• Jan
  • 26
  • 2013

Income Tax deductions for A.Y. 2013-14 / FY 2012-13

DEDUCTIONS FROM TOTAL INCOME

WHAT DEDUCTIONS FROM TOTAL INCOME ARE AVAILABLE TO TAXPAYERS?

Some of the various deductions available to a taxpayer are enumerated below:

DEDUCTION IN RESPECT OF LIFE INSURANCE PREMIA, DEFERRED ANNUITY, CONTRIBUTIONS TO PROVIDENT FUND, SUBSCRIPTION TO CERTAIN EQUITY SHARES OR DEBENTURES, ETC. [SEC. 80C, APPLICABLE FROM THE ASSESSMENT YEAR 2006-07] – SECTION 80C

1. Under section 80C, deduction would be available from gross total income.

2. Only an individual or a Hindu undivided family can claim deduction under section 80C.

Eligible Amount -Any sums paid or deposited in the previous year by the assessee —

1. As Life Insurance premium to effect or keep in force insurance on life of (a) self, spouse and any child in case of individual and (b) any member, in case of HUF. Insurance premium should not exceed 20% of the actual capital sum assured.

2. To effect or keep in force a deferred annuity contract on life of self, spouse and any child in case of individual. Such contract should not contain a provision for cash payment option in lieu of payment of annuity.

3. By way of deduction from salary payable by or on behalf of the Government to any individual for the purpose of securing to him a deferred annuity or making provision for his spouse or children. The sum so deducted does not exceed 1/5th of the salary.

4. As contribution (not being repayment of loan) by an individual to Statutory Provident Fund; i.e., any provident fund to which the Provident Funds Act, 1925, applies.

5. As contribution to Public Provident Fund scheme, 1968, in the name of self, spouse and any child in case of individual and any member in case of HUF.

6. As contribution by an employee to a recognised provident fund.

7. As contribution by an employee to an approved superannuation fund.

8. Any sum deposited in a 10 year or 15 year account under the Post Office Savings Bank (CTD) Rules, 1959, in the name of self and as a guardian of minor in case of individual and in the name of any member in case of HUF.

9. Subscription to the NSC (VIII issue).

10. As a contribution to Unit-linked Insurance Plan (ULIP) of UTI or LIC Mutual Fund (Dhanraksha plan) in the name of self, spouse and child in case of individual and any member in case of HUF.

11. To effect or to keep in force a contract for such annuity plan of the LIC (i.e., Jeevan Dhara, Jeevan Akshay and their upgradations) or any other insurer as referred to in by the Central Government.

12. As subscription to any units of any Mutual Fund referred u/s. 10(23D) (Equity Linked Saving Schemes).

13. As a contribution by an individual to any pension fund set up by any Mutual Fund referred u/s 10(23D).

14. As subscription to any such deposit scheme of National Housing Bank (NHB), or as a contribution to any such pension fund set up by NHB as notified by Central Government.

15. As subscription to notified deposit schemes of (a) Public sector company providing long-term finance for purchase/construction of residential houses in India or (b) Any authority constituted in India for the purposes of housing or planning, development or improvement of cities, towns and villages.

16. As tuition fees (excluding any payment towards any development fees or donation or payment of similar nature), to any university, college, school or other educational institution situated within India for the purpose of full-time education of any two children of individual.

17. Towards the cost of purchase or construction of a residential house property (including the repayment of loans taken from Government, bank, LIC, NHB, specified assessee’s employer etc., and also the stamp duty, registration fees and other expenses for transfer of such house property to the assessee). The income from such house property should be chargeable to tax under the head “Income from house property”.

18. As subscription to equity shares or debentures forming part of any eligible issue of capital of public company or any public financial institution approved by Board.

19. As Term Deposit (Fixed Deposit) for 5 years or more with Scheduled Bank in accordance with a scheme framed and notified by the Central Government.

20. As subscription to any notified bonds of National Bank for Agriculture and Rural Development (NABARD).

21. In an account under the Senior Citizen Savings Schemes Rules, 2004.

22. As five year term deposit in an account under the Post Office Time deposit Rules, 1981.

Relevant Conditions/Points

1. No deduction shall be allowed to assessee in the previous year of happening of following events (referred henceforth as “such previous year”) and the aggregate amount of deductions of income so allowed in respect of the previous years preceding such previous year shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to such previous year; i.e., If the assessee:—

(a) Terminates the contract of insurance (referred in item 1 above), by notice to that effect or if the contract ceases to be in force by reason of failure to pay any premium, by not reviving the contract of insurance, in case of any single premium policy, within 2 years or in any other case before the premiums have been paid for 2 years.

