DEDUCTIONS FROM

TOTAL INCOME
Sixth Semester Bcom
 General Principles for Deductions from
Incomes
• Deductions shall be allowed under section 80c to 80u
• The aggregate amount of deductions under section 80c to 80u shall
not exceed the gross total income
• If an association of persons a body of individuals is entitled to any
of the deductions referred to in sections 80G, 80GGA, 80GGC,
80IA, 80IB, 80IC AND 80IE, a member of the association of
persons is not entitle to claim such deductions again his own
assessment
• Where deductions under section 10AA or 80IA to 80RRB have been
claimed and allowed against the income specified in these sections
 Deductions in Respect of Life Insurance Premium,
Contributions to PF

Section 80C

• Assessees entitled to deduction:

a. An individual
b. HUF

• Quantum of deduction : up to Rs. 1,50,000

 Eligible Payments and Deposits
• In case of an individual
• Any sum paid and deposited by an individual:
1. To effect or to keep in force an insurance on the life of self, spouse or
his or her children
I. Qualifying amount – policy issued before 1.4.2012 shall not exceed 20% of
the actual capital sum assured
II. Qualifying amount – policy issued after 1.4.2012 shall not exceed 10% of
the actual capital sum assured
III. Policy issued on or after 1.4.2013 shall not exceed 15% of the actual capital
sum assured – person with a disability
Contd….
2. Employee contribution to PF (RPF)

3. Public Provident Fund (self, spouse or children)

4. Approved superannuation fund

5. Subscription to NSC VIII and IX issue

6. Interest due on NSC VIII and IX issue

7. Unit Linked Insurance Plan 1971

8. Unit Linked Insurance Plan of LIC mutual fund

9. Notified units of Mutual Fund or UTI

Contd….
10. Pension fund set up by mutual fund
11. NHB (tax saving) Term deposit / pension scheme 2008

[Link] in Sukanya Samridhi Account

13. Tuition fee for lifetime education of two children

PROBLEM 1
• From the following particulars in respect of Mr. Adarsh, an author of books, compute
the deductions allowable to him u/s 80C
I. Life insurance premium (on his own life) policy taken in 2011 – 22,000
II. Sum assured on the above policy – 2,00,000
III. Contribution to Unrecognized PF – 1000
IV. Contribution to Public Provident Fund – 95,000
V. Subscription to National Saving Certificate (VIII issue) – 18000
VI. Accrued interest for one year completed N.S.C (VIII issue) – 8000
VII. Life Insurance Premium (on his mothers life policy) – 5,000
VIII. Repayment of bank loan borrowed for construction of the house – 21,000
 Deductions in respect of Contributions to Certain
Pension Fund (80CCC)
• It provides for a deduction to individual for any
amount paid or deposited by him in an annuity plan of
LIC or any other insurer for receiving pension from
the fund.
• The deduction under this section is the amount so paid
or Rs.1,50,000 whichever is less
 Conditions

• The amount should have been paid out of his income chargeable to tax

• If the assessee or his nominee surrenders the annuity before the maturity
date, surrender value shall be taxable

• The amount received by the assessee or his nominee as pension will be

taxable

• Where any amount has been allowed as deduction u/s 80CCC, no deduction
with reference to such amount shall be allowed u/s 80C
Deduction in respect of Contribution to Pension Scheme
of Central Government
• u/s 80CCD
• Who is entitled to it: a) An employee of central govt. who has been
appointed on or after 1/1/2004 or b) an employee of any other
employer or c) an assesse being an individual
• Item eligible for deduction : amount deposited during the previous
year in the pension scheme notified by the central govt.
• Deduction : amount deposited by the employee or 10% of his salary
• In case of other individual, upto 20% of his gross total income in the
previous year
 Amendment to Sec. 80CCD(2)

• Section 80CCD (2) has been amended to increase maximum amount

of deduction to 14% of salary in the case of central or state govt.
employee and 10% in the case of other employees

• Where any amount has been allowed as deduction under this section,
no deduction with reference to such amount shall be allowed u/s 80C

• Salary – includes DA as per the terms of employment

 Aggregate amount of Deductions

• The aggregate amount of deductions under section 80C, 80CCC and

80CCD(1) shall not exceed Rs. 1,50,000

• The deduction upto Rs.50,000 u/s 80CCD(1B) in addition to overall

limit of Rs. 1,50,000 provided u/s 80CCE

• The amount contributed by the employer in pension scheme shall not

be included in Rs. 1,50,000 limit
Problem
• During the financial year 2024-25 Ram deposited the amounts as
under
1. Public Provident Fund -90,000
2. Pension scheme of central govt. @15% of his salary – 1,50,000
A matching contribution are made by the employer
Compute the deductions available to him from his gross total income
 Deduction in respect of Medical Insurance Premia

