Deductions under section 80C to 80U are allowed from gross total income to compute total income however deduction is allowed only from normal income.
Deductions are not allowed from-
♣ Long term capital gains, Section 112
♣ Casual income, Section 58(4)
♣ Short term capital gains on sale of short term equity shares or short term units of equity oriented mutual funds provided securities transaction tax has been paid, Section 111A
♣ Long term capital gains on sale of long term equity shares or long term units of equity oriented mutual funds provided securities transaction tax has been paid, Section 112A
Deduction under section 80C –
||Not allowed for
|(i) an individual
(ii) Hindu Undivided Family
| any partnership firm or a company.
Maximum deduction allowed shall be 1,50,000
|80CCE(150000)= 80C+80CCC+ 80CCD
Deduction shall be allowed to the extent of the following investments-
Investment in National Saving Certificate (NSC)
- In the name of: Self, spouse or minor children. HUF can invest the amount in the name of any of its members
- Deduction allowed:Amount invested and also for the accrued interest
- Deduction not allowed: accrued interest of the year in which assessee has received payment whereas amount received on maturity shall be exempt from income tax but interest shall be taxable every year on accrual basis
- Maximum period:5/10 years
Public provident fund is a deposit scheme run by Central Government
- In the name of:self, spouse or children. HUF can open the account in the name of any of its members
- Deduction allowed:Amount invested annually, amount received on maturity shall be exempt from income tax and also interest is exempt from income tax
- Deduction not allowed: for interest
- Maximum period: 15 years
Investment in fixed deposit with scheduled banks
- In the name of :Individual can deposit in his own name and HUF can deposit the amount in the name of any of its member
- Deduction allowed: Equal to the amount invested and principal amount received on maturity shall be exempt.
- Deduction not allowed:Interest income shall be taxable on accrual basis and it will not qualify for deduction under section 80C
- Maximum period: 5 years
Five Year Post Office Time Deposit Account.
- In the name of : Individual can deposit in his own name and HUF can deposit the amount in the name of any of its member
- Deduction allowed: Equal to the amount invested and amount received on maturity shall be exempt
- Deduction not allowed: Interest shall be paid on annual basis and it will be taxable and deduction under section 80C is not allowed.
- Maximum period: 5 years
Loan from a notified organization like banks or financial institution
- Purpose:for purchase or construction of a residential house.
- Deduction allowed: Equal to the amount repaid by the assessee towards principal (not towards interest)
- Deduction not allowed: Loan has been taken for Addition, Alteration, or Repairs.
House property should not be transferred before the expiry of 5 years from the end of the financial year in which possession of such properties was taken by him. Otherwise, deduction allowed in the past years shall be considered to be income of the assessee of the previous year in which the house property is transferred
- Maximum period: 5 years.
Investment in life policy
- In the name of: self, spouse and children and HUF can take the policy in the name of any of its members
- Deduction allowed: for the premium paid for such life policy. For the amount equal to the premium paid but maximum upto 10% of capital sum assured, i.e. if premium paid is more than 10% of capital sum assured, deduction shall be allowed only for 10% of sum assured
- Deduction not allowed:If life insurance policy is discontinued before paying premium for a period of at least 2 years, deduction allowed in the earlier years shall be considered to be income of the year in which policy has been discontinued
- Maximum period: 2years.
Payment of tuition fees to School, College, University or any other Educational Institution in India
- Deduction allowed: Children of assessee and whole time education
- Maximum 2 children( including adopted and step children)
- Deduction not allowed:To HUF and;
For the payments made outside India and any payment given for part time education or correspondence course
Investment in equity shares or debentures etc forming part of an eligible issue.
- Deduction not allowed: If such equity shares etc. have been sold within a period of 3 years from the date of purchase, insuch cases deduction earlier allowed shall be considered to be income of such year
Eligible issue means an issue made by an Indian Public Ltd Company or a Public Financial
Institution, a Mutual Fund etc
Senior Citizens Savings Scheme
- Investment in the name of: Self Amount received on maturity shall be exempt and interest shall be payable on quarterly basis and interest received is taxable.
Investment in Sukanya Samridhi Account
- Investment in the name of: Amount can be invested by an individual as guardian in the name of girl child who is of the age of 10 years or less
- Interest received is exempt. Amount received on maturity is exempt
- Maximum period: Account can be closed after the completion of 21 years of age. In case of marriage, payment is allowed after completion of 18 years of age.
Investment by an employee of the Central Government, as a contribution to a specified account of the pension scheme referred to in section 80CCD
- In the name of : An employee of Central Government
- Deduction allowed: if the amount has been actually paid by the assessee
- Deduction not allowed: if the amount is due but not paid
- Maximum period: 3 years
Employees contribution to statutory provident fund or recognised provident fund or approved superannuation fund.
Investment in Units of Unit trust of India or mutual fund including Unit Linked Insurance Plan of UTI or mutual fund.
Subscription to Notified Deposit Schemes of NHB.
Investment in notified bonds issued by the National Bank for Agriculture and Rural Development.