(b) Terminates the participation in any ULIP plan (referred in item 10 above) by notice to that effect or ceases to participate by reason of failure to pay any contribution, by not reviving his participation, before contributions in respect of such participation has been paid for 5 years.

(c) Transfers his house property (referred in item 17 above) before the expiry of 5 years from the end of the financial year in which possession of such property is obtained or receives back, whether by way of refund or otherwise any sum specified in that clause.

(d) Sales or transfers any equity shares or debentures (referred in item 18 above) to any person at any time within a period of 3 years from the date of their acquisition (i.e., date on which assessee’s name is entered in the register of members or debenture holders).

(e) Withdraw any amount (referred in item 21 and 22 above) including interest accrued thereon, before the expiry of the period of five years from the date of deposit. The amount of interest withdrawn will not be taxable in the year of withdrawal if the same has been including in the total income of the assessee of an earlier year.

2. Any sum paid or deposited as above need not be out of current year’s income but should not exceed the total income of the relevant previous year.

Extent of Deduction -100% of the amount invested or Rs. 1,00,000/- whichever is less. However, as per Section 80CCE, the total deduction the assessee can claim u/ss. 80C, 80CCC and 80CCD(1) shall be restricted in aggregate to Rs. 1,00,000/-.

DEDUCTION U/S 80CCC FOR NEW PERSONAL CUM-FAMILY PENSION SCHEME

Section 80CCC provided that if an assessee being an individual pays or deposits any amount out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the fund referred to in section 10(23 AAB), he shall be allowed a deduction of the amount equal to the deposit or Rs. one lakh whichever is less.

The amount of pension received in the hands of the contributor or the nominees shall be taxable.

Section 80CCC has been amended with effect from A.Y. 2006-07 so as to provide that where any amount paid or deposited by the assessee, has been allowed as a deduction u/s 80CCC, then a deduction of such amount shall not be allowed u/s 80C.

SECTION 80CCD -DEDUCTION IN RESPECT OF CONTRIBUTION TO PENSION SCHEME OF CENTRAL GOVERNMENT

Persons Covered -Individual in the employment of Central Government or any other employer on or after 1-1-2004 or any other assessee being an individual.

Eligible Amount -Deposit or payment made by the employee and Central Government or individual under a pension scheme notified by the Central Government.

Relevant Conditions/Points

1. No deduction is allowed u/s. 80C in respect of contribution claimed as deduction under this section.

2. Any amount received from the scheme either on closure or on the event of opting out of the pension scheme, is taxable in the hands of the assessee or nominee in the year of such receipt.

3. Salary for the purpose of this section includes dearness allowance, if the terms of employment so provide, but excludes all other allowances/perquisites.

4. For the purposes of these section, the assessee shall be deemed not to have received any amount in the previous year if such amount is used for purchasing an annuity plan in the same previous year.

Extent of Deduction

A) Aggregate of (a) Amount paid or deposited by the employee and (b) Amount paid or deposited by the Central Government. The total deduction shall be restricted to maximum 10% of salary.

B) Amount deposited by individual, subject to 10% of total income, in a previous year

SECTION 80D – DEDUCTION IN RESPECT OF MEDICAL INSURANCE PREMIA

The Finance Act, 2008 has amended section 80D of the Act and substituted it with a new section 80D providing for the following :

The provisions of section 80D provide for a deduction of Rs. 15,000/- to an individual or HUF to keep in force an insurance on the health of the assessee or spouse or dependent parents or dependent children of the assessee provided the payment for the insurance is made through a mode other than cash and out of the taxable income of the assessee. This deduction is allowed upto Rs.20,000/- in case of health insurance for senior citizens.

Now it has been provided in the Finance Act, 2008 to allow an additional deduction of Rs. 15,000/- to an individual on the payment made to keep in force an insurance on the health of parent(s). The earlier existing condition of ‘dependent’ with respect to parent(s) has been dispensed with. In case of senior citizens, the same shall be allowed upto Rs, 20,000/-. This deduction shall be in addition to existing deduction available to the individual on medical insurance for himself, spouse and dependent children.

This amendment shall take effect from 1st April, 2009 and will accordingly apply to assessment year 2009-10 and subsequent assessment years.

SECTION 80DD – DEDUCTION FOR PHYSICALLY HANDICAPPED & DISABLED DEPENDENT

Till A.Y. 2003-04, a deduction of Rs. 40,000 u/s 80DD was allowed to an Individual or HUF in respect of expenditure incurred on medical treatment of a handicapped dependent.

