Income Tax Benefits to Residents & Indian Companies

S.No.

Section

Particulars

Limit of exemption

Available to

A.

Business or Profession

1.

35D

Amortization of certain preliminary expenses (Subject to maximum of 5% of cost of the project or capital employed, whichever is more) Incurred before commencement of business or after commencement of business in connection with extension of an undertaking (Subject to certain conditions and nature of expenditures)

Qualifying preliminary expenditure is allowable in each of 5 successive years beginning with the previous year in which the extension of undertaking is completed or the new unit commences production or operation.

Indian Company

2.

35D

Amortization of certain preliminary expenses (Subject to maximum of 5% of cost of the project) Incurred before commencement of business or after commencement of business in connection with extension of an undertaking (Subject to certain conditions and nature of expenditures)

Qualifying preliminary expenditure is allowable in each of 5 successive years beginning with the previous year in which the extension of undertaking is completed or the new unit commences production or operation.

Resident Non-corporate assessees

3.

35DD

Amortization of expenditure incurred in connection with amalgamation or demerger on or after 01.04.1999

(Subject to certain conditions)

Allowed as deduction in 5 successive years in equal installments, beginning with the previous year in which such amalgamation or demerger takes place.

Indian Company

4.

35E

Deduction for qualifying expenditure incurred wholly and exclusively on prospecting, for certain minerals or development of a mine, etc. (Subject to certain conditions)

Qualifying expenditure is allowed as deduction in equal installments over a period of 10 years.

Indian Company and Resident Non-Corporate Assessees engaged in prospecting for minerals, etc.

5.

44AD

Computation of income from eligible business on presumptive basis under Section 44AD (Subject to certain conditions).

Presumptive income of eligible business shall be 8 % of gross receipt or total turnover (if turnover or gross receipt of eligible business does not exceed Rs. 2 crore).

Presumptive income shall be calculated at rate of 6% in respect of total turnover or gross receipts which is received by an account payee cheque or draft or use of electronic clearing system or through such electronic mode as may he prescribed.

Note: If the amount of cash received during the previous year does not exceed 5% of the total turnover or gross receipt of such year then the threshold limit for total turnover or gross receipt shall be taken as Rs. 3,00,00,000 instead of Rs. 2,00,00,000.

Resident Individual, Resident HUF or Resident Partnership Firm (Other than LLP)

6.

44ADA

Computation of income from profession on presumptive basis under section 44ADA (Subject to certain conditions).

Presumptive income of profession shall be 50% of gross receipt (if gross receipt of assessee does not exceed Rs. 50 lakh.
Note: If the amount of cash received during the previous year does not exceed 5% of the total gross receipt of such year then the threshold limit for total gross receipt shall be taken as Rs. 75,00,000 instead of Rs. 50,00,000.).

Resident person being individual or partnership firm (other than LLP) who is engaged in a profession referred to in section 44AA(1)

7.

115BA

Concessional rate of tax for domestic company if –

(i) Such company has been set-up and registered on or after March 1, 2016; and

(ii) It is engaged in business of manufacturing or production of any article or thing

(Subject to certain other conditions)

Income shall, at the option of such company, be computed at concessional tax rate of 25%.

Indian manufacturing Company

8.

115BAA

Concessional rate of tax for domestic company if total income of the company is computed without providing for specified deductions or exemptions

Income shall, at the option of such company, be computed at concessional tax rate of 22%.

Indian Company

9.

115BAB

Concessional rate of tax for domestic manufacturing company if:

a) Such Co. incorporated on or after 01-10-2019;

b) It should commence the manufacturing or production of an article or thing on or after 01-10-2019 but before 31-03-2024;

c) It must be engaged in the business of manufacture or production of any article or thing and research in relation to, or distribution of, such article or thing manufactured or produced by it; or generation of electricity;

d) The total income of the company is computed without providing for specified deductions or exemptions

(Subject to certain other conditions)

Income shall, at the option of such company, be computed at concessional tax rate of 15%.

Indian manufacturing Company

10.

115BAD

Concessional rate of tax for resident co-operative society if total income of the co-operative society is computed without providing for specified deductions or exemptions

Income shall, at the option of such co-operative society, be computed at concessional tax rate of 22%.

Resident Co-operative Society

11.

