DEDUCTIONS FROM GROSS TOTAL INCOME SECTION 80C (CHAPTER VI-A)

Deductions under section 80C to 80 U of Income Tax Act 1961 AY 2019-20 | FY 2018-19

Deductions from gross total income under section 80C to 80 U of Income Tax Act 1961 [Relevant for Assessment Year2019-20/Financial Year 2018-19 as per Finance Act 2018]

Relevant deductions from gross total income under section 80 C to 80 U [Chapter VI-A] of income tax are given below:

Section 80C provides for a deduction of savings in specified modes of Investments form gross total income. It is available only to an Individual or HUF. The Maximum permissible deduction is Rs.1.5 lakh along with deduction u/s 80CCC & 80CCD.

Deduction in respect of Payment of premium for annuity plan of LIC or any other Insurer is provided. The Premium must be deposited to keep in force a contract for annuity plan of LIC or any other insurer for receiving pension from the fund. For this purpose, the Interest or Bonus accrued or credited to the Assessees Account shall not be reckoned as Contribution. The Maximum Deduction allowed is Rs.1.5 lakh.

Contribution towards NPS by Employee[80CCD(1)]:Tax payer is an individual and he is employed by the central government (on or after January 1, 2004), or employed by any other person or self employed. He has in the previous year deposited any amount in his account under NPS. Under this, Employee is to contribute 10% of their salary or more and deduction is available under section 80CCD(1) which is restricted to 10% of the salary and for person other than employee deduction is restricted to 10% of GTI.
80CCD(1B) Tax payer shall be allowed a deduction in computation of his total income of the whole of the amount paid or deposited in the previous year in his account under a pension scheme notified by the Central Government, which shall not exceed fifty thousand rupees.
Contribution towards NPS by Employer [80CCD(2)]: Contribution by the employer to NPS is deductible under section 80CCD(2) in the hands of the concerned employee in the year in which contribution is made. However no deduction is available in respect of employer’s contribution which is in excess of 10 percent of the salary of the employee.

The Limit formaximum deduction available u/s 80C, 80CCC, 80CCD (combined together) is Rs.1.5 Lakh only.

Assessee gets an additional deduction of 50,000 if he makes investment in NPS scheme notified by the Central Government. This means the Limit formaximum deduction available u/s 80C, 80CCC, 80CCD+80CCD(1B) is Rs. 2 Lakh.

Tax Benefits of Rajiv Gandhi Equity Savings Scheme(RGESS)under section 80CCG has been withdrawn. However, if you have claimed this deduction in current FY 2016-17, you can claim the deduction for the next two Financial Years too.

*As amended by Finance Act 2018

This Sectionprovides for a deduction of Rs. 25,000 in respect of premium paid towards a health insurance policy for the Assessee or his family (spouse and dependentchildren) or any contribution made to the Central Government Health Scheme inaggregate and a further deduction of Rs. 25000 is allowed of premium paid inrespect of health insurance policy for parents.An increased deduction of Rs. 30000 is allowed in case any of thepersons mentioned above are senior citizens (i.e. of age 60 years or above).

It has been amended by finance Act 2018 that the upper limit of this increased deduction should be raised to Rs. 50,000.

Furtherit is provided that for claiming such deduction u/s 80D the payment must be byany mode other than cash.

FurtherDeduction of Rs. 5000 shall be allowed in respect of payment made on Account ofpreventive health check-up of self, spouse, children or parents made during theprevious year. For claimingthis deduction payment can be by any mode including cash.

The Analysis of amendment is provided in the table given below:

Bare Text of Finance Bill 2018 has been given below for your reference:
Deductions available to senior citizens in respect of health insurance premium and medical treatment

Section 80D, inter-alia, provides that a deduction upto Rs 30,000/- shall be allowed to an assessee, being an individual or a Hindu undivided family, in respect of payments towards annual premium on health insurance policy, or preventive health check-up, of a senior citizen, or medical expenditure in respect of very senior citzen. It is proposed to amend section 80D so as to raise this monetary limit of deduction from Rs 30,000/- to Rs 50,000/-.
In case of single premium health insurance policies having cover of more than one year, it is proposed that the deduction shall be allowed on proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit. .

These amendments will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.

It provides fora deduction to an Assessee being an individual or HUF who is a resident inIndia.Deduction of Rs. 75,000is available in respect of any Amount paid for the medical treatment(including nursing), training and rehabilitation of a dependent, or any amountpaid or deposited under a scheme framed in this behalf.

In case ofsevere disability (i.e. a person with 80% or more disability), the deduction of Rs. 1,25,000 shall be available.

To claim this deduction, you have to submit FORM NO. 10-IA.

