16-11-2024

DEDUCTIONS
FROM GROSS TOTAL
INCOME

SCOPE OF LEARNING

BASICS OF DEDUCTION

SEC. 80C

SEC. 80D

SEC. 80G

SEC. 80TTA & 80TTB

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INTRODUCTION

 From Gross Total Income (being aggregate of income under five heads),
assessee can claim several deductions as specified in chapter VIA.

 On fulfillment of prescribed conditions as laid down in the respective

sections from 80C to 80U of Income Tax Act, 1961.

 After allowing these deductions, total income of the assessee is arrived &
tax is charged on it at the prescribed rates.

 Total Income = [Gross Total Income – Deductions under Chapter-VIA]

BASIC RULES TO BE REMEMBERED

 Deductions not available from: Deductions under chapter VIA are not available from –
 Long-term capital gain;
 short term capital gain covered u/s 111A (i.e., STCG on which STT is charged)
 And casual income like winning from lotteries, races, etc.

 Limit of deduction: The aggregate amount of deduction under chapter VIA cannot exceed Gross Total Income
of the assesse excluding –
 Long term capital gain;
 Short term capital gain covered u/s 111A;
 Casual income like winning from lotteries, card-games, horse races, etc.; and
 income referred in Sec.115A, 115AB, 115AC, 115ACA, etc.

 Deduction must be claimed: Deduction under chapter VIA – Part C (i.e., profit based deduction) and sec. 10AA shall be
available only if the assesse claims for it in the return of income.
 The amount of deduction cannot exceed the profits and gains of the undertaking or unit or enterprise or eligible business.
 Return of income should be filed within due date of filing return of income.

 Double deduction not permissible:

 Where deduction under any section of chapter VIA has been claimed then the same shall not qualify for deduction in any
other section.

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FLOW CHART OF DEDUCTION

FLOW CHART OF DEDUCTION

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DEDUCTION U/S 80C: Payment in respect of LIC Premium, contributions to

PF etc. [Available under Old Regime]
 Applicable to:
 An Individual or a Hindu Undivided Family (whether resident or non-resident)
 Condition to be satisfied:
 Assessee has made a deposit or an investment in any one or more of the listed items (as given below)
during the P.Y.
 Deduction is not available from short-term capital gain covered u/s 111A and long-term capital gain.
 For the purpose of Deduction u/s 80C, amount paid, invested or deposited shall be considered on
payment basis.
 Payments, which have become due during the previous year but not paid till the end of the previous
year, shall not be eligible for deduction.
 Above rule holds good, even though the assessee follows mercantile system of accounting.

 Quantum of deduction
Deduction under this section shall be minimum of the following:
🖸 Aggregate of the eligible contributions, expenditure or investments
🖸 ₹ 1,50,000

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ELIGIBLE PAYMENT U/S 80C

 Life insurance premium paid by a person to effect or to keep in force an insurance policy (life policy or
endowment policy) [Sec. 80C(2)(i)]
 Insurance policy can be taken on life of the following:
 In case of an individual: Himself, spouse and child (whether major or minor) of such individual;
 In case of HUF: Any member of the HUF.
 Maximum limit: Premium on insurance policy in excess of following % of the Actual Sum Assured shall be
ignored.

 Actual capital sum assured in relation to a life insurance policy shall mean the minimum amount assured
under the policy on happening of the insured event at any time during the term of the policy, not taking
into account:
 the value of any premium agreed to be returned; or
 any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may
be received under the policy by any person.

ELIGIBLE PAYMENT U/S 80C

 Contribution made towards Public provident fund (PPF). [Sec. 80C(2) (v)]
Subscription should be in the name of following persons:
 In case of individual: Such individual, his spouse and child (whether major or minor);
 In case of HUF: Any member of HUF.
 Contribution must not be in form of repayment of loan
 Maximum eligible Amount during a P.Y. is Rs. 1,50,000.

 Any subscription to NATIONAL SAVINGS CERTIFICATES, VIII Issue and IX Issue [Sec. 80C(2)(ix)]
 If contribution is made in joint names, the person who has contributed the money is eligible to claim deduction.
 An individual can claim deduction in respect of certificates.
 purchased in the name of his spouse or minor child.
 Treatment of accrued interest: Deduction is also available on accrued interest which is reinvested. i.e., interest upto
penultimate year of lock-in-period is eligible for deduction.