115BAE

Concessional rate of tax for resident co-operative society registered on or after April 01, 2023 and commenced manufacturing or production of an article or thing on or before March 31, 2024, if total income of the co-operative society is computed without providing for specified deductions or exemptions

Income shall, at the option of such co-operative society, be computed at concessional tax rate of 15%.

Resident Co-operative Society

12

115BBG

Income from transfer of carbon credits

10% of such income

Any person

B.

Capital Gain

1.

47(iv)

Transfer of capital asset by a parent company to its wholly owned Indian subsidiary company shall not be treated as ‘transfer’.

No capital gains shall arise in the hands of holding company due to transfer of capital assets.

Transferee should be an Indian Company

2.

47(v)

Transfer of capital asset by a wholly owned subsidiary company to its Indian holding company shall not be treated as ‘transfer’ (Subject to certain conditions).

No capital gains shall arise in the hands of subsidiary company due to transfer of capital assets.

Transferee should be an Indian Company

3.

47(vi)

Transfer of capital asset in a scheme of amalgamation by amalgamating company to Indian amalgamated company shall not be treated as ‘transfer’.

No capital gains shall arise in the hands of amalgamating company due to transfer of capital assets.

Transferee should be an Indian Company

4.

47(vib)

Transfer of capital asset in a scheme of merger by demerged company to Indian resulting company shall not be treated as ‘transfer’ (Subject to certain conditions).

No capital gains shall arise in the hands of demerged company due to transfer of capital assets.

Transferee should be an Indian Company

5.

47(vii)

Allotment of shares of Indian amalgamated company to the shareholders in the amalgamating company in lieu of their amalgamation shall not be treated as ‘transfer’ (Subject to certain conditions).

No capital gains shall arise in the hands of shareholders in the amalgamating company due to such amalgamation.

Amalgamated company should be an Indian Company

6.

47(viic)

Redemption of Sovereign Gold Bonds issued by RBI under Sovereign Gold Bond Scheme, 2015.

It shall not be treated as transfer.

Resident individual

6A.

47(viid)

Conversion of Gold into Electronic Gold Receipt issued by a Vault Manager, or Conversion of Electronic Gold Receipt into Gold shall not be treated as ‘transfer’.

No capital gains in hands of person transferring gold/EGR

Any Person

6B.

47(xa)

Conversion of bonds referred to in 115AC(1)(a) into equity shares or debentures of any company shall not be treated as ‘transfer’.

It shall not be treated as transfer

Any person

6C.

47(xx)

Transfer of the interest in a Joint Venture in exchange for shares in a foreign company shall not be treated as ‘transfer’.

No capital gains

Interest is held by a public sector company

7.

111A

Adjustment of unutilized portion of maximum exemption limit from short-term capital arising from transfer of equity shares or units of equity oriented funds or unit of a business trust and tax on balance short-term capital gains at 20%:

If total income as reduced by such short-term capital gains is below maximum exemption limit (short-fall), such short-term capital gains shall be reduced by such short-fall and tax on the balance of such capital gains shall be computed at: 20%:

Resident Individual and HUF

8.

112

Adjustment of unutilized portion of maximum exemption limit from long-term capital gain and tax on balance long-term capital gains at 12.5% :

If total income as reduced by such long-term capital gains is below maximum exemption limit (short-fall), such long-term capital gains shall be reduced by such short-fall and tax on balance of such capital gains shall be computed at 12.5% :

Resident Individual and HUF

8A.

112A

Adjustment of unutilized portion of maximum exemption limit from long-term capital gain covered under section 112A and tax on balance long-term capital gains at 12.5% :-

If total income as reduced by such long-term capital gains is below maximum exemption limit (short-fall), such long-term capital gains shall be reduced by such short-fall and tax on balance of such capital gains shall be computed at 12.5% :-

Resident Individual and HUF

9.

115ACA

Concessional rate of tax on long-term capital gains arising from transfer of GDRs issued by a listed Indian company, engaged in specified knowledge based industry or service, to its employees in accordance with notified ESOP Scheme. Provided such GDRs are purchased in foreign currency (Subject to certain conditions)

Such long-term capital gains shall be taxable at 12.5%* without allowing benefits of first and second proviso to Section 48

Resident Individual – Employee

C.