DependentmeansIn the case ofan Individual the spouse, children, parents, brothers, sisters, of theindividual and in the case of HUF, any member who is wholly dependent on theassessee.

*As amended by Finance Act 2018

A deduction ofRs. 40000 or Amount actually paid whichever is less is allowed to anAssessee who is resident in India being an Individual or HUF. Deduction is allowed of any amount paid for the medical treatment of such disease orailment as may be specified in the rules.

It has been amended that in case the amount is paid in respectof a senior citizen/very senior citizen then the deduction would beRs.100,000 or the amount actually paid whichever is less.

[Earlier the limit was Rs. 60,000 for Senior Citizen & Rs. 80,000 for very senior citizen.]

Bare Text of Finance Bill 2018 has been given below for your reference:
Enhanced deduction to senior citizens for medical treatment of specified diseases

Section 80DDB of the Act, inter-alia, provide that a deduction is available to an individual and Hindu undivided family with regard to amount paid for medical treatment of specified diseases in respect of very senior citizen upto Rs 80,000/- and in case of senior citizens upto Rs 60,000/- subject to specified conditions. It is proposed to amend the provisions of section 80DDB of the Act so as to raise this monetary limit of deduction to Rs 1,00,000/- for both senior citizens and very senior citizens.

This amendment will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.

THE BELOW CRITERIA HAS TO BE MET FOR CLAIMING TAX DEDUCTION UNDER SECTION 80EE.

1.) The home loan should have been sanctioned during / after FY 2016-17.

2.) Loan amount should be less than Rs 35 Lakh.

3.) The value of the house should not be more than Rs 50 Lakh &

4.) The home buyer should not have any other existing residential house in his name.

If you take any loan for higher studies(after completing Senior Secondary Exam), tax deduction can be claimed under Section 80E for interest that you pay towards your Education Loan. This loan should have been taken for higher education for you, your spouse or your children or for a student for whom you are a legal guardian. Principal Repayment on educational loan cannot be claimed as tax deduction.

There is no limit on the amount of interest you can claim as deduction under section 80E. The deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier.

Contributions made to certain relief funds and charitable institutions can be claimed as a deduction under Section 80G of the Income Tax Act. This deduction can only be claimed when the contribution has been made via cheque or draft or in cash. In-kind contributions such as food material, clothes, medicines etc do not qualify for deduction under section 80G.
The donations made to any Political party can be claimed under section 80GGC.

W.e.f F.Y. 2017-18, the limit of deduction under section 80G / 80GGC for donations made in cash isreduced from current Rs 10,000to Rs 2,000 only.
Click here to know information on Tax Exempted Institutions

The Tax Deduction amount under80GG isRs 60,000 per annum. Section 80GG is applicable for all those individuals who do not own a residential house & do not receive HRA(House Rent Allowance).

The extent of tax deduction will be limited to the least amount of the following;

1.) Rent paid minus 10 percent the adjusted total income.

2.) Rs 5,000 per month.

3.) 25 % of the total income.

(If you are claimingHRA(House Rent Allowance) of more than Rs 50,000 per month (or) paying rent which is more than Rs 50,000 then the tenant has to deduct TDS @ 5%. Tax could be deducted at the time of credit of rent for the last month of the tax year or last month of tenancy, as applicable.)

AdmissibleDeductions:-

Any sum paid by the Assessee to the ResearchAssociation which has, as its object, the undertaking of scientific research

Any sum paid to an Association or Institutionwhich has, as its object, the undertaking of any programme of Rural Developmentto be used for carrying for carrying out any programme of Rural Development.

Any sum paid to Research Association which has,as its object the undertaking of research in Social Science or StatisticalResearch.

Any sum paid to Public Sector company or a localauthority for carrying out any eligible project or scheme.

Any sum paid to Rural Development fund.

Any sum paid to National Urban Poverty EducationFund (NUPEF).
Sub-section (2A) has been inserted which provides thatno deduction shall be allowed in respect of donation of any sum exceeding Rs.10000 unless such sum is paid by any mode other than cash.

Click here to know information on Tax Exempted Institutions

This provides ofdeduction of any sum contributed in the Previous Year by an Indian Company toany Political Party or an Electoral Trust. From assessment year 2014-15, no deduction shall be allowed in respect of any sum contributed by way of cash.

Click here to know information on Tax Exempted Institutions

This provides fordeduction of any sum contributed in the Previous Year by any Person to aPolitical Party or an Electoral Trust. It will not be available to a LocalAuthority and an Artificial Judicial Person. No deduction shall be allowed in respect of any sum contributed by way of cash.