Now, w.e.f. 1.4.04 i.e. for A.Y. 2004-05 and subsequent years, a total deduction of Rs. 50,000 will be available to the parents, spouse, Children, brothers & sisters or any one of such dependents in respect of either medical expenditure incurred on medical treatment of or for the deposits for future needs of the disabled or handicapped dependent. However in case of 80% or more of disability a sum of Rs. 1,00,00 is allowed. For details, section 80 DD may be referred to.

SECTION  80DDB – DEDUCTION FOR MEDICAL TREATMENT OF SERIOUS AILMENTS

With effect from assessment year 2004-05, section 80DDB provides that if a resident individual or HUF actually pays any amount for the medical treatment of a specified disease or ailment for himself or dependent or a member of HUF (in case of HUF assessee), then the amount actually paid or Rs. 40,000/- (Rs.60,000/- if the patient is a senior citizen), whichever is less shall be allowed as deduction. For availing this deduction, a certificate in prescribed form has to be furnished along with return of income from the concerned specialist working in a govt hospital.

SECTION 80E – DEDUCTION IN RESPECT OF INTEREST ON LOAN TAKEN FOR HIGHER EDUCATION

Section 80E has been substituted by a new Section with effect from the A.Y. 2006-07. The provisions of new Section are given below

Conditions - The following conditions should be satisfied -

1. The taxpayer is an individual.

2. He had taken a loan for the purpose of pursuing his higher education. ‘‘Higher education’’ for this purpose means full-time studies for any graduate or post-graduate course in engineering, medicine, management or for post-graduate course in applied sciences or pure sciences including mathematics and statistics.

3. The aforesaid loan was taken from any bank, an approved charitable institution or a financial institution notified by the Government.

4. During the previous year, the taxpayer has paid interest on such loan.

5. Such interest is paid out of his income chargeable to tax.

Amount deductible – If the above conditions are satisfied, the entire amount paid by way of interest is deductible under section 80E. However, the following points should be noted

1. The above deduction is allowed in computing the taxable income of the initial assessment year (i.e., the assessment year relevant to the previous year in which the assessee starts paying the interest on the loan) and 7 immediately succeeding assessment years (or until the above interest is paid in full, whichever is earlier).

2. From the assessment year 2006-07, no deduction will be available under section 80E in respect of repayment of principal amount.

3. From assessment year 2008-09 onwards, deduction under this section is also allowable for interest or Loan for higher education of assessee’s relative

SECTION 80G – DEDUCTION IN RESPECT OF DONATIONS TO CERTAIN FUNDS, CHARITABLE INSTITUTIONS, ETC.

Persons Covered -All assessees [except for 80G (2)(c), which is applicable for donations made only by company] to the Indian Olympic Association or to any other Association or Institution for the development of infrastructure for sports & games or the sponsorship of sports & games, in India.

Eligible Amount -Any sums paid in the previous year as Donations to certain funds, charitable institutions etc. specified u/s. 80G(2).

Relevant Conditions/Points

1. Donation in kind is not eligible for deduction.

2. Donations paid out of another year’s income or out of income not includible in the assessment of current year are also eligible for deduction. Lt. F. No. 45/313/66 – ITJ (61) dt. 2-12-1966.

Extent of Deduction

Without any ceiling of 10% of adjusted Gross Total Income:—

(a) 100% of donation if donation given to National Defence Fund set up by the Central Government; Prime Minister’s National Relief Fund; Prime Minister’s Armenia Earthquake Relief Fund; Africa (Public Contributions — India) Fund; National Foundation for Communal Harmony; An approved university/educational institution of National eminence; 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 earthquake in Gujarat; any Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district; National Blood Transfusion Council or to any State Blood Transfusion Council; any fund set up by a State Government for the medical relief to the poor; 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; National Illness Assistance Fund; Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund in respect of any State or Union Territory; National Sports Fund; National Cultural Fund; Fund for Technology Development and Application; National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities; Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of earthquake in Gujarat (contribution made during January 26, 2001 and September 30, 2001) or

(b) 50% of donation if donation given to Jawaharlal Nehru Memorial Fund; Prime Minister’s Drought Relief Fund; National Children’s Fund; Indira Gandhi Memorial Trust; Rajiv Gandhi Foundation.

With ceiling of 10% of adjusted Gross Total Income:— Where the aggregate of sums exceed 10% of adjusted gross total income, then such excess amount is ignored for computing such aggregate.

(a) 100% of qualifying amount, if donation given to Government or any approved local authority, institution or association to be utilised for the purpose of promoting family planning; Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India.

(b) 50% of qualifying amount if donation given to any other fund or any institution which satisfies conditions mentioned in Section 80G(5); Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning, Any authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both; Any corporation referred in Section 10(26BB) for promoting interest of minority community; For repairs or renovation of any notified temple, mosque, gurudwara, church or other place.