Other Sources

1.

115ACA

Concessional rate of tax on dividends on GDRs issued by a listed Indian company, engaged in specified knowledge based industry or service, to its employees in accordance with notified ESOP Scheme. Provided such GDRs are purchased in foreign currency (Subject to certain conditions)

Such dividend shall be taxable at 10%

Resident Individual – Employee

D.

Deductions

1.

80C

Only resident individuals can Investment in Public provident Fund scheme, 1968 either in his own name or in the name of minor of whom he is a guardian.

Maximum deposit in PPF Rs. 1,50,000

Resident Individual

2.

80C

Investment in Senior Citizens Savings Scheme 2004 for 5 year

Max. deduction Rs. 1,50,000

Resident individual who is 60 years of age or by a resident individual who is 55-60 years of age and retired under VRS

3.

80D

Amount paid (in any mode other than cash) by an individual or HUF to LIC or other insurer to effect or keep in force an insurance on the health of specified person*.An individual can also make payment to the Central Government health scheme and/or on account of preventive health check-up.

* specified person means:

  –   In case of Individual – self, spouse, dependent children or parents

  –   In case of HUF – Any member thereof

Note:

 1.  Deduction for preventive health check-up shall not exceed in aggregate Rs. 5,000.

 2.  Payment on account of preventive health check-up may be made in cash.

 3.  Within overall limit, deduction shall be allowed up to Rs. 50,000 towards medical expenditure incurred on the health of specified person provided such person is a senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person.

 4.  ‘Senior citizen’ means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.

In case of Individual, amount paid:

 a)  For self, spouse and dependent children: Up to Rs. 50,000 if specified person is a senior citizen

 b)  For parents: additional deduction of Rs. 50,000 shall be allowed if parent is a senior citizen

In case of HUF, up to Rs. 50,000 if specified person is a senior citizen

Resident Individual who is senior citizen

4.

80DD

Deduction allowed to resident Individual and HUF for:

a) Any expenditure incurred for the medical treatment (including nursing), training and rehabilitation of a dependent, being a person with disability

b) Any amount paid or deposited under an approved scheme framed in this behalf by the LIC or any other insurer or the Administrator or the specified company for the maintenance of a dependent, being a person with disability

(Subject to certain conditions).

Rs. 75,000 (Rs. 1,25,000 in case of severe disability)

Resident Individual and HUF

5.

80DDB

Expenses actually paid by resident individual and HUF for medical treatment of specified diseases and ailments of:

a) In case of Individual: Assessee himself or wholly dependent spouse, children, parents, brothers and sisters

b) In case of HUF: Any member of the family who is wholly dependent upon the family

(Subject to certain conditions).

Up to Rs. 40,000 (Rs. 1,00,000 in case of senior citizen)

Resident Individual/ HUF

6.

80GGB

Sum contributed to political party or electoral trust is allowed as deduction (Subject to certain conditions)

100% of amount contributed (excluding contribution in cash) is allowed as deduction

Indian company

7.

80JJAA

Deduction of additional employee cost in respect of employment of new employees.

Additional employee cost means total emoluments paid or payable to additional employees employed during the previous year.

(Subject to certain other condition)

Deduction of 30% of additional employee cost.

Deduction shall be allowed for first three Assessment Years including the Assessment Year relevant to previous year in which such employment is provided.

Assessee who is liable to tax audit under Section 44AB

8.

80PA

Producer company engaged in an eligible business of marketing, purchase or processing of agricultural produce of its members

100% of profits for a period of 5 years from the financial year 2018-19 subject to the condition that the total turnover of company shall be less than Rs. 100 crores during the financial year.

Producer Company

9.

80QQB

Royalty income of resident individual – authors of certain specified category of books other than text books

Least of the following shall be exempt from tax:

a) In case of Lump sum payment – Amount of royalty income subject to maximum of Rs. 3,00,000

b) In other cases – amount of such income subject to maximum of 15% of value of books sold during the previous year.

Resident Individual Author

10.

80RRB

Royalty in respect of patents registered on or after 01.04.2003 (Subject to certain conditions)

100% of royalty subject to maximum of Rs. 3,00,000

Resident Individual

11.

