Deductions in Income tax 1961

1. DEDUCTIONS U/S 80 C -80 U
BY
DR. D. JANIS BIBIYANA

2. •Section 80 C allows to reduce taxable income by making tax
saving investments or incurring eligible expenses. It allows a
maximum deduction of Rs 1.5 lakh every year from the
taxpayers total income.
The benefit of this deduction can be availed by Individuals and
HUFs.
Companies, partnership firms, LLPs cannot avail the benefit of this
deduction.
Section 80C includes sub sections , 80CCC, 80CCD (1) , 80CCD
(1b) and 80CCD (2).

4. Sec 80 C: Deductions in respect of LIC premium,
Contribution to PF, Repayment of housing loan, Term
deposit, Tution fee
1. Any sum paid as LIC Premium on the life of Self, Spouse and Children
Actual premium subject to 20% of sum assued is allowed if policy is
taken before 1.4.2012. Otherwise only 10% of sum assured.
2. Any sum paid as Tuition fees for not more than 2 children.
3. Any sum paid as repayment of housing loan (Principal only, not interest)
4. Any sum deposited in a term deposit for a period of not less than 5
years with a scheduled bank.

5. PROBLEM NO: 1
• Mr. Monish has provided the following information for the previous year 2020-21.
Compute his total income.
• i. Gross Salary 6,00, 000
• ii. Rent from House Property 3,00,000
• iil. STCG on transfer of Residential House 1,00,000
• iv. LIC Premium for his own life taken in 2017 Rs. 90,000 (Sum assured Rs.
8,00,000, Policy taken in 2018)
• Tuition fees for his three children (each 35,000) 1,05, 000
• vi. Repayment of housing loan -Principal 35,000

6. SOLUTION
TAXABLE INCOME OF MR. MONISH
• Gross Salary 6,00,000
Less: Standard Deduction 50,000
--------------- 5,50,000
Income from House Property 3,00,000
Less: Standard Deduction 30% 90,000
------------- 2,10,000
STCG on Residential House 1,00,000
-----------------
Gross Total Income 8,60,000
Less: 80C Deduction 1,50,000
-------------------
Taxable Income 7,10,000
-------------------

7. WORKING NOTE FOR PROBLEM NO: 1
LIC Premium restricted to 10% (policy taken after 2012)
(10% on 800000) 80000
Tuition Fees for 2 children (2*35000) 70000
Repayment of Housing loan (Principal amt only) 35000
-----------------
185000
-----------
Deductions u/s 80 C restricted upto Rs. 150000

8. PROBLEM NO: 2
• Mr. Sudhir’s gross total income during the previous vear 2020-21 was Rs.
18,00,000 the following payment during 2020-21. Compute his total income.
• i. LIC Premium for his own life Rs. 75, 000 (Sum assured Rs. 3,00, 000) Policy
taken on 1.1.2011
• ii. LIC Premium for his son (not dependent on Mr. A) 15,000
• iii. LIC Premium for a dependent brother 5,000
• iv. Repayment of housing loan from SBI (Principal FRs.50,000, Interest Rs.
35,000) 85,000
• V. Tuition fees for his children 40,000 (First child 10,000; second child 12,
000; third child - 18,000)

9. Eligible investments for tax deductions
80 C 80C allows deduction for investment made in PPF , EPF, LIC premium , Equity linked saving scheme, principal amount
payment towards home loan, stamp duty and registration charges for purchase of property, Sukanya smriddhi yojana
(SSY) , National saving certificate (NSC) , Senior citizen savings scheme (SCSS), ULIP, tax saving FD for 5 years,
Infrastructure bonds etc
80CCC Deduction for
life insurance annuity
plan.
80CCC allows deduction for payment towards annuity pension plans Pension received from the annuity or amount
received upon surrender of the annuity, including interest or bonus accrued on the annuity, is taxable in the year of
receipt.
80CCD (1) Deduction
for NPS
Employee’s contribution under section 80CCD (1) Maximum deduction allowed is least of the following
 10% of salary (in case taxpayer is employee)
 20% of gross total income (in case of self employed)
 Rs 1.5 Lakh ( limit allowed u/s 80C)
 (Salary = Basic + D.A (if enters into retirement benefits) + Commission (if it is percentage of turnover)
80CCD (1b) Deduction
for NPS
The deduction under Section 80 CCD is Rs. 2 Lakhs with the Additional deduction of Rs 50,000 is allowed for amount
deposited to NPS account
Contributions to Atal Pension Yojana is also eligible for deduction.
80CCD (2) Deduction
for NPS
Employers contribution is allowed for deduction upto 10% of basic salary plus dearness allowance under this section.
Benefit in this section is allowed only to salaried individuals and not self employed.