 Contribution for participating in the UNIT-LINKED INSURANCE PLAN (ULIP) of Unit Trust of India (UTI) or ULIP of
LIC Mutual fund u/s 10(23D) formerly known as Dhanraksha 1989. [Sec.80C(2)(x)]
 Contribution can be made in the names of following persons:
 In case of individual: Such individual, spouse and child (major or minor) of such individual;
 In the case of HUF: Any member of HUF.

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ELIGIBLE PAYMENT U/S 80C

 Any Sum paid to effect or keep in force a contract for notified annuity plan of the LIC or any other insurer. [Sec. 80C(2)(xii)]
 Subscription to notified units of a specified Mutual fund u/s 10(23D)/ administrator or the specified company as referred in
sec. 2 of UTI. [Sec. 80C(2)(xiii)] : Eligible scheme: Equity Linked Saving Scheme, 2005.

 Any sum paid as subscription to Home Loan Account Scheme or notified pension fund of the National Housing Bank. [Sec
80C(2)(xv)]: National Housing Bank (Tax Saving) Term Deposit Scheme, 2008.
 Any sum paid as subscription to a notified deposit scheme. [Sec. 80C(2)(xvi)]: Such deposit scheme shall be of -
 Public sector companies engaged in providing long-term finance for construction or purchase of houses in India for residential
purpose; or
 Any authority constituted in India for the purpose of satisfying the need for housing accommodation or for the purpose of
planning, development or improvement of cities, towns, villages or for both.
 Any payment for purchase or construction of a residential house property (the income from which is chargeable to tax
under the head “Income from house property”), by way of –
 Specified person includes -
 the Central or State Government; or
 any bank, including a co-operative bank; or
 the National Housing Bank; or
 Life Insurance Corporation; or
 any public company formed and registered in India with the main object of carrying on the business of providing long-term
finance for construction or purchase of houses in India for residential purposes.

ELIGIBLE PAYMENT U/S 80C

 Investment as term deposit for a period of 5 years or more with a scheduled bank. [Sec. 80C(2)(xxi)]
 Such term deposit scheme shall be framed and notified by the Central Government.
 Notified Bonds issued by the National Bank for Agriculture and Rural Development (NABARD) [Sec. 80C(2)(xxii)]
 Senior Citizens Savings Scheme Rules, 2004 [Sec. 80C(2)(xxiii)]
 5 year time deposit in an account under the Post Office Time Deposit Rules, 1981 [Sec. 80C(2)(xxiv)]
 Contribution made towards Statutory Provident Fund and Recognised Provident Fund. [Sec. 80C(2)(iv)& (vi)]
 Contribution must not be in form of repayment of loan.
 Contribution made towards an Approved Superannuation Fund. [Sec. 80C(2)(vii)]
 Subscription to any notified Government security or any notified deposit scheme (i.e., Sukanya Samriddhi Account
Scheme) [Sec. 80C(2)(viii)]
 Subscription should be in the name of Such Individual or any girl child of that individual, or any girl child for whom such
person is the legal guardian, if the scheme so specifies.
 Any payment by way of tuition fees to any university, college, school or other educational institution situated within
India for the purpose of full-time education. [Sec. 80C(2)(xvii)]
 Restriction on number of child: Deduction shall be allowed in respect of maximum 2 children.
 Admission fee: Tuition fees may be at the time of admission or thereafter.
• Donation to school, etc: Such payment does not include any payment towards any development fees or donation or
payment of similar nature.
 Private tuition fee is not covered.
 Contribution to a specified account (i.e., NPS Tier-II account) of the notified pension scheme referred to in sec. 80CCD for
a fixed period of not less than 3 years by an employee of the Central Government.

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ELIGIBLE PAYMENT U/S 80C

PRACTICAL CASE STUDY

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DEDUCTION U/S 80D: Payment in respect of medical insurance premium [Available under Old
Regime]
Sl. No. xpenditure on behalf of Deduction
Nature of payment/expenditure
I  Any premium paid,otherwise than by  Any person who is a resident in India Rs. 25,000
way of cash, to keep in force an
insurance on the health
 Contribution toCentral Government
Health Scheme(CGHS)
 Preventive healthcheck-up  In case any of the above persons is of the age of
expenditure 60 yearsor more + resident in India Rs. 50,000
II  Any premium paid, otherwise than by  Parents Rs. 25,000
way of cash, to keep in force an
insurance on thehealth  In case either or both the parents is of the age
of 60 yearsor more + Resident in India
Rs. 50,000
 Preventive health checkup
III  Amount paid on accountof medical For self/spouse/parents + who is of the age of 60
expenditure years or more + Resident in India + no payment
has been made to keep in force an insurance on
the health of such person Rs. 50,000
 Maximum Rs. 5,000 allowed as deduction for aggregate of preventive health check-up expenditure, by any mode
including cash, mentionedin I and II (Subject to overall limit of Rs. 25,000 or Rs. 50,000, as the case may be)

