2. Introduction
Provided by the Income Tax Act, 1961.
Contained in Chapter VI – A and in the form
of deductions from section 80C to 80U.
They are the permissible amount by which
the gross total income is reduced to arrive
at the total income liable to tax.
They are intended to act as incentive to the
assessee for achieving certain economic
objectives.
3. Basic Rules
Rule 1
The aggregate amount of deductions under
sections 80C to 80U cannot exceed gross
total income.
Rule 2
These deductions are to be allowed only if
the assessee claims these and gives the
proof of such investments/ expenditure/
income.
4. Categories of Deductions
1. To encourage savings
2. For certain personal expenditure
3. For socially desirable activities
4. For physically disabled persons
5. Deduction u/s 80C
From AY 2007-08 onwards.
Applicable only to Individual & HUF.
This section provides for deduction in
respect of certain expenditure/
investments paid or deposited by the
assessee in the previous year.
6. The gross qualifying amount under this section refer to the
payment/investment under some of the following schemes:-
Life Insurance Premium Paid.
Deferred Annuity Contract.
Statutory Provident Fund and Recognized Provident Fund.
15 Year Public Provident Fund.
Approved Superannuation Fund.
National Savings Certificates.
Unit-linked Insurance Plan (Ulip).
Dhanraksha Plan of LIC Mutual Fund.
Jeevan Dhara, Jeevan Akshay, New Jeevan Dhara.
Notified Units of Mutual Fund or UTI.
7. Amount of Deduction
100% of the amount invested or Rs. 1,00,000/-
whichever is lower.
8. Deduction u/s 80CCC
Deduction in respect of Contribution to
Certain Pension Funds.
Individual
Eligible Amount – amount paid/deposited
under an annuity plan of the Life Insurance
Corporation of India or any other insurer for
receiving pension.
9. Conditions
Taxable income.
This must not be allowed as deduction u/s
80C.
Any amount withdrawn or pension received
from the plan is taxable in the hands of
the assessee or nominee in the year of
receipt.
Amount of Deduction
Amount paid or Rs. 10,000/- whichever is
lower.
10. Deduction u/s 80CCD
Deduction in Respect of Contribution to
Pension Scheme of Central Government.
Individual who is an employee of Central
Government on or after 1.1.2004.
Eligible Amount – Deposit made under a
pension scheme notified by the Central
Government.
11. Conditions
No deduction must have been claimed u/s 80C.
Any amount received from the scheme, is taxable
in the hands of the assess in that year or receipt.
Salary for the purpose of this section includes
dearness allowance if under the terms of
employment.
Amount of Deduction
Aggregate of amount deposited by the employee
and the Central government, or 10% of the salary,
whichever is lower.
12. The aggregate amount of deductions under 80C,
80CCC and 80CCD put together cannot exceed
Rs.1,00,000
13. Deduction u/s 80D
Deduction in respect of Medical Insurance
Premia.
Individuals/HUF.
Eligible Amount - Insurance premium paid in
accordance with the scheme framed by the
General Insurance Corporation of India and
approved by the Central Government.
14. Conditions
The amount should be paid by cheque out of the
taxable income.
The policy is taken on the health of the assessee,
on the health of spouse, dependent parents or
dependent children of the assessee. In case of HUF
on the health of any member of the family.
Amount of Deduction
100% of premium paid subject to a maximum of:
Rs. 15,000 in case of senior citizens (above 65
years)
Rs. 10,000 in case of others.
15. Deduction u/s 80DD
Deduction in respect of dependent relative.
Individuals/HUF who is a Resident of India.
Eligible Amount – expenditure incurred on
medical treatment OR/AND amount paid or
deposited under any scheme framed by the
LIC of India or any other insurer for the
payment of an annuity or a lump sum amount
for the benefit of such dependent
16. Conditions
The assess shall have to furnish a certificate in the
prescribed form.