10. SEC 80 CCC: Deductions in respect
of Pension Fund
An individual who has paid a sum under a annuity plan of LIC or
any other insurance can claim this deduction.
He/She can claim upto Rs. 1,50,000 as deduction under this
section

11. SECTION 80 CCC UNDER THE INCOME
TAX ACT
section 80ccc of the income act provides a ground for a tax
deduction in which one can make an investment in pension
funds. It relates to the deduction for premium paid for any
annuity plan of LIC or pension fund or another insurer. In these
pension funds, a taxpayer can claim a maximum amount of
deduction of Rs 1.5 lakhs. It could be from any insurer in the
pension funds and an individual is only eligible to claim this
deduction as a taxpayer.

12. SECTION 80CCD UNDER INCOME TAX ACT
• Section 80CCD relates to the deductions that are available to individuals
against the contributions made to the Atal Pension Yojana (APY) and the
National Pension Scheme (NPS).
• The deduction under Section 80 CCD is Rs. 2 Lakhs which is the maximum limit
available and this shall include Rs. 50,000/- which is the additional deduction
available under sub-section 1B.

13. PROBLEM NO: 3
•Mr. Chandhru has furnished the following particulars.
Compute his total income for the previous year 2020-21.
•i. Gross salary 7,50,000
•Ii. Income from other sources 5,00,000
• üi. LIC Annuity Plan Premium paid Rs. 50,000

14. SOLUTION:
TOTAL INCOME OF MR. CHANDRU FOR THE PREVIOUS
YEAR 2020-21
Gross salary 750000
Less Std Deduction (sec 16) 50000
--------------------- 700000
Income from other sources 500000
-------------
Gross total income 120000
Less dedu u/s 80CCC 50000
-----------
Taxable income 115000

15. SEC. 80D: DEDUCTION IN RESPECT OF MEDICAL
INSURANCE PREMIUM
•This deduction is allowed to an Individual or a HUF in respect of medical
insurance premium. The payment should be any mode other than cash. An
assessee can claim deduction subject the following limits.
•i. In case of an individual assessee any amount paid as medi claim
insurance premium contribution to CGHS, preventive health check-up on
his own life or spouse, dependent children can claim up to 25,000.
•ii. In the above case, if there is medi claim insurance of any senior citizen
(at least 60 years of age at any time during the previous year) an
additional deduction ot Rs. 25,000 can be claimed.

16. contd……
• iii. In case of an individual assessee any amount paid as medi claim insurance
premum. contribution to CGHS, preventive health check-up on his parents
(whether dependent or otherwise) can claim up to 25,000.
• iv. In the above case, if there is medi claim insurance of any senior citizen (at
least 60 years of age at any time during the previous year) an additional
deduction of Rs.25,000 can be claimed.
• v. The aggregate payment on account of preventive health check-up of self,
spouse, dependent children, father or mother cannot exceed Rs. 5,000.
• vi. Payments for medi claim should be made by any mode other than cash.
However payment for preventive health check-up can be made by any mode
including cash

17. PROBLEM NO: 4
From the following payments (made by cheque), compute the
amount allowable as deducton u/s 80D for the previous year
2020-21.
i. Medical insurance premium on Self and Spouse 22,000
ii. Medical insurance premium on Mother aged 65 years
42,000
iii. Preventive health checkup for Self and Spouse Rs. 3000
iv. Preventive health checkup for Mother 7,000

18. SOLUTION:
• Medical insurance premium on self & spouse 22000
• Medical insurance premium on mother 42000
• Preventive health check up
self & spouse 3000
mother 7000
--------
10000
eligible deduction 5000
--------- 5000
-----------
Total deduction 69000
-------------

19. Deduction is allowed to an individual and a HUF, This is allowed
when an assessee incurred an expenditure because of medical
treatment for a person with disability or amount paid under any
scheme any person with framed by the LIC or any other insurer for the
benefit or a deduction disability Rs. 75,000 from the assessee's gross
total income can be claimed as irrespective of the actual expenditure.
If there is severe disability up Rs. 125000 can be claimed as
deduction.
SEC. 80DD: Deduction in respect of maintenance including
medical treatment of a dependent who is a person with
disability