DEDUCTION U/S 80D

 In case the individual or any of his family members is a senior citizen, the aggregate of deduction, in respect
of payment of premium, contribution to CGHS and medical expenditure incurred, as specified in I & II above cannot
exceed Rs. 50,000.
 In case one of the parents is a senior citizen who is covered under mediclaim policy and another is also a senior
citizen but not covered under mediclaim policy, the aggregate of deduction, in respect of payment of medical
insurance premium and medical expenditure incurred, as specified in II & III above cannot exceed Rs. 50,000.

CASE STUDY-1 ON SEC. 80D:

 Mr. A, aged 40 years, paid medical insurance premium of Rs. 20,000 during the P.Y.
2023-24 to insure his health as well as the health of his spouse.
 He also paid medical insurance premium of Rs. 47,000 during the year to insure
the health of his father, aged 63 years, who is not dependent on him.
 He contributed Rs.3,600 to Central Government Health Scheme during the year.
 He has incurred Rs. 3,000 in cash on preventive health check-up of himself and his
spouse and Rs.4,000 by cheque on preventive health check-up of his father.
 Compute the deduction allowable under section 80D for the A.Y. 2024-25 if Mr. A
has opted for Old Tax Regime.

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DEDUCTION U/S 80D

CASE STUD-2 ON SEC. 80D:

 Mr. Y, aged 40 years, paid medical insurance premium of Rs. 22,000
during the P.Y. 2023-24 to insure his health as well as the health of his
spouse and dependent children.
 He also paid medical insurance premium of Rs. 33,000 during the year
to insure the health of his mother, aged 67 years, who is not dependent
on him. He incurred medical expenditure of Rs. 20,000 on his father,
aged 71 years, who is not covered under mediclaim policy. His father is
also not dependent upon him.
 He contributed Rs. 6,000 to Central Government Health Scheme during
the year.
 Compute the deduction allowable under section 80D for the A.Y. 2024-
25 if Mr. Y has opted for Old Tax Regime.

DEDUCTION U/S 80TTA: in respect of interest on deposits in Savings Accounts

[Available under Old Regime]
 Eligible assessee: Individual or a Hindu Undivided Family, includes any income by way
of an interest on deposits in a saving account (not being time deposits, which are
deposits repayable on expiry of fixed periods)
 Age limit of Assesse: Less than 60 years.
 Allowable Institution: in case the saving account is maintained with:
 A Banking Company to which the Banking Regulation Act, 1949, applies (including any
bank or banking institution referred to in section 51 of that Act);
 a Co-operative Society engaged in carrying on the business of banking (including a co-
operative land mortgage bank or a co-operative land development bank)
 A Post Office
 Quantum of deduction: (Lower of)
 Aggregate amount of Savings Bank A/c Interest of an assesse.
 Maximum Limit Rs. 10,000.

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DEDUCTION U/S 80TTB: in respect of interest on deposits in case of senior citizens

[Available under Old Regime]
 Eligible assessee: Individual includes any income by way of an interest on deposits of a
senior citizen in a fixed deposit and saving Bank account.
 Age limit of Assesse: More than 60 years (a resident individual who is of the age of 60
years or more at any time during the relevant previous year).
 Allowable Institution: in case the saving account is maintained with:
 A Banking Company to which the Banking Regulation Act, 1949, applies (including any
bank or banking institution referred to in section 51 of that Act);
 a Co-operative Society engaged in carrying on the business of banking (including a co-
operative land mortgage bank or a co-operative land development bank)
 A Post Office
 Quantum of deduction: (Lower of)
 Aggregate amount of Savings Bank A/c, Term Deposit A/c Interest of an assesse.
 Maximum Limit Rs. 50,000.