SECTION 80GG – DEDUCTION OF RENTS PAID 

A deduction in respect of any expenditure incurred by an assessee, who is not in receipt of any income falling within clause (13A) of Section 10 of the Act, in excess of 10% of his total income towards payment of rent in respect of any furnished or unfurnished accommodation occupied by him for the purpose of his own residence to the extent of Rs. 2,000 per month or 25% of his total income, whichever is less, will be allowed under Section 80GG. This deduction is allowable to only those assessees who do not own any residential accommodation.

Persons Covered -Any assessee other than assessee having income falling u/s 10(13A) (i.e., House Rent Allowance).

Eligible Amount -Any expenditure incurred by him on payment of rent (by whatever name called) in respect of any furnished or unfurnished accommodation in excess of 10% of his total income, before making any deduction under this section.

Relevant Conditions/Points

1. Such accommodation is occupied by him for his own residence.

2. The assessee should file a declaration in Form No. 10BA along with return of income.

3. This section shall not apply to an assessee if residential accommodation is, (a) owned by the assessee or by his spouse or minor child or where such assessee is member of HUF, by such family, at the place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession. OR (b) owned by the assessee at any other place, being accommodation in the occupation of the assessee, the value of which is to be determined u/s. 23(2)(a) or 23(4)(a).

Extent of Deduction -Lower of (a) Rs. 2,000 per month, or (b) 25% of the total income (after allowing all deductions except under this section), or (c) Expenditure incurred in excess of 10% of the total income (after allowing all deductions except under this section).

SECTION 80GGA -DEDUCTION IN RESPECT OF CERTAIN DONATIONS FOR SCIENTIFIC RESEARCH OR RURAL DEVELOPMENT

Persons Covered – All assessees:

Eligible Amount

1. Any sum paid to a scientific research association or to a university, college, or other institution to be used for scientific research [approved u/s. 35(1) (ii)];

2. Any sum paid to a university, college, or other institution to be used for research in social science or statistical research [approved u/s. 35(1)(iii)];

3. Any sum paid to an association or institution for any programme of rural development [approved u/s. 35CCA];

4. Any sum paid to an association or institution for training of persons for implementing rural development programmes [approved u/s. 35CCA];

5. Any sum paid to a public sector company or local authority or to an association or institution approved by National Committee for carrying out any eligible project or scheme [approved u/s. 35AC];

6. Any sum paid to a rural developemt fund set up and notified by Central Government for the purposes of Section 35CCA(1)(a);

7. Any sum paid to a National Urban Poverty Eradication Fund set up and notified by Central Government for the purposes of Section 35CCA(1)(d).

Relevant Conditions/Points

1. No deduction is allowed if assessee has income chargeable under the head “Profits and gain of business and profession”.

2. Any sum in respect of which deduction is allowed under this section will not qualify for deduction under any other provision of this Act for any assessment year.

3. If donation is paid for rural development, then the assessee should furnish the certificate referred to in Section 35CCA(2) or 35CCA(2A) from such association or institution and if donation paid for eligible project/scheme then the assessee should furnish the certificate referred to in Section 35AC(2)(a) from such association.

Extent of Deduction -100% of the amount paid as donation/contribution.

SECTION 80GGB -DEDUCTION IN RESPECT OF CONTRIBUTION GIVEN BY COMPANIES TO POLITICAL PARTIES OR AN ELECTORAL TRUST”

Persons Covered -Indian company.

Eligible Amount  -Contribution given by Indian companies to any political parties or an electoral trust.

Relevant Conditions/Points

1. The word “contribute” has the meaning assigned to it under Section 293A of the Companies Act, 1956.

2. “Political party” means a political party registered under Section 29A of the Representation of the People Act, 1951.

3. “Electoral Trust” is defined in section 2(22AAA) of IT Act, 1961

Extent of Deduction -100% of the amount paid as contribution.

SECTION 80GGC – DEDUCTION IN RESPECT OF CONTRIBUTION GIVEN BY ANY PERSON TO POLITICAL PARTIES OR AN ELECTORAL TRUST”

Persons Covered -Any assessee (except local authority and every artificial juridical person wholly or partly funded by the Government).

Eligible Amount – Contribution given by assessee to political parties or an electoral trust.

Relevant Conditions/Points

“Political party” means a political party registered under Section 29A of the Representation of the People Act, 1951.

“Electoral Trust” is defined in section 2(22AAA) of IT Act, 1961

Extent of Deduction -100% of the amount paid as contribution.