80U

A resident individual who, at any time during the previous year, is certified by the medical authority to be a person with disability [as defined under Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995]

Rs. 75,000 (Rs. 1,25,000 in case of severe disability)

Resident Individual

12.

80-IA

Indian Company developing, maintaining and operating any infrastructure facility shall be entitled to claim deduction (Subject to certain conditions).

100% of profit for 10 consecutive AY falling within a period of 15 AY beginning with the AY in which assessee begins operating and maintaining infrastructure facility.

No deduction shall be allowed to any enterprise which starts the development or operation and maintenance of the infrastructure facility on or after the 1st day of April, 2017.

Indian Company

13.

80-IA

Indian Company formed before 30-11-2005 with majority equity participation by public sector companies to reconstruct or revive a power generating plant shall be entitled to claim deduction. Provided it begins to generate or transmit or distribute power before 31-03-2011 (Subject to certain conditions).

100% of profit for 10 consecutive AY falling within a period of 15 AY beginning with the AY in which assessee begins operating and maintaining infrastructure facility.

Indian Company

14.

80-IAC

Profit and gains derived by an eligible start-up from specified business

100% of profit for 3 consecutive assessment years out of 10 years beginning from the year in which the eligible start-up is incorporated

Company and LLP

E.

TDS

1.

193

No TDS from interest on securities

If amount paid or payable during the financial year does not exceed Rs. 10,000

Resident person

1A.

193

No TDS from interest paid on debentures issued by a company in which public are substantially interested.

If amount paid or payable during the financial year does not exceed Rs. 10,000

Resident individual and HUF

2.

193

No TDS from interest on 8% Saving (Taxable) Bonds 2003 or 7.75% Savings (Taxable) Bonds, 2018, Floating Rate Savings Bonds, 2020 (Taxable) or any other notified security paid to a resident persons

If amount paid or payable during the financial year does not exceed Rs. 10,000

Resident persons

3.

193

No TDS from interest on 6.5% Gold Bonds, 1977, or 7% Gold Bonds, 1980

If a declaration is made that the nominal value of such bonds did not exceed Rs. 10,000 at any time during the previous year

Resident Individual

3A

193

No TDS from interest paid on 4.25% National Defence Bonds, 1972, 4.25% National Defence Loan, 1968, or 4.75% National Defence Loan, 1972

No TDS from interest

Resident Individual

3B

193

No TDS from payment of certain interest

No TDS from payment of interest on following securities:

(a) National Development Bonds;

(b)  7 Year National Savings Certifications (IV Issue);

(c) Debentures issued by notified persons;

(d) Any security of Central or State Government;

(e) Any listed security issued by a company and held in DEMAT form;

(f)  Securities beneficially owned by LIC, GIC, specified companies or any other insurer.

Resident Persons

4.

194

No TDS from dividend paid by any mode other than cash to resident persons.

If amount paid or payable during the financial year does not exceed Rs. 10,000.

Resident person

5.

194A

No TDS from interest (other than on interest on securities) paid by a banking company, post office or co-operative bank on time deposits

Note:

With effect from 01.06.2015, tax shall be deducted from interest credited or paid by a co-operative bank to its member. However, interest paid or credited by a co-operative society to its member or to any other co-operative society shall not be subject to TDS.

If amount paid or payable during the financial year does not exceed Rs. 50,000

Note:

 a)  In case of senior citizens, tax shall not be deducted if interest payment doesn’t exceeds Rs. 1,00,000

 b) With effect from 01.06.2015, time deposit shall also include recurring deposit. Therefore, tax shall be deducted from payment of interest on recurring deposit if it exceeds the threshold limit of Rs. 50,000.

 c) The threshold limit of Rs. 50,000 shall be computed with reference to the income credited or paid by a banking company or co-operative society (and not by individual branch thereof) which has adopted core banking solutions (‘CBS’).

Resident persons

6.

194A

No TDS from interest on deposit with a post office under Senior Citizens Saving Scheme Rules, 2004

If amount paid or payable during the financial year does not exceed Rs. 1,00,000

Resident persons

7.

194A

No TDS from interest other than on securities (in any other case)

If amount paid or payable during the financial year does not exceed Rs. 1,00,000

Resident persons

8.

