DEDUCTION IN RESPECT OF LIFE INSURANCE PREMIA, ETC. (SEC. 80C)
The following payments/investments qualify for deduction under this section. The total amount of investments made during the P.Y. under these below-mentioned schemes is known as Gross Qualifying Amount ( GQA )
1.Life Insurance premium paid on a policy taken on his own life, the life of the spouse or any child (child may be dependent/ independent ). In the case of a Hindu undivided family, the policy may be taken on the life of any member of the family. The premium paid should be maximum of 20% of sum assured .
2. Any sum deducted from salary payable to a Government employee for the purpose of securing him a deferred annuity (subject to a maximum of 20% of salary)
3. Contribution towards statutory provident fund and recognized provident fund.
4. Contribution towards 15-year public provident fund (maximum of Rs 70,000).
5. Contribution towards an approved superannuation fund
6. Subscription to National Savings Certificates, VIII Issue .
7. Contribution for participating in the Unit-Linked Insurance Plan (ULIP) of Unit
8. Contribution for participating in the unit-linked insurance plan (ULIP) of LIC Mutual Fund (i.e. Dhanraksha plan of LIC Mutual Fund)
9.Payment for notified annuity plan of LIC (i.e. Jeevan Dhara, Jeevan Akshay
New Jeevan Dhara ,etc ) or any other insurer.
10. Subscription towards notified units of Mutual Fund or UTI
11. Contribution to notified pension fund set up by Mutual Fund or UTI .
12. Any sum paid (including accrued interest) as subscription to Home Loan
Account Scheme of the National Housing Bank
13. Any sum paid as tuition fees to any university/college/educational institution in India for full-time education.
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SECTION 80CCC – PAYMENT IN RESPECT OF PENSION FUND
If the following conditions are fulfilled an assessee may claim deduction under this section
• The taxpayer is an individual
• During the previous year, he has paid/deposited a sum under an annuity plan of the Life Insurance Corporation of India or any other insurer for receiving the pension.
• If deduction has not been claimed under section 80C
Note;-The aggregate deduction under sections 80C, 80CCC and 80CCD cannot exceed Rs.1, 50,000.
DEDUCTION IN RESPECT OF CONTRIBUTION TO PENSION SCHEME OF CENTRAL GOVERNMENT (SEC. 80CCD[2])
This section is for allowing deduction to new central & other State Government employees, if the following conditions are satisfied:
• The taxpayer is an individual
• He is employed by the Central or State Government on or after January 1, 2004.
• He has in the previous year paid or deposited any amount in his account under a pension scheme notified by the Central or State Government.
The amount deductible is
a) The total employee’s contribution and employer’s contribution to the notified pension scheme during the year.
b) Or 10% of salary of the employee, Whichever is less
NOTE: Salary means basic salary including dearness allowance if under the terms of employment.
The aggregate amount of deduction under sections 80C, 80CC cannot exceed Rs. 1,50,000,but Section 80CCD(2) Employer’s Contribution to the Employee’s Pension Fund excluding deduction U/s 80C limit Rs. 1.5 Lakh.
DEDUCTIONS FOR CERTAIN PERSONAL EXPENDITURE On medical purpose.
Under Section 80-D, 80-DD ,80-DDB 80-E and 80-GG of IT Act 1961 some deductions are allowed in respect of personal expenditure such as Medical Insurance, Medical treatment of handicapped dependent, etc. These deductions are allowed to give impetus to threshold areas like education ,health & housing. Let us now discuss them one by one.
SECTION 80D – MEDICAL INSURANCE PREMIUM
If the following conditions are satisfied then an assessee may claim deduction under this section.
• The taxpayer is an individual or a Hindu undivided family .
• The insurance premium is paid by the taxpayer in accordance with the scheme framed in this behalf by the General Insurance Corporation of India and approved by the Central Government. The scheme is known as “mediclaim” insurance policy.( The amount deposited in a similar scheme of any other insurer who is approved by the Insurance Regulatory and Development Authority shall also be eligible for deduction.)
• The aforesaid premium is paid by cheque
• Mediclaim policy is taken on the health of the taxpayer, on the health of spouse, dependent parents or dependent children of the taxpayer. In case of HUF on the health of any member of the family
Own/spouse/dependent children
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(a) Actual amount paid
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(b) 25,000
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Parents of the assessee (dependent or not)
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(a) Actual amount paid
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(b) 30,000
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For senior or super senior citizen
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(a) Actual amount paid
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(b) 30,000
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SECTION 80DD – MEDICAL TREATMENT AND MAINTENANCE
Following are the provisions of this section:
• This deduction is available to only Individuals and HUF, who is resident in India.
