DEDUCTIONS UNDER SECTION 80

Section Scope Eligibility Deduction Amount Items Covered

Indian companies Except 100% of amount (non- 1. A business donation, payment, or
A government agency cash) subscription paid to a person engaging in any
2. A company that has only been in activity that has the potential to influence or
operation for three years. otherwise alter public support for a political
party or other political aim.
2. The amount spent by a company on
Donations to political
80GGB advertisements in any publications—whether
parties/electoral trusts
brochures, tracts, keepsakes, or pamphlets—
produced on behalf of political parties, either
directly or indirectly. In the form of a political
donation, the publication may not be directly
linked to a political party but yet act to its
advantage.
Any individual, Hindu Undivided Family 100% of amount (non- Recognized political party or approved electoral
(HUF), an AOP or BOI, a firm, and an cash) trust
Donations to political
80GGC artificial juridical person which is not
parties/electoral trusts
wholly or partly funded by the
government
80IA Profits from infrastructure  Power generation, distribution, Check table given Infrastructure Facilities
facilities, telecom, power, etc. and transmission. below  It should be a single Indian company, a
 Modernisation and renovation of corporation, an authority, a board, or a
the existing power undertaking. consortium of Indian enterprises.
 Operate, develop, and maintain  You should have a development
an infrastructure facility. agreement with the local authority,
 Industrial parks notified by the statutory body, or government for your
government. new infrastructure facility.
 Rendering telecommunication Telecommunication Services
services The telecommunications service should not
have been developed by reconstructing or
splitting up an existing business organization.
A telecommunication service that was
developed by transferring plants and machinery
from an existing organization will not be eligible
 to claim a deduction under section 80IA.
Industrial Park and SEZ
 Business owners need to follow the
rules of the Central Government while
operating the industrial parks and SEZs.
 You should adhere to the criteria for
deduction mentioned under section
80TTB to claim income tax benefits.
Reconstruction of Power Plants
 It should be recognized by the Central
Government and must have acquired it
before 31 December 2005.
 The construction period should be
before 30 November 2005.
 The power plant should have initiated
generation, transmission, and
distribution of power before 31st
March 2011.
Generation and Distribution of Power
 Generate power at any time between
1st April 1993 and 31st March 2017.
 Undertakes the renovation and
modernization of the existing network
of transmission and distribution lines at
any time during the period starting on
1st April 2004 till 31st March 2017.
 Starts distribution and transmission by
laying a new network of new
transmission at the time from 1st April
1999 to 31st March 2017.

SEZ developers (notified post 01.04.2005) 100% for 10 years out of The deduction can be claimed for 10
15 consecutive assessment years out of a total of
80IAB Profits from developing SEZ
15 years from the year in which the SEZ is
notified by the government.
 Co. or LLP incorporated 01.04.2016– 100% for 3 out of 10 Start-ups in innovation, technology, scalable
80IAC Profits of eligible start-ups
31.03.2024, turnover ≤ ₹100 cr years model
Profits from specified industrial New undertakings in eligible activities 30%–100% of profits for Housing projects, multiplex theatres, cold
80IB
undertakings 5–10 yrs storage, hospitals, R&D
Profits from affordable housing Developers (approved 01.06.2016– 100% of profits Affordable housing projects (size & completion
80IBA
projects 31.03.2022) norms)
Profits from hotels & Undertakings in NCR & specified cities 100% for 5 years Hotels (2-star+), convention centres in NCR &
80ID
convention centres specified areas
Profits from industries in North New units set up between 01.04.2007– 100% for 10 years Manufacturing, power, service sector in NE
80IE
Eastern States 31.03.2017 states
Profits from bio-degradable Assessees engaged in waste mgmt. 100% for 5 years Compost, bio-gas, bio-fertilizers, renewable fuel
80JJA
waste processing from waste
Indian companies (audit required) 30% of additional Hiring new employees (240 days/150 days
80JJAA Deduction for new employment
employee cost for 3 yrs apparel sector)
Scheduled banks, IFSC units 100% for 5 yrs, 50% Offshore banking, IFSC banking,
80LA Offshore banking & IFSC income
next 5 yrs derivatives/securities
Domestic companies receiving & Lower of dividend Dividend received & redistributed by domestic
80M Inter-corporate dividends
distributing dividends received/distributed companies
Income of co-operative Co-operative societies (other than co-op 100% (extent depends Banking (PACs), agri marketing, cottage
80P
societies banks except PACs/PCARDBs) on activity) industries, milk/oil societies
Producer cos. with turnover ≤ ₹100 cr 100% for 5 years Producer cos. in agri/animal produce
80PA Profits of Producer Companies
processing/marketing