20. PROBLEM 8
•Mr. Ragul has furnished the following particulars for the previous year
2020-21. Compute his taxable income.
i. Income from salary 3,00,000
ii. Income from house property (Gross) 90,000
iii. Income from interest on securities 80,000
He made the following payments:
i. Contribution to RPF Rs.10,000
ii. Medical insurance premium on self 32,000 .
iii. Amount spent for medical treatment of his disabled son Rs. 30,000

21. COMPUTATION OF TOTAL INCOME OF MR. RAHUL
Income from Salary 300000
Less Std Deduction (sec 16) 50000
-------------------250000
Income from HP 90000
Less SD 30% 27000
---------------------------- 63000
Income from OS 80000
-----------
Gross Total Income 393000
Less Deduction 80C Contribution to RPF 10000
80 D Mediclaim upto 25000
80DD disabled person 75000
----------- 110000
--------------
Taxable income of Mr. Rahul 283000
-----------------
Income from Salary 300000
Less Std Deduction (sec 16) 50000
-------------------250000
Income from HP 90000
Less SD 30% 27000
---------------------------- 63000
Income from OS 80000
-----------
Gross Total Income 393000
Less Deduction 80C Contribution to RPF 10000
80 D Mediclaim upto 25000
80DD disabled person 75000
----------- 110000
--------------
Taxable income of Mr. Rahul 283000
-----------------

22. SEC. 8ODDB: DEDUCTION IN RESPECT OF MEDICAL
TREATMENT ON SPECIFIED DISEASE
• This deduction is allowed to an individual for himself or his dependent
relatives like spouse, children, parents, brothers and sisters and a HUF for
its members. Deduction is allowed in respect of any medical expenditure
actually incurred for the treatment of diseases like cancer, AIDS and
chronic renal failure provided the medical certificate in that regard is
produced. Actual amount paid subject to the maximum of Rs. 40,000 can
be claimed as deduction. In case such expenditure is incurred for a senior
citizen, up to Rs. 1,00,000 instead of Rs. 40,000 can be claimed as
deduction.

23. PROBLEM
Mr. Sunil, an individual assessee, has furnished the following
particulars for the 2020-21. Ascertain his previous year total
income.
(i) Gross Total Income 12,00,000
(ii)Contribution to PPF 30,000
(iii)Expenditure regarding the treatment of his dependent
brother is suffering from cancer (medical certificate
produced) 75,000

24. COMPUTATION OF TAXABLE INCOME OF MR. SUNIL
Gross total income 1200000
Less Deductions u/s 80
80 C contribution to PPF (Restricted upto 150000) 30000
80 DDB Expenditure for specified disease 40000
-------- 70000
--------------
Taxable income 1130000
-------------

25. SEC. 80E DEDUCTION FOR INTEREST PAID ON
LOAN TAKEN FOR HIGHER EDUCATION
This deduction is available only to an individual assessee. If
an assessee avails higher education loan for self or for spouse or
for children (whether dependent or not) and pays interest on that
allowed for the initial loan, it can be claimed as deduction under
section 80E. This deduction is allowed for the initial assessment year
and seven assessment years immediately succeeding the first
assessment year or until the interest is paid in full, whichever is
earlier.

26. PROBLEM
•Mr. Abraham has borrowed Rs. 7,00,000 for his
son's MBA program at a Mumbai college from the
SBI in 2016. It is repayable in 10 installments of Rs.
1,00,000 starting from the 2017-18 (Rs. 70,000 as
principal and 30,000 as interest). Find out how
much and how can claim deduction?

27. SOLUTION
As per the above problem, Abraham is
paying Rs. 30000 as interest on higher
education loan. So Abraham can claim Rs.
30000 as deduction u/s 80 E from the year
2017-18 to 2024-25.

28. SEC. 80G: DEDUCTION IN RESPECT OF DONATIONS TO CERTAIN
FUNDS, CHARITABLE INSTITUTIONS, ETC.,
•This deduction is allowed to all assessees for donation made to the
specified funds or institutions. It is allowed in respect of amount given to
charitable donations and it is allowed to all types of assesses. For some
of the donations, deductions are allowed without any limit (No Limit
Donations) and in some other donations, deductions are allowed with
certain limits (With Limit donations) For With Limit donations, the limit is
10% of the Gross total income reduced by the following: i. Long term
capital gains ii. Short term capital gain on transfer of Shares through
recognized stock exchange (i.e. STCG if STT paid) . All deductions u/s
80C to 80U except this deduction.