DEDUCTION U/S 80JJA – DEDUCTION IN RESPECT OF PROFITS & GAINS FROM BUSINESS OF COLLECTING AND PROCESSING OF BIO-DEGRADABLE WASTE

Section 80JJA provides a deduction of whole of profits to an assessee in business of collecting, processing and treating biodegradable waste for the specified purpose for a period of 5 consecutive assessment years from the year of commencement of business.

Persons Covered -All Assessees.

Eligible Amount -Profits and gains from business of collecting and processing or treating of bio-degradable waste.

Relevant Conditions/Points -The business should be of collecting and processing or treating of bio-degradable waste for generating power or producing bio-fertilizers, bio-pesticides or other biological agents or for producing bio-gas or making pellets or briquettes for fuel or organic manure.

Extent of Deduction -100% of the profit and gains from such business for a period of five consecutive assessment years beginning with the assessment year relevant to previous year in which such business commences.

DEDUCTION U/S 80JJAA - DEDUCTION IN RESPECT OF EMPLOYMENT OF NEW WORKMEN

Section 80JJAA provides a deduction to Indian companies on employing new regular workmen. This section is applicable from assessment year 1999-2000 onwards. This deduction is allowable of 30% of additional wages paid to the new regular workmen employed by the assessee for 3 assessment years, including the assessment year in which such employment is provided.

Persons Covered -Indian company.

Eligible Amount -Additional wages paid to the new regular workmen employed.

Relevant Conditions/Points

1. Profits and gains should be derived from any industrial undertaking, engaged in the manufacture or production of article or thing.

2. The industrial undertaking should not be formed by splitting up or reconstruction of an existing undertaking or amalgamation with another industrial undertaking.

3. Audit report in Form 10DA certifying that the deduction has been correctly claimed is required to be filed along with return of income.

4. Additional wages means the wages paid to the new regular workman in excess of 100 workmen employed during the previous year provided that in case of an existing undertaking, the additional wages shall be nil if the increase in the number of regular workmen employed during the year is less than 10% of existing number of workmen employed in such undertaking as on the last day of the preceding year.

5. Regular workman does not include a casual workman or a workman employed through contract labour or any other workman employed for a period of less than 300 days during the previous year.

6. Workman shall have the meaning assigned to it u/s. 2(s) of the Industrial Disputes Act, 1947.

Extent of Deduction -30% of the additional wages paid to the new regular workmen for first 3 assessment years including the assessment year relevant to the previous year in which such employment is provided.

SECTION 80L – DEDUCTION IN RESPECT OF INTEREST ON CERTAIN SECURITIES AND DIVIDENDS

No deduction under section 80L is admissible from A.Y. 2006-07, as it is omitted vide Finance Act, 2005, w.e.f. 1-4-2006.

SECTION 80LA -DEDUCTION IN RESPECT OF CERTAIN INCOMES OF OFF-SHORE BANKING UNITS and International Financial Services Centre. (as substituted by the Special Economic Zones Act, 2005, w.e.f. 10th February, 2006)

Persons Covered

1. Scheduled Bank, or, any bank incorporated by or under the laws of a country outside India; and having an Offshore Banking Unit in a Special Economic Zone.

2. A Unit of an International Financial Services Centre.

Eligible Amount  -Income shall be

(a) The income from an Offshore Banking Unit in a Special Economic Zone.

(b) The income from the business, referred to in Section 6(1) of Banking Regulation Act, 1949, with an Undertaking located in a Special Economic Zone or any Other Undertaking which develops, develops and operates or operates and maintains a Special Economic Zone.

(c) The income from any Unit of the International Financial Services Centre from its business for which it has been approved for setting up in such a centre in a Special Economic Zone.

Relevant Conditions/Points

1. The terms “International Financial Services Centre”, “Special Economic Zone” and “Unit” shall have the same meanings respectively as assigned to them in clauses (q), (za) and (zc) of Section 2 of the Special Economic Zones Act, 2005.

2. The term “Scheduled Bank” shall have the same meaning as assigned to it in clause (e) of Section 2 of the Reserve Bank of India Act, 1934.

3. Audit report in Form 10CCF certifying that the deduction has been correctly claimed is required to be filed along with return of income.

4. A copy of the permission obtained under Section 23(1)(a) of the Banking Regulation Act, 1949, is required to be filed along with return of income.

Extent of Deduction

100% of such income for first 5 consecutive assessment years beginning with the assessment year relevant to the previous year in which permission u/s 23(1)(a) of Banking Regulation Act, 1949, or permission or registration under the Securities and Exchange Board of India Act, 1992, or any other relevant law was obtained and 50% of such income for next 5 consecutive assessment years.