194A

No TDS from interest on compensation awarded by Motor Accident Claims Tribunal

If amount paid during the financial year does not exceed Rs. 50,000

Note:

With effect from 01.06.2015, no tax shall be deducted at the time of credit of interest on compensation awarded by the Motor Accidents Claims Tribunal.

Resident persons

9.

194A

No TDS from interest on zero coupon bonds issued by Infrastructure Capital Co., Infrastructure Capital Fund, Public Sector Co. or Scheduled bank

If Zero Coupon Bonds are issued on or after 01-06-2005 by specified entities

Resident persons

10.

194A

No TDS on Interest paid under any provision of Income-tax Act, 1961 or Wealth-tax Act, 1957

Entire interest is paid under the prescribed Acts

Resident persons

11.

194A

No TDS on Interest paid in respect of deposits under any notified scheme or Post Office deposits, Kisan Vikas Patra, NSC VIII Issue, Indira Vikas Patra, etc.

If interest is earned on the prescribed deposits

Resident persons

12.

194C

No TDS from sum paid or payable to contractor (Subject to certain conditions)

a) If sum paid or payable to a contractor in a single payment does not exceed Rs. 30,000

b) If sum paid or payable to contractor in aggregate does not exceed Rs. 1,00,000 during the financial year

Resident Contractor

13.

194C

No TDS from sum paid or payable to transport operator who is in the business of plying, hiring or leasing goods carriage

If transporter owns 10 or less goods carriages at any time during the financial year and he furnishes a declaration with his PAN to person responsible for making payment.

Resident transport operator

14.

194C

No TDS from payment made by an Individual or HUF to a resident contractor for exclusively personal purposes

If payment is made for personal purpose of Individual or HUF

Resident Contractor

15.

194K

No TDS from payment made:

a) in respect of units of a Mutual Fund specified under section 10(23D);

b) units from the administrator of the specified undertaking; or

c) units from the specified company

If amount paid or payable during the financial year does not exceed Rs. 10,000

Resident persons

16.

197A(1)

No deduction of tax shall be made under Sections 194 and 194EE, if resident individual furnishes to the payer a written declaration in prescribed form that tax on his estimated total income of the previous year will be nil.

No tax shall be deducted from specified payments if the sum paid does not exceed the maximum amount which is not chargeable to tax

Resident Individual

17.

197A(1C)

No deduction of tax shall be made under Section 192A, Sections 193, 194, 194A, 194D, 194DA, 194-I, 194EE and 194K if resident senior citizen furnishes to the payer a written declaration in prescribed form that tax on his estimated total income of the previous year will be nil.

No tax shall be deducted from specified payments

Resident Individual – Senior Citizen and Super Senior Citizen

18.

194LA

No TDS from payment of compensation on compulsory acquisition of immovable property (other than Agricultural Land)

If amount paid or payable during the financial year does not exceed Rs. 5 Lakhs

Resident persons

19.

194D

No TDS from insurance commission paid or payable during the financial year

If amount paid or payable during the financial year does not exceed Rs. 20,000

Resident persons

20.

194DA

No TDS from sum payable under a life insurance policy (including bonus) to a resident person (w.e.f. 01-10-2014)

If amount paid or payable during the financial year is less than Rs. 1 lakh

Resident persons

21.

194H

No TDS from payment of commission or brokerage

If amount paid or payable during the financial year does not exceed Rs. 20,000. Further no tax to be deducted from commission payable by BSNL/MTNL to their PCO Franchisees.

Resident persons

22.

194J

No TDS from payment of professional fees technical fees and royalty

If amount paid or payable during the financial year does not exceed Rs. 50,000

Resident persons

23.

194-I

No TDS from payment of rent in respect of land &building, furniture or fittings or plant and machinery

If amount paid or payable during the financial year does not exceed Rs. 50,000 per month or part of the month.

With effect from 01.06.2015, no tax shall be deducted where income by way of rent is credited or paid to a real estate investment trust in respect of any real estate asset [as referred to in section 10(23FCA)] owned directly by such trust.

Resident persons

24.

194-IA

No TDS from payment of consideration for purchase of an immovable property (other than agriculture land)

If consideration of immovable property and its stamp duty value doesn’t exceed Rs. 50,00,000

Resident Transferor

25

194-IB

No TDS from payment of rent in respect of any land or building.