29. CLAIMING DEDUCTIONS UNDER SECTION 80G
•For the purpose of all donations can be classified into four
category as follows.
•1. No Limit Donations with 100% deduction eligibility
• 2. No Limit Donations with 50% deduction eligibility
•3. With Limit Donations with 100% deduction eligibility
•4. With Limit Donations with 50% deduction eligibility

30. I. NO LIMIT [NL] DONATIONS WITH 100% DEDUCTION ELIGIBILITY
DONATIONS TO THE FOLLOWING CATEGORIES ARE 100% ELIGIBLE FOR DEDUCTION UNDER SEC. 80G
• 1. National Defense Fund
• 2. Prime Minister's National Relief Fund
• 3. Prime Minister's Earthquake Relief Fund
• 4. Africa Fund
• 5. National Foundation for Communal Harmony
• 6. National Blood Transfusion Council
7. Andhra Pradesh Chief Minister's Cyclone Relief Fund
• 8. National Illness Assistance Fund
• 9 Chief Minister's Relief Fund
• 10. National Sports Fund
• 11. National Children's Fund
• 12. Educational institution on National eminence by approved authority
• 13. National Fund for control of drug abuse

31. II. NO LIMIT [NL] DONATIONS WITH 50%
DEDUCTION ELIGIBILITY
• Donations to the following categories are 50% eligible for deduction under
Sec. 80G
• 1. Jawaharlal Nehru Memorial Fund
• 2. Prime Minister's Drought Relief Fund
• 3. Indira Gandhi Memorial Trust
• 4. Rajiv Gandhi Foundation

32. III. WITH LIMIT [WL] DONATIONS WITH 100%
DEDUCTION ELIGIBILITY
• 1. Donations to local authority, institutions or association for promoting family
planning
• 2. Donations to Indian Olympic Association or any Institutions for development
infrastructure for sports and games or for sponsorship of sports and games in
India.

33. IV. WITH LIMIT [WL] DONATIONS WITH 50%
DEDUCTION ELIGIBILITY
• 1.Donations to Local authority for any charitable purpose other than family
planning
• 2. Donations for the purpose of planning development
• 3 Donations to promote the interest of the member of a minority community
• 4 Donations to educational institutions, Donations to the place of worship.

34. PROBLEM
Mr. Priyan's G.T.I for the Previous Year is Rs. 600000. He
made the following donations. Compute his total income
for the previous year 2020-21.
i. National Defense Fund Rs. 20000
ii. National Sports Fund 15,000
iii. National Children's Fund 10000
iv. Prime Minister's Drought Relief Fund Rs. 25000

35. Mr. Anil's gross total income is Rs. 7,50, 000. He has made
taxable income the following donations. Compute his
Taxable income for the previous year 2020-21.
i. National Defense Fund 20,000
ii. Prime Minister 's National Relief Fund 15,000
ii. Prime Minister's Drought Relief Fund 18,000
iv. Prime Minister 's Earthquake Relief Fund in kind Rs. 1000
V. Donation to a poor farmer 8,000

36. PROBLEM
•Mr. Basu's Gross Total Income is 6,00,000
Including LTCG of Rs. 60000 he has made the following
payments. Compute his total income for the previous year
2020-21.
•His contribution to PPF 16,000
•Medi claim insurance for his wife 14,000
•Expenditure on medical treatment for a disabled brother
30,000
• Donation to the repair work of a temple 40,000
•Donation for promoting a minor community 60,000

37. SOLUTION
• Computation of total Income of Mr. Basu
Gross Total Income 600000
Less: LTCG 60000
Contribution to PPF (80 C) 16000
Medi claim insurance for wife (80D) 14,000
Expenditure on medical treatment
for a disabled brother (80 DD) 75,000
--------------------165000
-------------
435000
(10% of 435000 is Rs. 43500)
Donation 80 G 50% on 43500 21750
-----------
Taxable Income of Mr. Basu 413250

38. • Mr. Sekar's Gross Total Income for the previous year ending on
31.03.21 is Rs. 30,00,000. He has donated the following amounts:
• National Defence Fund 1,00,000
• P.M's Drought Relief Fund 2,00,000
• To an approved college for constructing a class room 2,00,000
• To a temple for its repairs 1,50,000
• For the development of sports and games 2,00,000
• He has deposited 1,00, 000 in Public Provident Fund.
Determine his total income.