DEDUCTIONS UNDER SECTION 80G

 Section 80G allows deduction to taxpayers on donations made to prescribed government relief funds and charitable institutions.
 Any of the following taxpayer can claim a deduction under this section:
 Individuals
 Companies
 Firms
 Hindu Undivided Firm (HUF)
 Non-Resident Indian (NRI)
 Any other person
 Depending on the donee, deduction can be claimed up to 100% of donation or 50% of the donation, subject to restrictions as the case may be.
  Even full donation paid to certain funds can be claimed as deduction under this section (without maximum limits), thus significantly reducing
the overall tax liability.
Mode of Payment Under Section 80G
Section 80G deductions can be claimed by taxpayers when they make donations through the following
modes:
 Cheque
 Demand draft
 Cash (for donations up to Rs 2,000)
Note:
1. In-kind contributions such as food, material, clothes, medicines etc., and donations of above Rs 2,000 in cash they do not qualify for deduction
under Section 80G.
2. Donations above Rs 2,000 should be made in any mode other than cash to qualify under Section 80G.
The various donations specified in Section 80G are eligible for a deduction of up to 100% or 50% with or without restriction, as provided in Section
80G.
List of Donations Eligible for 100% Deduction without Qualifying Limit
 National Defence Fund set up by the Central Government
 Prime Minister’s National Relief Fund and PM CARES fund
 National Foundation for Communal Harmony
 An approved university/educational institution of National eminence
 Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
 Fund set up by a state government for medical relief to the poor
 National Illness Assistance Fund
 National Blood Transfusion Council or any State Blood Transfusion Council
 National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities
 National Sports Fund
 National Cultural Fund
 Fund for Technology Development and Application
 National Children’s Fund
  Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
 The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s
Cyclone Relief Fund, 1996
 The Maharashtra Chief Minister’s Relief Fund during October 1, 1993, and October 6, 1993
 Chief Minister’s Earthquake Relief Fund, Maharashtra
 Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the earthquake in Gujarat
 Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of the earthquake in Gujarat (contribution
made between January 26, 2001, and September 30, 2001)
 Prime Minister’s Armenia Earthquake Relief Fund
 Africa (Public Contributions – India) Fund
 Swachh Bharat Kosh (applicable from FY 2014-15)
 Clean Ganga Fund (applicable from FY 2014-15)
 National Fund for Control of Drug Abuse (applicable from FY 2015-16)
List of Donations Eligible for 50% Deduction without Qualifying Limit
 Prime Minister’s Drought Relief Fund

List of Donations Eligible for 100% Deduction Subject to 10% of Adjusted Gross Total Income
 Donations to the government or any approved local authority, institution or association to be utilised to promote family planning
 Donation by a company to the Indian Olympic Association or any other notified association or institution established in India to develop
infrastructure for sports and games in India or sponsor sports and games in India.