Dependant means the spouse, children, parents and
siblings in case of individuals, or any member of the
family in case of HUF.
Person with severe disabilities means a person
suffering from 80% or more of one or more
disabilities.
Amount of Deduction
Rs. 50,000 in case of normal disabilities and Rs.
75000 in case of severe disabilities,
This is irrespective of the amount expended.
17. Deduction u/s 80DDB
Deduction In Respect Of Medical Treatment
Individuals/HUF who is a Resident of India.
Eligible amount – expenditure incurred for the
medical treatment of such diseases specified in
Rule 11D(e.g. Parkinson's disease, malignant
cancers, full blown AIDS, chronic renal failure,
etc) for self or dependant individual.
18. Conditions
The concerned assessee must attach a copy of
certificate in the prescribed Form no. 10-1
along with the return of income.
Dependant again means the spouse, children,
parents and siblings in case of individuals, or
any member of the family in case of HUF.
The deduction shall be reduced by the amount
received, if any, under an insurance from an
insurer for the medical treatment of person
mentioned in this section or reimbursed by the
employer.
19. Amount of Deduction
100% of the expenses incurred subject to
a maximum of
Rs. 60,000 in the case of expenses
incurred for senior citizens (above 65
years)
Rs. 40,000 in the case of others.
20. Deduction u/s 80E
Deduction in respect of repayment of loan
taken for higher education.
Individual
Eligible Amount – any amount paid by way of
interest on loan taken from any financial
institution or any approved charitable
institution for higher education.
21. Conditions
Amount is paid out of his income chargeable to tax.
Higher education means full-time studies for any
graduate or post-graduate course in engineering,
medicine, management or for post-graduate course
in applied science or pure sciences including
mathematics and statistics.
the deduction shall be allowed for the previous year
in which the assessee starts repaying the loan or
interest thereon and seven previous years
immediately succeeding it or until the loan together
with interest thereon is paid by the assessee in
full ,whichever is earlier.
22. Financial institution means banking company
or financial institution notified by the
central government.
Approved Charitable Institutions means an
institution referred u/s 10(23C) of the act.
Amount of Deduction
Actual interest paid or Rs. 40,000 whichever
is lower.
23. Deduction u/s 80GG
Deduction in respect of amount of rent
paid.
Any assessee other than assessee having
income allowance consisting HRA.
Eligible Amount – Any expenditure incurred
by him on payment of rent in excess of 10%
of his total income.
24. Conditions
The assessee files a declaration in Form No.
10BA regarding the payment of rent.
Such accommodation is occupied by him for his
own residence.
Deduction under this section can be claimed
even if accommodation at concessional rent is
provided by the employer.
Adjusted Gross Total income( Adj.GTI) for
this purpose means his gross total income minus
long-term capital gain, short term capital gain
taxable u/s 111A, and all deductions u/s 80CCC
to 80U except any deduction under this
section.
25. Amount of Deduction
The amount of deduction under this section
will be the least of the following-
excess of actual rent paid over 10% of
adjusted gross total income:
25% of his adjusted gross total income;
and
Rs. 2,000 p.m.
26. Deduction u/s 80U
Deduction in case of person with disability.
Individual resident of India.
Eligible amount – Flat deduction to a person
with disability.
27. Conditions
He is certified by the medical authority to be a person
with disability, at any time during the previous year.
He furnishes a certificate issued by the medical
authority in the prescribed form along the return of
income.
Amount of Deduction
A fixed deduction of
Rs. 50,000 in case of a person with disability
Rs. 75,000 in case of a person with severe disability.
( having any disability over 80%)
28. Conclusion
Under the income tax act first of all income under
each head is computed.
The aggregate of income under each head is known
as ‘Gross Total Income’.
Out of this gross total income certain deductions
are allowed.
The income after such deductions is called ‘Total
Income’
The total deductions from section 80 C - 80 U
cannot exceed the total income.