DEDUCTION U/S 80G: in respect of donations to certain funds, charitable institutions

etc. [Available under Old Regime]
 Eligible assessee:
 Donation to eligible funds or institutions, is entitled to a deduction, subject to certain limitations, from
the gross total income.
 Individual, HUF, AOP (other than a co-operative society) or BOI or an Artificial Juridical Person.
 Ineligible deductions:
 Cash donation more than Rs. 2000. [ i.e. donation by cheque, online mode are allowed]
 Donations in kind shall not qualify for deduction.
 Quantum of deduction: for total list click here: [Link]
Type of Donation Description
 Donation qualifying for  ANY FUND, TRUST
100% deduction, without any  Approved University/Educational Institution of National Eminence
qualifying limit  Any ZILA SAKSHARTA SAMITI constituted in any district for improvement of primary
education in villages and towns and for literacy and post-literacy activities
 National Blood Transfusion Council/ Any State Blood Transfusion Council whose sole
objective is the control, supervision, regulation or encouragement in India of the services
related to operation and requirements of blood banks
 Donation qualifying for 50%  PRIME MINISTER’S DROUGHT RELIEF FUND
deduction, without any
qualifying limit

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DEDUCTION U/S 80G: in respect of donations to certain funds, charitable

institutions etc. [Available under Old Regime]
 Quantum of deduction:
Type of Donation Description
 Donation qualifying for  The Government or to any approved local authority/institution Association
100% deduction, subject for Promotion of Family Planning.
to qualifying limit  Sum paid by a company as donation to the Indian Olympic Association or any
other association/institution established in India.

 Donation qualifying for  Any Institution/Fund established in India for charitable purposes.
50% deduction, subject to  Government/Local Authority for utilization for any charitable purpose
qualifying limit  An authority dealing with planning, development or improvement of cities, towns
and villages, or both
 Any Corporation established by the Central Government promoting the interests of
the members of a minority community
 Renovation or repair of Notified temple, mosque, Gurdwara, church or other place
of historic, archaeological or artistic importance
 The eligible donations SUBJECT TO QUALIFYING LIMIT should be aggregated and the sum total should be limited to 10% of
the adjusted gross total income. This would be the maximum permissible deduction.
 The donations qualifying for 100% deduction would be first adjusted from the maximum permissible deduction and
thereafter 50% deduction of the balance would be allowed.

DEDUCTION U/S 80G: in respect of donations to certain funds, charitable

institutions etc. [Available under Old Regime]
 Steps for computation of Qualifying Amount:

Step 1 Compute Adjusted Total Income i.e:

 Gross Total Income (GTI)
 Less: Deductions under Chapter VI-A, except under section 80G
 Less: Short-term capital gain taxable under section 111A
 Less: Long-term capital gains taxable under sections 112 & 112A
 Less: Any income on which income-tax is not payable
Step 2 Calculate 10% of Adjusted Total Income
Step 3: Calculate the aggregate actual donation, which is subject to qualifying limit
Step 4: Lower of Step 2 or Step 3 is the maximum permissible deduction.
Step 5: The said deduction
 Adjusted first against donations qualifying for 100% deduction
 Thereafter, 50% of balance qualifies for deduction

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DEDUCTION U/S 80G

 CASE STUDY-1 ON SEC. 80G:
 Mr. Shiva aged 58 years, has gross total income of Rs. 7,75,000 comprising of income from
salary, house property and savings bank Interest.
 He has made the following payments and investments:
 Premium paid to insure the life of her major daughter (policy taken on 1.4.2018)
(Assured value Rs. 1,80,000) – Rs. 20,000.
 Medical Insurance premium for self – Rs. 12,000; Mother (88 years) – Rs. 14,000.
 Deposit in PPF – Rs.1,00,000
 Savings Bank A/c interest – Rs. 60,000
 Cash donated for education of poor children- Rs. 10,000
 Blanket Donation to Local Slum community- cost Rs. 15,0000
 Donation to a Public Charitable Institution- Rs. 50,000 by way of cheque
 Donation to National Children’s Fund– Rs. 25,000 by way of cheque
 Donation to Prime Minister’s Drought Relief Fund – Rs.25,000 by way of cheque
 Donation to approved institution for Promotion of Family Planning– Rs. 40,000 by
way of cheque
 Compute the total income of Mr. Shiva for A.Y. 2024-25 if he opts for Old Tax Regime.

DEDUCTION U/S 80G

 CASE STUDY-2 ON SEC. 80G:
Compute total income for the A.Y.2024-25 of Miss Dipika, a resident individual, from the following details:

Hints: Total amount of donation u/s 80G- Rs. 17,250, Adj. Total Income- Rs. 85,000.

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