List of Donations Eligible for 50% Deduction Subject to 10% of Adjusted Gross Total Income
 Any other fund or institution satisfies the conditions mentioned in Section 80G(5).
 Government or any local authority, to be utilised for any charitable purpose other than promoting family planning.
 Any authority constituted in India to deal with and satisfy the need for housing accommodation or the purpose of planning, development or
improvement of cities, towns, villages or both.
 Any corporation referred to in Section 10(26BB) for promoting the interest of the minority community.
 For repairs or renovation of any notified temple, mosque, gurudwara, church, or other places.
What is Adjusted Total Income?
Adjusted gross total income is the gross total income (sum of income under all heads) reduced by the total of
the following:
 Amount deductible under Sections 80C to 80U (but not Section 80G)
 Exempt income
 Long-term capital gains
 Short-term capital gains u/s 111A
 Income referred to in Sections 115A, 115AB, 115AC, 115AD and 115D
How to Calculate the Deduction under section 80G?
Step 1: Compute your total income before claiming any deductions under Chapter VI-A (including 80G).
Step 2: Calculate Adjusted Total Income -
 Subtract all deductions except Section 80G from the Gross Total Income.
 Also, exclude Long-term capital gains, Short-term capital gains under Section 111A, Income under Sections 115A, 115AB, 115AC, and 115AD,
All incomes covered under Chapter VI-A, except 80G
The resulting figure is called the Adjusted Total Income.
Step 3: Calculate 10% of Adjusted Total Income. This is known as the Qualifying Limit. It applies to donations subject to a limit.
Step 4: Categorise Donations into the following categories:
 100% deduction without limit (a)
 50% deduction without limit (b)
 100% deduction subject to qualifying limit (c)
 50% deduction subject to the qualifying limit (d)
Step 5: Allow full deduction for donations in categories (a) and (b).
Step 6: Apply Qualifying Limit to Remaining Donations
 For donations in categories (c) and (d):
a) Total donations eligible under the qualifying limit = the lower of actual donations or 10% of adjusted total income
b) Set off donations under 100% (qualifying limit) first
c) Any balance remaining is considered for 50% (qualifying limit) deduction
d) Deduction for 50% donations = 50% of the remaining eligible donation
Step 7: Compute Total Deduction under Section 80G by adding:
 Full deductions (from step 5)
 Deductions under the qualifying limit (from step 6)

Eligibility for 80IA

Sector Conditions Validity Period Amount of Deduction
Distribution of Natural Gas Not from splitting any business or Functioning on or after 1st April 100% profits for 10 out of 15 years
reconstruction, recognized by the 2007. from commencement.
Petroleum and Natural Gas
Regulatory Board, ⅓ pipeline for
common carriers.
Infrastructure Facility Owned by an Indian Company or a - 100% profits for 10 out of 15 years
Government body. from commencement.
Agreement with Government or
local authority for development.
Telecommunication Services Not from splitting any business or 1st April 1995 to 1st April 2005
100% profits for first 5 years, 30%
reconstruction or used machinery. for next 5 years, total of 15 years.
Industrial Parks and SEZ Operate under the rules provided
SEZ: 1st April 1999 to 31st March 100% profits for 10 out of 15 years
by the Central Government. 2006. from commencement.
Industrial Parks: 1st April 1999 to
31st March 2011
Generation and Distribution of Not from splitting any business or 1st April 1999 to 31st March 2011 100% profits for first 5 years, 30%
Power reconstruction or used machinery. for next 5 years, total of 15 years.
Reconstruction of Power Plant Should be recognized by the - 100% profits for 10 out of 15 years
Central Government and developed from commencement.
before the specified dates.