SECTION 80P -DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOCIETIES

Type of Co-operative Societies

 A. Co-operative Society engaged in —

(1) business of banking or providing credit facilities to its members, or

(2) a cottage industry, or

(3) the marketing of agricultural produce grown by its members, or

(4) the purchase of the agricultural implements, seeds, livestock or other articles intended for agriculture for supplying them to its members, or

(5) the processing of the agricultural produce of its members without the aid of power, or

(6) the collective disposal of the labour of its members, or

(7) fishing or allied activities; i.e., catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members.

B. Co-operative society, being a primary society engaged in supplying milk, oilseeds, fruits or vegetables raised or grown by its member to (a) a federal co-operative society being a society engaged in the business of supplying milk, oilseeds, fruits or vegetables, as the case may be, or (b) the Government or a local authority, or (c) a Government company or a corporation established by or under a Central, State or Provincial Act being a company or corporation engaged in the business of supplying milk, oilseeds, fruits or vegetables, as the case may be to the public.

C. Co-operative society engaged in activities other than mentioned above (i.e., other than A & B).

D. Co-operative society having any income by way of interest or dividends from its investment in other co-operative society.

E. Co-operative society having income derived by way of letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities.

F. Co-operative society other than a housing society or an urban consumers’ society or a society engaged in transport business or a society engaged in performance of any manufacturing operations with the aid of power, having income by way of interest on securities or any income from house property chargeable u/s. 22.

Eligible Amount

1. Profits and gains of business attributable to any one or more such activities in case of societies covered in A, B & C.

2. Relevant income out of the gross total incomes of societies covered in D, E & F.

Relevant Conditions/Points

1. In case of societies of type referred in A(6) & A(7) above, the rules and bye-laws of the society should restrict the voting rights to following classes of its members — (a) the individuals who contribute their labour or, as the case may be, carry on the fishing or allied activities, (b) the co-operative credit societies which provide financial assistance to the society (c) the State Government.

2. With effect from A.Y. 2007-08, the provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. The terms “co-operative bank” and “primary agricultural credit society” shall have the same meanings respectively as assigned to them in Part V of the Banking Regulation Act, 1949. The term “Primary co-operative agricultural and rural development bank” means a society having its area of operation confined to a taluka and the principal object of which is to provide for long-term credit for agricultural and rural development activities.

Extent of Deduction

1. In case of societies referred in A & B above — 100% of the profits and gains of business (without any limit).

2. In case of societies referred in C above — 100% of the profits and gains of business subject to a maximum of Rs. 1,00,000/- in case of Consumers’ Co-operative Society or
Rs. 50,000/- in other cases.

3. In case of societies referred in D & E above — 100% of the relevant income (without any limit).

4. In case of societies referred in F above — 100% of the relevant income provided the gross total income of such society does not exceed Rs. 20,000/-.

SECTION 80QQB -DEDUCTION IN RESPECT OF ROYALTY INCOME, ETC., OF AUTHORS OF CERTAIN BOOKS OTHER THAN TEXT BOOKS

Persons Covered -Individual resident in India.

Eligible Amount -Income derived by author (or a joint author) from his profession, on account of (a) any lump sum consideration for the assignment or grant of any of his interests in the copyright of any book being a work of literary, artistic or scientific nature, or (b) royalty or copyright fees in respect of such book (whether receivable in lump sum or otherwise).

Relevant Conditions/Points

1. In respect of income earned from any source outside India, only so much of the income as is brought into India in convertible foreign exchange within 6 months from the end of previous year or within such further period as competent authority may allow shall be taken into consideration.

2. If the income earned is from any source outside India, a certificate in prescribed Form No. 10H from prescribed authority [RBI or authorised authority as specified in Rule 29A(2)], should be filed along with return of income.

3. A certificate in prescribed Form No. 10CCD and duly verified by any person responsible for making such payment to the assessee, should be filed along with return of income.

4. Where a deduction under this section for any previous year has been claimed and allowed, no deduction in respect of such income shall be allowed under any other provision of the Act in any assessment year.

Extent of Deduction

1. In case of lump sum consideration for (a) Assignment or grant of any interest in the copyright of any book or (b) Amount of Royalty or Copyright fees (being a lump sum consideration in lieu of all rights in the book) — Lower of 100% of such consideration or
Rs. 3 lakhs.

2. In case of amount of Royalty or Copyright fees not being a lump sum consideration in lieu of all rights in the book — Lower of (a) Royalty or Copyright Fees (before allowing expenses attributable to such income) not exceeding 15% of gross value of books sold during the previous year or (b) Rs. 3 lakhs.

SECTION 80RRB -DEDUCTION IN RESPECT OF ROYALTY ON PATENTS

Persons Covered

Individual resident in India.

Eligible Amount -Income by way of royalty in respect of a patent registered on or after 1st April, 2003.

