• Document: S 80C TO 80U
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DEDUCTIONS U/S 80C TO 80U Indian tax laws contain certain provisions, which are intended to act as an incentive for achieving certain desirable socio-economic objectives. These provisions are contained in Chapter VIA and are in the form of deductions (80C TO 80U) from the Gross Income. By reducing the chargeable income, these provisions reduce the tax liability, increase the post-tax income and thus induce the tax-payers to act in the desired manner. This unit is intended to give a broad idea of such deductions. To compute the net income of the assesses, first of all we compute the income under the five head. The provisions for the same have been already discussed in the previous units. The aggregate of income under each head is known as “gross total income”. Certain deductions which are not deductible under any particular head of income are allowed out of gross total income to arrive at the total income liable to tax. Total income is accordingly computed as under: 1. Income from salaries ______ 2. Income from House property ______ 3. Profits and Gains of Business and Profession ______ 4. Income from capital gains ______ 5. Income from other sources ______ Gross Total Income = _________________ Less deduction under Chapter VI-A(80C TO 80U)(-) ------ Total income _______________________ Following are the basic rules for deduction 1.The aggregate amount of deductions under sections 80C to 80U cannot exceed gross total income(gross total income after excluding long term capital gains, short term capital gain under section 111A, winnings from lottery, crossword puzzles etc.) 2.These deductions are to be allowed only if the assessee claims these and gives the proof of such investments/ expenditure/ income. CATEGORIES OF DEDUCTIONS There are various kinds of deductions. Some of them are to encourage savings, some are for certain personal expenditure, a few are for socially desirable activities, and some are for economic growth. For the sake of better understanding we have categorized them into four kinds. They are: TO ENCOURAGE SAVINGS For certain personal expenditure For socially desirable activities For physically disabled persons DEDUCTIONS TO ENCOURAGE SAVINGS The government wants to encourage the habit of people to save for the rainy day. To give impetus to savings these deductions are given on certain investments or certain expenditure made by the assessee. Deduction is allowed when the saving is invested but normally any withdrawal is treated as income in the year of withdrawal. SECTION 80C – QUALIFIED SAVINGS DEDUCTION IN RESPECT OF LIFE INSURANCE PREMIA, ETC. (SEC. 80C) The following payments/investments qualify for deduction under this section. The total amount of investments made during the P.Y. under these below mentioned schemes is known as Gross Qualifying Amount ( GQA ) 1.Life Insurance premium paid on a policy taken on his own life, life of the spouse or any child (child may be dependent/ independent ). In the case of a Hindu undivided family, policy may be taken on the life of any member of the family. The premium paid should be maximum of 20% of sum assured . 2. Any sum deducted from salary payable to a Government employee for the purpose of securing him a deferred annuity (subject to a maximum of 20% of salary) 3. Contribution towards statutory provident fund and recognized provident fund. 4. Contribution towards 15 year public provident fund (maximum of Rs 70,000). 5. Contribution towards an approved superannuation fund 6. Subscription to National Savings Certificates, VIII Issue . 7. Contribution for participating in the Unit-Linked Insurance Plan (ULIP) of Unit 8. Contribution for participating in the unit-linked insurance plan (ULIP) of LIC Mutual Fund (i.e. Dhanraksha plan of LIC Mutual Fund) 9.Payment for notified annuity plan of LIC (i.e. Jeevan Dhara, Jeevan Akshay New Jeevan Dhara ,etc ) or any other insurer. 10. Subscription towards notified units of Mutual Fund or UTI 11. Contribution to notified pension fund set up by Mutual Fund or UTI . 12. Any sum paid (including accrued interest) as subscription to Home Loan Account Scheme of the National Housing Bank 13. Any sum paid as tuition fees to any university/college/educational institution in India for full time education. AMOUNT OF DEDUCTION We add the amounts invested / spent in above mentioned schemes and this amount is known as Gross qualifying amount. The amount deductible is a) Gross qualifying amount; or b) Rs 1,00,000 Whichever is less Note:-The maximum deduction under sections 80C, 80CCC and 80CCDis Rs 1,00,000. SECTION 80CCC – PAYMENT IN RESPECT OF PENSION FUND DEDUCTION IN RESPECT OF PENSION FUND (SEC. 80CCC) If the following conditions are fulfilled an assessee may claim deduction under this section • The taxpayer is an individual • During the previous year, he

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