• This deduction is given to the assessee if a person with the disability is dependent upon him.
• A person with the disability means disabilities like autism, cerebral palsy, mental retardation, etc. as specified in Persons with Disabilities Act 1995.
• The assessee has incurred expenditure by way of medical treatment (including nursing), training and rehabilitation of a disabled dependent: or/and
• He has paid or deposited any amount 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 in the event of the death of the assessee.
• For claiming the deduction the assessee shall have to furnish a certificate by the prescribed medical authority with the return of income.
If the above-mentioned conditions are satisfied the amount of deduction is fixed at.
Rs. 50,000 irrespective of actual expenditure.
In a case of a person with the severe disability (over 80 %) a higher deduction of Rs.
1,00,000 shall be allowed irrespective of actual expenditure.
Explanation: Dependent means
me) In a case of an individual, the spouse children, parents, brothers, sisters of the individual or any of them.
ii) In a case of HUF, a member of the HUF wholly or mainly dependent on such individual or HUF for support and maintenance.
SECTION 80DDB – MEDICAL EXPENSES OF DEPENDENT
Deduction is available if following are satisfied
• The assessee is an individual or HUF resident in India.
• The assessee has actually paid for the medical treatment of specified disease or ailment, for himself or any dependent* or in a case of HUF any member of the family.
• The assessee furnishes a certificate, in the prescribed form from prescribed authority, along with the return of income.
i) a) The amount paid
b) or Rs. 60,000 whichever is less;
ii) Where the amount is paid in relation to a senior citizen the deduction shall be allowed for the amount paid or Rs. 80,000 whichever is less.
iii)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
SECTION 80E – INTEREST ON HIGHER EDUCATION LOAN
Deduction is available if:-
• The assessee is an individual.
• He has taken a loan from any financial institution (bank) or an approved charitable institution.
• The loan is taken is for the purpose of pursuing his higher education.
• During the previous year, he has repaid some amount as interest on such loan.
• Such amount is paid out of his income chargeable to tax.
The entire amount paid by way of interest on such
Period of Deduction
Further, 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.
SECTION 80GG – DEDUCTION FOR RENT PAID
This deduction is allowed to an individual assessee in respect of rent paid by him for an accommodation used for his residential purposes provided the following conditions are fulfilled:
• The assessee is either a self-employed person or such a salaried employee who is not in receipt of house rent allowance from any source.
• The actual rent paid by him is in excess of 10% of his total income.
• He or his spouse or minor children or the HUF, of which he is a member, do not own any residential accommodation at the place where the assessee resides, performs the duties of his office or employment or carries on his business or profession. Where, however, the assessee owns any residential accommodation at any other place and claims the concessions of self-occupied house property for the same, he will not be entitled to any deduction u/s 80GG even if he does not own any residential accommodation at the place where he ordinarily resides, performs the duties of his office or employment or carries on his business or profession.
• The assessee files a declaration in Form No. 10BA regarding the payment of rent.
The assessee, who fulfills the above-mentioned conditions, is allowed a deduction
equal to least of the following three:
• excess of actual rent paid over 10% of adjusted gross total income:
• 25% of his adjusted gross total income; and
• Rs. 5,000 p.m or 60,000 per annum
SECTION 80G – DONATIONS
A. Donations made to the following are eligible for 100% deduction without any qualifying limit.
1. Prime Minister’s National Relief Fund
2. National Defense Fund
3. Prime Minister’s Armenia Earthquake Relief Fund
4. The Africa (Public Contribution - India) Fund
5. The National Foundation for Communal Harmony
6. Approved university or educational institution of national eminence
7. The Chief Minister’s Earthquake Relief Fund, Maharashtra
8. Donations made to Zila Saksharta Samiti.
9. The National Blood Transfusion Council or a State Blood
Transfusion Council.
10. The Army Central Welfare Fund or the Indian Naval Benevolent
Fund or The Air Force Central Welfare Fund.
SECTION 80U – HANDICAPPED RESIDENT PERSONS
To help a disabled person by reducing his tax burden, this section has been incorporated. Following are the provisions.
• The assessee is an individual being a resident
• He is a person with the disability.
• He is certified by the medical authority to be a person with the 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. 75,000 in case of a person with disability below 80% & above 80%
Rs. 1,25,000 in the case of a person with severe disability.( having any disability over 80%)
Tax Rebate U/s 87A – Maximum Rs.5000/- who’s Taxable Income less than 5 lakh
Tax Exemption from Savings Bank Account U/s 80TTA :- Max Rs. 10 thousand who’s Taxable Income less than 5 Lakh.
