After releasing of Finance Act, 2018, it appears that without analyzing the proposed amendments most of the people have jumped to the conclusion that entire Chapter VI A deduction  are covered, thus wrongly concluding that deduction u/s  80C (payment of PPF/LIC/School fee etc) , 80D- Mediclaim, 80G (Donations),80TTA & 80TTB (interest from Bank) etc will not be allowed if the Income Tax Return is filed beyond the due date, which in actual is not the case since only PART C to Chapter VIA is covered in the budget proposal. In the following paragraphs an attempt has been made to clarify the position.

It may be noted that the budget has proposed disallowance of deductions in respect of certain incomes contained in Part C only if the ITR is filed after the due date. Deductions allowable under the other four parts are immune from the proposed amendment.

Chapter VIA of the Income Tax Act 1961 “deductions to be made in Computation of Total Income”. The said Chapter has five parts as under:

Part A- General (Containing Sections 80A, 80AB, 80AC and 80B)

Part B- Deductions in respect of certain payments (containing Sections 80C to 80GGC)

Part C – Deductions in respect of certain incomes (containing Sections 80H to 80TT)

Part CA- Deductions in respect of other incomes (containing Sections 80TTA & proposed 80TTB)

Part D- Other deductions (containing Sections 80U)

Deductions in respect of certain payments like Life Insurance premiums, contribution to Provident Fund, School fee, health insurance, preventive health check-up, medical treatment, interest for loans taken for education/ house property, rents paid, donations to certain institutions and political parties etc. are contained in Part B of Chapter VIA and are not going to be affected with the proposed amendment. Similarly deductions of Bank interest u/s 80TTA & proposed 80TTB as well as person with disability u/s 80U is not going to be affected by the proposed amendment.

Persons eligible to claim deduction under the following eight sections ONLY may be denied the deductions under Part C of Chapter VIA if they file their IT Return after due date under the proposed amendment:

1. Section – 80-IAC : Special provision in respect of specified businesse. starts ups

2. Section – 80-IBA : Deductions in respect of profits and gains from housing projects

3. Section – 80JJA : Deduction in respect of profits and gains from business of collecting and processing of bio-degradable waste

4. Section – 80JJAA : Deduction in respect of employment of new employees

5. Section – 80LA : Deductions in respect of certain incomes of Offshore Banking Units and International Financial Services Centre

6. Section – 80P : Deduction in respect of income of co-operative societies

7. Section – 80QQB : Deduction in respect of royalty income, etc., of authors of certain books other than text-books

8. Section – 80RRB : Deduction in respect of royalty on patents

Disallowance for the following six Sections under Part C of the said chapter is already existing since long under section 80AC in case of filing IT Return beyond due date:

1. Section – 80-IA : Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.

2. Section – 80-IAB : Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone.

3. Section – 80-IB : Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings

4. Section – 80-IC : Special provisions in respect of certain undertakings or enterprises in certain special category States.

5. Section – 80-ID : Deduction in respect of profits and gains from business of hotels and convention centers in specified area.

6. Section – 80-IE : Special provisions in respect of certain undertakings in North-Eastern States.

On a careful analysis of Part C, it can be seen that though this part originally contained 41 Sections, only 14 sections are applicable in present context.

(a)  Sections already omitted in past

(80H,80J,80JJ,80K,80L, 80M, 80MM, 80N, 80QQ, 80S, 80T and 80TT)

(b) Sections no more applicable after 31.3.2005

(80HH, 80HHA, 80HHB, 80HHBA, 80HHC, 80HHD, 80HHE, 80HHF, 80I, 80O, 80Q, 80QQA, 80R, 80RR and 80RRA)

(c) Disallowance already existing through Section 80AC

(80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE)

(d) Proposed disallowance under the Budget

(80IAC, 80IBA, 80JJA 80JJAA, 80P, 80QQB and 80RRB)

Total 41

The deductions under Part C to chapter VIA is mainly in form of incentivized deduction to promote certain fields. Most of these presently applicable14 sections already require certain other conditions like furnishing of report by auditors in prescribed forms. One of the condition for such incentivized deduction to furnish the Income tax Return within due date cannot be termed as unreasonable. Moreover, only a limited number of assessees do earn incomes referred to in Sections 80IAC, 80IBA, 80JJA 80JJAA, 80P, 80QQB and 80RRB and imposing a condition of filing the return within the respective due dates cannot be termed as harsh keeping in view such conditions already prevalent since long for the other six sections 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE of Part C to Chapter VIA.

Therefore, people should not have any apprehension of losing the deductions available to them under Part B, CA and D even if they happen to file their Income Tax Return after the due dates but before the end of the relevant Assessment year or before the completion of assessment, whichever is earlier.

Fees u/s 234F for delayed filing of Return, however, will be applicable where a person required to furnish a return of Income u/s 139 fails to do so within due date. 

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  1. J V GURURAJ says:

    A very impressive clarifications made by the author against presumed take aways all chapterVIA deductions in belated returns.Thanks for differentiation made between “Incentivized” deductions and saved deductions with in chapter VIa

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January 2021