Note:

Other than the rent covered by section 194-I

If amount of rent does not exceeds Rs. 50,000 for a month or part of a month during the financial year

Resident Individual or HUF

26

194-O

No TDS from payment to participants of e-commerce

If amount paid or payable during the financial year does not exceed Rs. 5 Lakhs

Resident Individual or HUF

27

194Q

No TDS from payment made to resident seller

If amount paid or payable to resident seller for purchase of goods during the Financial Year if aggregate value of goods doesn’t exceed Rs. 50 lakhs

Resident Individual or HUF

28

194R

No TDS in case any benefit or perquisite is provided to a resident

If aggregate value of benefit/perquisite provided during the Financial Year doesn’t exceed Rs. 20,000

Resident Individual or HUF

29

194S

No TDS from payment on transfer of Virtual Digital Asset

No tax shall be deducted under this provision in the following circumstance:

• If the consideration is payable by any person (other than a specified person) and its aggregate value does not exceed Rs. 10,000 during the financial year.

• If the consideration is payable by a specified person and its aggregate value does not exceed Rs. 50,000 during the financial year. Specified person means:

(a) An individual or a HUF, whose total sales, gross receipts or turnover does not exceed Rs. 1 crore in case of business or Rs. 50 lakhs in case of a profession, during the financial year immediately preceding the financial year in which virtual digital asset is transferred;

(b) An individual or a HUF who does not have any income under the head profits and gains of business or profession.

Resident Individual or HUF

F.

Advance Tax

1.

207(2)

Exemption from payment of advance tax by a resident senior citizen or resident super senior citizen not having any income from business or profession

(who is at least 60 Years of age at any time during the previous year)

Not liable to pay advance tax

Resident Senior Citizen and Resident Super Senior Citizen

G.

Exemptions

1.

–

Maximum amount of income which is not chargeable to Income-tax in the hands of a resident senior citizen

(who is at least 60 Years of age at any time during the previous year but less than 80 Years of age on the last day of the previous year)

Rs. 3,00,000

Resident Senior Citizen

2.

–

Maximum amount of income which is not chargeable to Income-tax in the hands of a resident super senior citizen

(who is at least 80 Years of age at any time during the previous year)

Rs. 5,00,000

Resident Super Senior Citizen

3.

87A

Rebate to resident individual whose total income does not exceed Rs. 5,00,000

Rebate shall be limited to tax payable or Rs. 12,500, whichever is less

Resident Individual

4.

87A

A maximum rebate of Rs. 60,000 is allowed under section 87A from the amount of income tax on total income, which is chargeable to tax under section 115BAC(1A). However, this rebate is allowed if the total income of assessee chargeable to tax under section 115BAC(1A) is up to Rs. 12,00,000.
Further, if the total income chargeable to tax under section 115BAC(1A) exceeds Rs. 12,00,000 and the tax payable on such income exceeds the difference between the total income and Rs. 12,00,000, he can claim a rebate with marginal relief to the extent of the difference between the tax payable on such total income and the amount by which it exceeds Rs. 12,00,000

Note: The total rebate under section 87A shall not exceed the amount of income tax payable as per the rates provided in section 115BAC(1A) [effective from AY 2026-27]

Rebate shall be limited to tax payable or Rs. 60,000, whichever is less

Resident Individual

H.

Tonnage Taxation

1.

115V to 115VZC

(Tonnage Taxation)

Qualifying Company may opt for computation of income from business of operating qualifying ship or inland vessel on presumptive basis.

* A company is a ‘Qualifying Company’ if:

a) It is an Indian Company;

b) The place of effective management of it is in India;

c) It owns at least one qualifying ship; and

d) The main object of it is to carry on business of operating ships.

The income from operating ships shall be computed on basis of tonnage of each qualifying ship.

Indian Company

I.

Exemption from return filing

1.

194P

A senior citizen is not liable to furnish the return of income for the previous year in which tax has been deducted under section 194P

No requirement to file return of income by senior citizen if:

 a) His total income consists only income in the nature of pension and interest received or receivable from any account maintained with deductor (such bank); and

 b) Tax on such income is deducted by deductor on the basis of rates in force.

Resident Senior citizens (whose age is 75 years or more)