Comparison of Section 80IB and Section 80IBA

[Link] Particulars Existing Section 80IB Proposed Section 80IBA
1. Approval From local authority From concerned authority
2. Approval Duration From October 1st,1998 to March 31st, 2008 From June 1, 2016, to April 1st, 2020
3. Completion Period Within the period of five years from the end of the Within the period of three years from the date of first
financial year in which the housing project is approved approval by the competent authority
from Local authority
4. Date of completion The date in which completion certificate is issued by the The date when the certificate of completion of the
local authority project as a whole is obtained in writing from the
concerned authority
5. Commercial built-up area Not exceeding 3% of the aggregate built-up area or 5000 Not exceeding 3% of the aggregate built-up area
sq ft. Whichever is higher
6. Housing project No such condition Any project was consisting predominantly of dwelling
units with specified facilities and amenities
7. Residential Unit No such condition Any independent housing unit with separate facilities for
cooking, living and sanitary requirements
8. Books of Accounts Maintenance of separate books of 738accounts not Separate Books of accounts has to be maintained for the
compulsory project
Other Conditions
 If the housing project is not completed within the specified period under section 80-IBA(2)(b) (i.e. three years) and in respect of which a
deduction has been claimed, the total amount of deduction so obtained and allowed in one or more preceding years, would be considered as
the chargeable income of the taxpayer under the head “Profits and gains of business or profession” of the preceding year in which the period
for completion so expires.
 This deduction is not applicable to the taxpayer who completes the project as a work contract made under any individual or Central or State
Government
What is the meaning of additional employees as per section 80JJAA?
It means an employee who has been employed during the previous year but does not include the following:
  Employees whose total salary is more than Rs. 25,000/- per month.
 Employees who were employed for less than 240 days in the previous year (150 days in case of manufacture of apparel or footwear or leather
products)
 Employees who do not participate in Recognised Provident Fund like casual workers, etc.
 Employees whose entire contribution is paid by the Government under the Employees’ Pension scheme
What is the additional employee cost as per section 80JJAA?
Additional Employee Cost means total emoluments paid or payable to additional employees.
However, in the case of an existing business, additional employee costs shall be NIL if the total number of employees does not increase, which means
the total number of employees joined should be more than the total number of employees left during the previous year.
What is the meaning of emoluments given in section 80JJAA?
Emoluments mean any sum paid or payable to an employee in lieu of his employment by whatever name called but does not include the contribution
by the employer to a pension fund, provident fund or any payment paid or payable to an employee at the time of termination of his service or
Voluntary retirement example: Gratuity, severance pay, voluntary retrenchment benefits, leave encashment, commutation of pension, et
Applicability of Section 80JJAA of the Income Tax Act
Section 80JJA of the Income Tax Act deals with tax deductions on profits and gains from businesses. The section allows a deduction of 30% on
additional employee costs for three consecutive assessment years.

Activities and amount eligible for deduction under Section 80P

Activities covered Quantum of deduction
Co-operative society engaged in:
The business of banking or providing credit facilities to its members
Cottage industry
Marketing of agricultural produce grown by its members
Purchase of agricultural implements, seeds, livestock or other articles intended for agriculture
for the purpose of supplying them to its members 100% of profits and gains attributable to
Processing of agricultural produce of its members without the aid of power these activities
Collective disposal of the labor of its members, or fishing, or any allied activities (catching,
curing, processing, preserving, storing, marketing of fish or the purchase of materials and
equipment in connection therewith for the purpose of supplying them to its
members). However, rules and by-laws of these co-operative societies must restrict voting
rights to:
1. Members, who are individuals who contribute with their labour
2. Is a co-operative society which provides financial assistance to the society or
3. Is a State Government.
A co-operative society which is primarily engaged in supplying milk, oilseeds, fruits or
vegetables raised or grown by its members to:
1. A federal co-operative society, a society engaged in the business of supplying milk, oilseeds, 100% of profits and gains of such
fruits, or vegetables, as the case may be business
2. The Government or Local authority
3. Either a government company as per the company law or a corporation established by or
under the Central, State or Provincial Act, which is engaged in supplying milk, oilseeds, fruits or
vegetables, as the case may be, to the public
A co-operative society engaged in any other activities 1. For consumer co-operative society* –
Upto Rs 1 lakh
2. Others – Upto Rs 50,000
A co-operative society earning:
1. Interest or dividend from its investment with any other co-operative society or 100% of such income
2. Income from letting of godowns or warehouses for storage, processing or facilitating the
marketing of commodities
Interest on securities or income from the house property of a co-operative society other than a 100% of such income
Housing society or
1. Urban consumers’ society** or
 2. Society carrying on a transport business or
3. Society engaged in manufacturing operations with the aid of power
whose gross total income is not more than Rs 25,000
* ‘Consumers’ co-operative society’ means a society for the benefit of its consumers
** ‘Urban consumers’ co-operative society’ means a society for the benefit of the consumers within the limits of a municipal corporation, municipality,
municipal committee, notified area committee, town area or cantonment.