Deductions

Deductions under Chapter VIA

Deductions under 80CCC:

Deduction: The premium must be deposited to keep in force a contract for an annuity plan of the LIC or any other insurer for receiving pension from the fund.
The Finance Act 2006 has enhanced the ceiling of deduction under Section 80CCC from Rs.10,000 to Rs.1,00,000 with effect from 1.4.2007.

Remark: The premium must be deposited to keep in force a contract for an annuity plan of the LIC or any other insurer for receiving pension from the fund.The Finance Act 2006 has enhanced the ceiling of deduction

under Section 80CCC from Rs.10,000 to Rs.1,00,000 with effect from 1.4.2007.

Deductions under 80CCD:
Deduction: Deposit in pension a/c.

Remark: Deposit made by an employee in his pension account to the extent of 10% of his salary. Where the Central Government makes any contribution to the pension account, deduction of such contribution to the extent of 10% of salary shall be allowed. Further, in any year where any amount is received from the pension account such amount shall be charged to tax as income of that previous year.

Deductions under 80D:
Deduction: Payment of medical insurance premium.

Remark: The premium is to be paid by any mode of payment other than cash and the insurance scheme should be framed by the General Insurance Corporation of India & approved by the Central Govt. or Scheme framed by any other insurer and approved by the Insurance Regulatory & Development Authority. The premium should be paid in respect of health insurance of the assessee or his family members. The Finance Act 2008 has also provided deduction upto Rs. 15,000/- in respect of health insurance premium paid by the assessee towards his parent/parents.

Deductions under 80DD:

Deduction: Deduction of Rs.40,000/- in respect of (a) expenditure incurred on medical treatment,

(including nursing), training and rehabilitation of handicapped dependant relative. (b) Payment or deposit to specified scheme for maintenance of dependant handicapped relative. W.e.f. 01.04.2004 the deduction under this section has been enhanced to Rs.50,000/ -. Further, if the dependant is a person with severe disability a deduction of Rs.75,000/ - shall be available under this section.

Remark: The handicapped dependant should be a dependant relative suffering from a permanent disability (including blindness) or mentally retarded, as certified by a specified physician or psychiatrist.

Note: A person with severe disability means a person with 80% or more of one or more disabilities as outlined in section 56(4) of the “Persons with Disabilities (Equal opportunities , Protection of Rights and Full Participation)Act.

Deductions under 80DDB:

Deduction: Deduction available to the extent of Rs.40,000 or the amount actually paid, whichever is less, in respect of medical expenditure incurred. In case of senior citizens, a deduction upto Rs.60,000/- shall be available.

Remark: Expenditure must be actually incurred by resident assessee on himself or dependent relative for medical treatment of specified disease or ailment. The diseases have been specified in Rule 11DD. A certificate in form 10 I is to be furnished by the assessee from a specialist working in a Government hospital.

Deductions under 80E:

Deduction: Deduction in respect of payment in the previous year of interest on loan taken from a financial institution or approved charitable institution for higher studies.

Remark: This provision has been introduced to provide relief to students taking loans for higher studies. The payment of the interest thereon will be allowed as deduction over a period of upto 8 years. Further, by Finance Act, 2007 deduction under this section shall be available not only in respect of loan for pursuing higher education by self but also by spouse or children of the assessee.

Deductions under 80G:
Deduction: Donation to certain funds, charitable institutions etc.

Remark: The various donations specified in Sec. 80G are eligible for deduction upto either 100% or 50% with or without restriction as provided in Sec. 80G.

Deductions under 80GG:
Deduction: Deduction available is the least of
(i) Rent paid less 10% of total income
(ii) Rs.2000 per month
(iii) 25% of total income.

Remark: (1) Assessee or his spouse or minor child should not own resedential accommodation at the place of employment.

(2) He should not be in receipt of house rent allowance.

(3) He should not have a self occupied residential premises in any other place.

Deductions under 80U:

Deduction: Deduction of Rs.50,000/- to an individual who suffers from a physical disability (including blindness) or mental retardation.Further, if the individual is a person with severe disability, deduction of Rs.75,000/- shall be available u/s 80U.

Remark: Certificate should be obtained on prescribed format from a notified ‘Medical authority’.

Deductions under 80RRB:

Deduction: Deduction in respect of any income by way of royalty in respect of a patent registered on or after 01.04.2003 under the Patents Act 1970 shall be available as :- Rs. 3 lacs or the income received, whichever is less.

Remark: The assessee who is a patentee must be an individual resident in India. The assessee must furnish a certificate in the prescribed form duly signed by the prescribed authority alongwith the return of income.

Deductions under 80QQB:

Deduction: Deduction in respect of royalty or copyright income received in consideration for authoring any book of literary, artistic or scientific nature other than text book shall be available to the extent of Rs. 3 lacs or income received, whichever is less.

Remark: The assessee must be an individual resident in India who receives such income in exercise of his profession. To avail of this deduction, the assessee must furnish a certificate in the prescribed form along with the return of income.

Deductions under 80C:

Deduction: This section has been introduced by the Finance Act, 2005. Broadly speaking, this section provides deduction from total income in respect of various investments/expenditures/payments in respect of which tax rebate u/s 88 was earlier available. The total deduction under this section is limited to Rs.1 lakh only.

Remark: Life Insurance Premium, Sum paid under contract for deferred annuity, Sum deducted from salary payable to Govt. Servant for securing deferred annuity for self, spouse or child, Employee’s Provident Fund Scheme, PPF, National Saving Certificate, Housing Loan principal repayment, ULIP, FD, ELSS, Bonds and Children education, etc.