39. Mr. Chezhiyan's G.T.I. is Rs. 5,00,000 and he has made the
following donations. Compute his total income for the previous
year 2020-21.
i. Africa fund 10,000
ii. National Sports Fund 30,000
iii. Donation to approved educational institutions 25000
vi. Donation to temples for repairs 35,000
V. Donation to the municipal corporation for family planning
28000

40. Mr. Arumugam's G.T.I is Rs. 4,00,000 during the P.Y.
2018-19 and he has made the following donations. Determine
his total income:
i. Rs. 20,000 to Andhra Pradesh Chief Minister's Earthquake
Relief Fund
ii. 10,000 to National Cultural Fund
iii. 6,000 to Rajiv Gandhi Foundation
iv. 25,000 to Municipal corporation for the promotion of family
planning.
V. Rs. 28000 to approved educational institutions

41. SEC. 80GG: DEDUCTION IN RESPECT OF RENT PAID
• When an individual pays rent for his residential accommodation, he can claim
it for deduction. He may be either self- employed or an employee without
receiving H.R.A. He should not own any residential place where he is working.
If he is having residential accommodation in some other place, it should not
be assessed as self-occupied property. He can claim, the least of the
following three as deduction: i. 10% of Rent ii. 25% of Adjusted Total Income
iii. 5,000 p.m.
• Note: Adjusted Total Income means Gross Total Income reduced by the
following: i. LTCG, if any ii. STCG on transfer of shares through a recognized
stock exchange ii. All deductions under Sections 80C to 80U except 80GG

42. •From the particulars, compute the total income of Mr.
Siva, for the previous year 2020-21
• i. Income from Business Rs.300000
• i. Income from other sources Rs 200000.
• ii. L.I.C premium paid Rs. 20000
• iii. Rent paid for residential accommodation Rs. 72000

43. SEC. 80GGA: DEDUCTION IN RESPECT OF DONATIONS
FOR SCIENTIFIC RESEARCH OR RURAL DEVELOPMENT
• An assessee who is not having any income under business or
profession can claim this deduction.. Donation may be provided to
an association, a university or college, a public company or any
other approved institution. 100% of donations can be claimed as
deduction. No deduction is allowed under this section in respect of
any sum exceeding 10,000 is paid by any mode other than cash.

44. SEC. 80GGB: DEDUCTION IN RESPECT OF
CONTRIBUTIONS GIVEN TO POLITICAL PARTIES
This deduction is allowed to an assessee (including an
Indian company) who has contributed any amount of money
to a political party during the previous year. When the
assessee bears advertisement expenses in a souvenir /
brochure owned by a political party he can claim this.
However, this deduction is not available
i) to a local authority or company funded by Government.
ii) if donation is paid by cash.

45. SEC. 80QQB: DEDUCTION IN RESPECT OF ROYALTY
INCOME OF AUTHORS OF TEXT BOOKS
This deduction is allowed to an individual who
has received royalty for his work on literacy, artistic
or scientific nature. He can claim deduction@ 15% of
the value of such books less expenses subject to the
maximum of Rs. 3,00,000 as deduction.

46. PROBLEM
Mr. Hari submit the following information. Compute his total
income for the previous year 2020-21.
Royalty on a book for college students on Rs. 6,00, 000 @
20% Rs. 1,20,000
Expenses incurred to earn the royalty 20,000
Other income Rs. 5,00, 000

47. SEC 80RRB: DEDUCTION IN RESPECT OF ROYALTY
ON PATENTS
This deduction is allowed to an individual who is
respect and patent and if his gross total income
includes royalty in respect of such patent. The patent
should be registered on or before 1.4.2003. under
the Patents Act 1970. He can claim the actual royalty
subject to the maximum of Rs. 3,00,000 as deduction.

48. SEC. 80U: DEDUCTION IN RESPECT OF PERSON
WITH DISABILITY
If the assessee is a person with disability, he can claim deduction
under this section. He must be certified by the medical authority
as a person with disability. An assessee who is suffering from
severe disability can claim up to Rs. 1,25,000. An assessee who
is suffering from disability but not severe disability can claim up
to 75,000. This deduction is allowed irrespective of actual
expenditure.

49. SEC 80 EE: DEDUCTIONS IN RESPECT OF INTEREST
ON HOME LOAN
The first time home buyers can claim an additional tax deductions upto Rs. 50000 on
home loan interest payments u/s 80 EE. This criteria given below have to be met the
following deductions:
a. The home loan should have been sanctioned in or after 2016 – 17.
b. Loan amount should be less than 35 lakh.
c. the value of house should not be more than Rs. 50 Lakhs.
d. the home buyer should not have any other existing residential house in his name.
e. If deduction of interest is claimed u/s 80 EE, no other deductions will be allowed in
respect of such interest.