Click here to know information on Tax Exempted Institutions

*As amended by Finance Act 2018

Deduction from gross total income of an individual or HUF, up to a maximum of Rs. 10,000/-, in respect of interest on deposits in savings account with a bank, co-operative society or post office can be claimed under this section. Section 80TTA deduction is not available on interest income fromfixed deposits.

A new provision to allow deduction of up to Rs. 50,000 to the senior citizen who has earned interest income from deposits with banks or post office or co-operative banks has been inserted by Finance Act 2018. Interest earned on saving deposits and fixed deposits both shall be eligible for deduction under this provision.

Deduction under Section 80TTA shall not be available to senior citizens in respect of interest on saving deposits.

Bare Text of Finance Bill 2018 has been given below for your reference:
Deduction in respect of interest income to senior citizen

At present, a deduction upto Rs 10,000/- is allowed under section 80TTA to an assessee in respect of interest income from savings account. It is proposed to insert a new section 80TTB so as to allow a deduction upto Rs 50,000/- in respect of interest income from deposits held by senior citizens. However, no deduction under section 80TTA shall be allowed in these cases.
This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.

It is also proposed to amend section 194A so as to raise the threshold for deduction of tax at source on interest income for senior citizens from Rs 10,000/- to Rs 50,000/-.

This amendment will take effect, from 1st April, 2018.

*As amended by Finance Act 2018

A standard deduction upto Rs 40,000/- or the amount of salary received, whichever is less has been allowed by Finance Act 2018. Consequently the presentexemption in respect of Transport Allowance (except in case of differently abled persons) [Rs 1600*12=Rs 19200] and reimbursement of medical expenses [Rs 15000]is proposed to be withdrawn.

Bare Text of Finance Bill 2018 has been given below for your reference:
Standard deduction on salary income

Section 16, inter-alia, provides for certain deduction in computing income chargeable under the head Salaries. it is proposed to allow a standard deduction upto Rs 40,000/- or the amount of salary received, whichever is less. Consequently the presentexemption in respect of Transport Allowance (except in case of differently abled persons) and reimbursement of medical expensesis proposed to be withdrawn.

These amendments will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year2019-20 and subsequent assessment years.

*As amended by Finance Act 2018

To promote agricultural activities a new section 80PA has been inserted. This new provision proposes 100% deductions of profits for a period of 5 years to farm producer companies who have total turnover of up to Rs. 100 crores during the financial year.

For claiming this deduction the gross total income of producer companies should include income from:

Bare Text of Finance Bill has been given below for your reference:
Deduction in respect of income of Farm Producer Companies

Section 80P provides for 100 percent deduction in respect of profit of cooperative society which provide assistance to its members engaged in primary agricultural activities.

It is proposed to extend similar benefit to Farm Producer Companies (FPC), having a total turnover upto Rs 100 Crore, whose gross total income includes any income from

(i) the marketing of agricultural produce grown by its members, or

(ii) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or

(iii) the processing of the agricultural produce of its members

The benefit shall be available for a period of five years from the financial year 2018-19.

This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.

*As amended by Finance Act 2018

Deduction of 30% is allowed in addition to normal deduction of 100% in respect of emoluments paid to eligible new employees who have been employed for a minimum period of 240 days during the year.
However, the minimum period of employment is relaxed to 150 days in the case of apparel industry, the same has beenextend to footwear and leather industry.

Manufacturers are often denied the deduction if an employee is employed in 1st year for a period of less than 240 days/150 days, but continues to remain employed for more than 240 days/150 days in the 2nd year. To overcome this difficulty, the requirement of period of employment has been proposed to be relaxed. Now as per the new provision the deductions shall be allowed to the manufacturer in respect of an employee hired in 1st year, if he continues to remain in employment in current year(2nd year) for more than 240/150 days, as the case may be.
Bare Text of Finance Bill has been given below for your reference:
Incentive for employment generation

At present, under section 80-JJAA of the Act, a deduction of 30% is allowed in addition to normal deduction of 100% in respect of emoluments paid to eligible new employees who have been employed for a minimum period of 240 days during the year.

However, the minimum period of employment is relaxed to 150 days in the case of apparel industry. In order to encourage creation of new employment, it is proposed to extend this relaxation to footwear and leather industry.
Further, it is also proposed to rationalize this deduction of 30% by allowing the benefit for a new employee who isemployed for less than the minimum period during the first year but continues to remain employed for the minimum period in subsequent year.

This amendment will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.

[Disclaimer : The above deductions are based on Finance Act 2018 & Applicable for FY 18-19]

Deductions under section 80C to 80 U of Income Tax Act 1961 [AY 2019-20/FY 2018-19]

You May Also Like : Reverse Charge (RCM) U/s 9(4) of CGST Act,2017