaxation as a senior citizen.
Since dependent mother is non-resident and, therefore, outside the purview of being a senior
citizen. However, the premium for health of mother will qualify for the normal limit irrespective
of the residential status.
Any premium paid in cash or by cheque or out of exempted income does not quality for deduction
u/s 80D.

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Computation

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Computation

Income Head

Particulars
Income from Salary
Income by way of allowance
Taxable value of perquisite
Less: Allowances / Taxes
Taxable income under the head "Salaries"

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Computation

Income Head
2

Particulars
Income from house property
Adjusted net value
Less:Deduction under section 24
Taxable income under the head "Income from House Property"

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Computation

Profits and gains of business or profession

Net profit as per P & L a/c
Add:Amounts which are not allowed
Taxable under the head "Profit and Gains of Business or Profession"

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Computation

Income Head
4

Particulars
Capital gains
Amount of gains
Less:Amount exempt under sections 54
Taxable under the head "Capital Gains"

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Computation

Income Head
5

Particulars
Income from other sources
Gross income
Less:Deductions under section 57
Taxable income under the head "Income from Other Sources"

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Computation
Particulars
Total Gross Income (i.e. 1+2+3+4+5)
Less:Deductions under Sections 80C to 80U
Total income or net income liable to tax

Particulars
Tax on net income
Add:Surcharge
Tax and surcharge
Add: Education cess and secondary and higher education cess
Less:Rebate under sections 86, 89,90, 90A and 91
Less: Pre-Paid Taxes
Less: Tax deducted or collected at source
Less: Tax paid in advance / Advance Tax
Less: Tax paid on self assessment
Tax to be paid / (refund)
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Amount
xx
(xx)
xx

Amount
xx
xx
xx
xx
(xx)
(xx)
(xx)
(xx)
(xx)
xx
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Case Studies on Total Income Computation

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Case 1 Total Income Computation

R borrowed a sum of Rs.25,00,000 from the State Bank of India @ 12% p.a. on 1.5.2013 and
purchased a house property for Rs.36,00,000 on the same day. He does not own any residential
house property on the date of taking the loan. He has been using the house property for his own
residence since its acquisition.
Compute the total income of R assuming he has salary income of Rs. 9,60,000 and he deposited
Rs.1,30,000 in PPF during the previous year 2013-14.

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Case 1 Total Income Computation (Solution)

Computation of total income of R for Assessment Year 2014-15

Note:
Total interest @ 12% on Rs.25,00,000 for 11 months
= 25,00,000 (12/100) x (11/12)
= Rs.2,75,000
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Case 2 Comprehensive Problem on Total Income

M, resident in India, furnishes the following particulars of his receipts and outgoings during the
Previous Year 2013-2014.
Receipts:
I.

Income from Salary Rs.2,00,000

II. Income from House Property Rs.3,00,000

III. Gross winning from crossword puzzle Rs.3,50,000
Outgoing :

I.

Term deposits for a fixed period of 5 years with a scheduled bank Rs.15,000

II. Medical insurance premium:

a) For himself Rs.4,000
b) His wife, not dependent Rs.3,000
c) Mother, non-resident, 67 years, dependent Rs.5,000

III. M had borrowed a sum of Rs.2,00,000 in 2003 @ 9% interest to complete his B.Tech. degree
from Delhi University. In March 2014, he repaid a sum of Rs.75,000 (including Rs.20,000 interest)
Students are required to compute Total Income of M for the Assessment Year 2014-2015
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Case 2 Comprehensive Problem on Total Income (Solution)

Computation of Total Income for AY 2014-2015

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