Relevant Conditions/Points

1. Assessee should be patentee (he may be a co-owner of patent); i.e., the person or persons, being the true and first inventor of the invention, whose name is entered on the Patents Register as the patentee as per the Patents Act, 1970.

2. In respect of income earned from any sources outside India, only so much of the income as is brought into India in convertible foreign exchange within 6 months from the end of previous year or within such further period as competent authority may allow shall be taken into consideration.

3. If the income earned is from any source outside India, a certificate in prescribed Form No. 10H from prescribed authority [RBI or authorised authority as specified in Rule 29A(2)], should be filed along with return of income.

4. A certificate in prescribed Form No. 10CCE verified by any person resposible for making such payment to the assessee is required to be filed with Return of income.

5. Where a compulsory licence is granted in respect of any patent under the Patents Act, 1970, the income eligible for the purposes of this section shall not exceed the amount of royalty under the terms and conditions of a licence settled by the Controller under that Act.

6. Where a deduction under this section for any previous year has been claimed and allowed, no deduction in respect of such income shall be allowed under any other provision of the Act in any assessment year.

Extent of Deduction

100% of royalty or Rs. 3 lakhs, whichever is lower.

SECTION 80U -DEDUCTION IN CASE OF A PERSON WITH DISABILITY

Persons Covered-Individual resident in India.

Eligible Amount -Deduction to a person with disability out of total Income

Relevant Conditions/Points

1. The concerned assessee must attach a copy of certificate in the prescribed form and signed by prescribed medical authority along with return of income filed u/s. 139. A fresh medical certificate may be required to be submitted after the expiry of stipulated period depending on the condition of disability as specified in such certificate.

2. Medical authority means the medical authority referred u/s. 2(p) of Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 [PDEOPRFP Act] or u/ss. 2(a), (c), (h), (j) and (o) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 [NTWPACMRMD Act].

3. “Disability” has the same meaning assigned to it in Section 2(i) of PDEOPRFP Act and includes “autism”, “cerebral palsy” and “multiple disabilities” referred to in clauses (a), (c) and (h) of Sec. 2 of the NTWPACMRMD Act.

4. “Person with Disability” means a person as referred to in Sec. 2(f) of the PDEOPRFP Act or Sec. 2(j) of NTWPACMRMD Act.

5. “Person with Severe Disability” means a person suffering from 80% or more of one or more disabilities prescribed u/s. 56(4) of PDEOPRFP Act or u/s. 2(o) of NTWPACMRMD Act.

Extent of Deduction

(a) Rs. 50,000/- in case of normal disability or

(b) Rs. 1,00,000/- in case of severe disability.

Deduction in respect of interest on deposits in savings account (Section 80TTA):

Section 80TTA has been introduced from this Financial Year [2012-13] and it allows to an Individual or HUF from his gross total income if it includes any income by way of interest on deposits (not being time deposits) in a savings account a deduction amounting to :

(i)  in a case where the amount of such income does not exceed in the aggregate ten thousand rupees, the whole of such amount; and

(ii)  in any other case, ten thousand rupees.

If such savings account is maintained in a

(a)  banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);

(b)  co-operative society engaged in carrying on the business of banking (including a cooperative land mortgage bank or a co-operative land development bank); or

(c)  Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 1898),

For this section, “time deposits” means the deposits repayable on expiry of fixed periods.

We will Discuss deduction under section 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID,80-IE in separate Article

Sandeep Kanoi

29 Responses to “Income Tax deductions for A.Y. 2013-14 / FY 2012-13”

  1. Manjunatha says:

    Fixed deposit (5 years locking period) limit of max. 20000 is apart from 1 lakh under 80C, is my understanding currect?

  2. Manjunatha says:

    My mother has lost >80% of her sight because of diabeties. Her age is now 85 years. Can I claim tax benifit under 80DD or 80U as she is having permanent disability and costing for medical treatment.

  3. Abrar Hasan says:

    personal

  4. madhu says:

    can an assessee carry deductions under chapter VIA to next financial year, if the assessee does not have the profit during the current financial year

  5. Harjinder SIngh says:

    I have taken education loan for higher education of my daughter after passing +2. She is pursuing her course in New Zealand. She is doing graduation. My employer is deducting tax from my salaries on the ground that deduction of interest on education loan can not be given, School board or university should be recognised by the central government or state government or local authority of India. University is recognised by New Zealand Govt; Am i eligible for this deduction?

  6. Boopathi says:

    If employee is blinf and he claim 80u and his wife also deff and dumn she dependent on her husband supose he can claim 80u for his and 80dd for his wife?
    its correct or wrong

  7. MUKUL says:

    IF CHARGEBLE INCOME HEAD WRONGLY ENTERED IN PREVIOUS ASSESSMENT YEAR AS PER INCOME TAX ACT WHAT ARE THE NEXT PROVISION?

