Chapter VI-A contains deductions from Gross Total Income. It is to be noted that if there is no Gross total Income than no deduction will be permissible. That means maximum deduction one can claim from chapter VI-A is equal to his Gross total Income. The chapter contains deductions in respect of certain payments, deductions in respect of certain incomes, deductions in respect of other incomes and other deductions. Chapter VI-A contains sections from Section 80C to 80U under which an Assesse can claim deduction. Let’s focus on Section 80C which contain certain Investment which can be claimed as deduction for the purpose of computing total income.
Section 80C is applicable only for Individual and Hindu Undivided Family. Corporate bodies, partnership firms, and other businesses are not qualified to avail deduction under section 80C. It allows maximum deduction of rupees 150,000 to an investor in a previous year.
Following are the some specific Investment and their conditions where an investor get deduction if assesse invested with conditions maintained under the provision.
Life Insurance Premium – Premium paid on insurance on the life of the individual, spouse or any child (minor or major) and in the case of HUF, any member thereof. This will include a life policy and an endowment policy.
Contribution to SPF/PPF/RPF – Contributions to any provident fund to which the Provident Funds Act, 1925 applies and recognized provident fund qualifies for deduction under section 80C.made to any Provident Fund set up by the Central Government and notified in his behalf (i.e., the Public Provident Fund established under the Public Provident Fund Scheme, 1968) also qualifies for deduction under section 80C. Such contribution can be made in the name of the individual, his spouse and any child of the individual; and any member of the family, in case of a HUF. The maximum limit for deposit in PPF is 1,50,000 in a year.
Contribution to Superannuation fund – Contribution by an employee to an approved superannuation fund qualifies for deduction under section 80C.
Amount deposited in sukanya samridhi Account – Subscription to any such security of the Central Government or any such deposit scheme as the Central Government as may notify in the Official Gazette. Accordingly, Sukanya Samriddhi Scheme has been notified to provide that any sum paid or deposited during the previous year in the said Scheme, by an individual in the name of–
a) any girl child of the individual; or
b) any girl child for whom such individual is the legal guardian would be eligible for deduction under section 80C
Subscription to National Savings Certificates VIII – Subscription to any Savings Certificates under the Government Savings Certificates Act, 1959 notified by the Central Government in the Official Gazette (i.e. National Savings Certificate (VIII Issue) issued under the Government Savings Certificates Act, 1959).
Contribution in Unit-linked Insurance Plan 1971– Contributions in the name of the individual, his spouse or any child of the individual for participation in the Unit-linked Insurance Plan 1971. In case of a HUF, the contribution can be in the name of any member.
Contribution in Unit-linked Insurance Plan of LIC Mutual Fund – Contributions in the name of the individual, his spouse or any child of the individual for participation in any Unit linked Insurance Plan of the LIC Mutual Fund. In case of a HUF, the contribution can be in the name of any member.
Contribution to approved annuity plan of LIC – Contributions to approved annuity plans of LIC (New Jeevan Dhara and New Jeevan Akshay, New Jeevan Dhara I and New Jeevan Akshay I, II and III) or any other insurer (Tata AIG Easy Retire Annuity Plan of Tata AIG Life Insurance Company Ltd.) as the Central Government may, by notification in the Official Gazette, specify in this behalf.
Subscription towards notified units of mutual fund or UTI – Subscription to any units of any mutual fund or from the Administrator or the specified company under any plan formulated in accordance with such scheme notified by the Central Government.
Investment in five year term deposit – Investment in term deposit for a period of not less than five years with a scheduled bank; and which is in accordance with a scheme framed and notified by the Central Government in the Official Gazette.
Repayment of housing loan including stamp duty, registration fee and other expenses – Any payment made towards the cost of purchase or construction of a Repayment of amount borrowed by the assessee from: new residential house property. The income from such property –
(i) should be chargeable to tax under the head “Income from house property”;
(ii) would have been chargeable to tax under the head “Income from house property” had it not been used for the assessee’s own residence.The approved types of payments are as follows:
(a) Any instalment or part payment of the amount due under any self- financing or other schemes of any development authority, Housing Board or other authority engaged in the construction and sale of house property on ownership basis; or
(b) Any instalment or part payment of the amount due to any company or a cooperative society of which the assessee is a shareholder or member towards the cost of house allotted to him; or
(c) Repayment of amount borrowed by the assessee from
I. The Central Government or any State Government;
II. Any Schedule Bank
III. The life insurance corporation
IV. Any national housing bank
(d) Stamp duty, registration fee and other expenses for the purposes of transfer of such house property to the assesse.
Payment of tuition fees to any university, college, school or other educational institution within India for full-time education for maximum 2 children.
OTHER INVESTMENT UNDER SECTION 80C WHICH IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80C
1. Subscription to notified bonds issued by NABARD
2. Investment in five year Post Office time deposit
3. Investment in five year Post Office time deposit
4. Contribution to additional account under NPS.
An assesse can generate some additional income through investing schemes given under section 80C and also earn get deductions from gross total income. This is the reason this section called as Investment come deduction.
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