  8. Devendra says:

    Forward an example for IT Calculation for salaried employee getting basic pay + DA and HRA who is residing in rented house,thankyou.

  9. rn dwivedi says:

    benefit of section 80dd and 80u cane be taken togther or not? good article..thanks…

  10. anusha says:

    PLEASE EXPLAIN WITH ONE EXAMPLE

  11. SC BANAWAL says:

    Sir, Please do clear the deduction u/s80TTA applicable from 01.04.12 or 01.04.2013 ?

  12. ragothaman says:

    the information is more useful.myself and my daughter have availed a bank loan of 12 lakhs in 2012-13 through Indian bank against a sanction of 20 lakhs. My daughter is studying her MS at USA.
    The course will end in 2014 and repayment schedule starts in 2015.i am aged 63 and retired.My daughter has availed loan and i stand guarantee for the loan.IN your information tuition fee within India has been mentioned as deduction. If i repay interest for the current period for the loan amount used for tuition fee can i show the amount such paid as deduction in my income tax . whether it is including the 1 lakh saving or to be accounted separately.kindly give guidelines

  13. ca poonam says:

    kindly forward an examples with all types of incomes & all types of deductions

  14. K K SARAOGI says:

    Deduction u/s 80C in respect of LIC premium has been stated to be not more than 20% of the sum insured. This has been amended in the finance Act, 2012 with regard to availability of deduction subject to the premium amount not exceeding 10% of the sum assured in a year.

  15. A.S.Rathore says:

    ONE MY COLEGUGE TAKEN LTA FOR THE CALANDER YAER 2009 & 2010 ONE TIME & NEXT YEAR HE HAS ALSO TAKEN FOR THE CALANDER YEAR 2011, NOW HE WANTS TO TAKE THE LTC IN NEXT YEAR ie 2014 FOR 2012 & 2013 FOR 2009, 2010 & 2011 FOR ANY YEAR HIS LTA NOT TAKEN AS INCOME FOR THE PURPOSE OF INCOME TAX COMPUTATION. pL. LET US KNOW WHETER IF HE TAKE LTA JOINTLY 2012 & 2013 THEN WAHT SHOULD BE THE TREATMENT OF HIS LTA. WILL IT BE ADDED IN HIS INCOME OR TREATED AS EXEMPT INCOME.

  16. Prasad Kshirsagar says:

    Thanks a lot for very important article written well within the time.It will help all of us a lot!

  17. PRITHVI RAJ BARANWAL says:

    PL GIVE DETAILS OF NEW RGES IN EQUITY & MUTUAL FUND .

  18. bala sushita says:

    why 80TTA(w.e.f AY 2013-14)is not shown in this article ?

  19. Joginder says:

    Lot of thanks to provide the information to calculate I Tax

  20. Mustafa says:

    An information much needed for people who have little knowledge on how to compute their personal income and create an awareness amongst themselves and have a meaningful session and dialogue when reliance is placed on their accountants to compute their income

  21. Santosh Mahaveer says:

    Sir, I have created HUF and got a pan card in name of HUF, I have rental income from my house property. Given the fact that w.e.f 1-4-2011 PPF account for HUF is not available and also Post office NSC has also been withdrawn for HUF account. Kindly let me know where to invest so that I can claim deduction u/s 80c. I fall in the tax bracket of 20%. Thank you in advance.

  22. Venugopal Unni says:

    very  informative indeed

  23. Pubu says:

    This info has been very useful to me. Thanks a lot.

  24. CA. Subhash Chandra Podder says:

    Good information for the Tax payers as well as to the Tax Practitioners Also , advise /request all to refer the Income Tax Act , and Rules, including amendments there to, if any, till the date of publication /guidelines given by Tax Guru. IF any body Acts on this circulars./ information etc, you may be in occurred position.
    CA. Subhash Chandra Podder
    Kolkata
    18/01/2012

  25. M S SHIVA PRASAD says:

    Sir,
    Thank you very much for the information.  I request you to kindly forward an examples with all types of incomes & all types of deductions, so that the same can be retained as master copy & refer the same for all needs.  The examples may be covered for salaried, proprieter, H U F & Companies.

    I will be greatful if you can mail the same.

    Regards,
    M S Shiva Prasad

  26. BRIJESH SHAH says:

    very nice articles..

  27. ravinder says:

    very good article for IT payers

  28. supriya says:

    a very exhaustive information on income tax deductions. was very helpful.

  29. SUbhendu Saha says:

    Dividend  and bank interest is taxable or not.

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