• Who is entitled to deduction

• An individual
• HUF
• Individual – deduction
(a) For self and family (spouse and dependent children) – 25000
(b) For parents – additional deduction – 25000
• If in (a) or (b) there is a senior citizen – 50000
(c) if in (a) any member is a senior citizen and the amount is paid
on account of medical expenditure and no amount has been paid as a
health insurance premium for him/her – upto 50,000
Contd…

• (d) If in (b) any parent is senior citizen and the amount is paid on account
of medical expenditure and no amount has been paid as a health insurance
premium for him/her – upto 50,000

• The aggregate deduction under (a) and (c) shall not exceed – upto 50,000

• The aggregate deduction under (b) and (d) shall not exceed – upto 50,000
Contd…
• Hindu Undivided Family:
• (a) medical insurance premium for the members of the family –upto
25,000
• If any member of the family is a senior citizen –upto 50,000
• If any member of the HUF is a senior citizen and the amount is paid
on account of medical expenditure and no amount has been paid as a
health insurance premium for him/her – upto 50,000
• The aggregate deduction under (a) and (b) – upto 50,000
 Conditions for Deductions

• The scheme for insurance must be framed by GIC and approved by the
central government or any other insurer and approved by IRDA

• The amount should have been paid out of his income chargeable to tax

• The amount should have been paid by any mode of payment other
than cash
 Preventive Health Check up
• The expenditure on preventive health check up (self, spouse,
dependent children and parents) shall not exceed in the aggregate –
5,000
• The payment can be made by any mode of payment including cash
• The eligible deduction shall be allowed within the overall limit
prescribed (25,000 or 50,000)

HUF is not eligible to claim deduction in respect of preventive

health check up payment
Problem
From the following information compute the deduction available u/s
80D regarding payment of medical insurance premium by cheque
1. MIP for self and spouse 23,000
2. MIP for father aged 70 years 44,000
3. Paid for preventive health check up
self and spouse – 2,000
father -6,000
 Deduction in respect of maintenance including medical
treatment of a dependent who is a person with disability
• Section 80DD

• Who is entitled to : resident individual or HUF

• Eligible for deduction (i) Expenditure incurred on medical treatment, training and
rehabilitation of a disabled dependent

• Any amount paid or deposited under the scheme framed by LIC or any other
insurer or any specified company approved by CBDT

• Quantum of deduction : (a) for disability –Rs. 75,000 (b) for severe disability –
Rs. 1,25,000
 Conditions
• The scheme provides for payment of annuity or lump sum
amount for the benefit of a disabled dependent after the death of
individual or member of HUF in whose name the deposit has
been made
• The assesse nominates the disabled dependent or any other
person or trust to receive payment on behalf or for the benefit
of disabled dependent
• The assesse claiming deduction shall furnish a copy of
certificate issued by medical authority in the prescribed form
along with the return of income
Contd…

Disabled dependent dies before the death of the assessee : In such a

case the amount deposited shall be deemed to be the income of the
assessee of the previous year in which the amount is received

Dependent means:
The spouse, parents, children, brothers and sisters of the individual
– in case of individual
Member of the HUF – in case of HUF
Problem
Following are the particulars of income of shri Amarnath for the
previous year 2023-24
• Salary -5,10,000
• Rental income from house property – 36,000
• Profits of business – 2,20,000
During the PY, he paid by cheque Rs. 27,000 as premium on the insurance
of the health of himself and wife. During the year the assessee claimed 1,500 for
the illness of his wife, which were duly received from the insurance company.
The unmarried disabled sister of Amaranth is dependent wholly on him.
Amarnath spent 19,000 on her treatment and training during the previous year
Compute the total income of Amarnath for the AY 2024-25
 Deduction in respect of Medical Treatment
Sec. 80 DDB

It provides for deduction to a resident individual or a resident HUF for

expenditure actually paid on medical treatment of individual himself or a
dependent or any member of HUF in respect of diseases or ailments which may
be specified in the rules
Deduction : Amount paid or Rs,40,000 whichever is less
Where the payment relate to senior citizen, deduction shall be amount paid or
Rs. 1,00,000 whichever is less

The deduction shall be reduced by the amount received from an insurer or reimbursed by
the employer for the medical treatment of person mentioned in this section
 Conditions for Deduction
• The assesse has actually paid for the medical treatment of the
specified disease or ailment for himself or any dependent or
member in case of HUF
• The asessee furnishes with the return of income, a certificate in the
prescribed form from a neurologist, an oncologist, a urologist, a
haematologist, an immunologist or such prescribed specialist
working in a government hospital

Specified Diseases : Neurological diseases, cancer, AIDS,

Chronic renal failure,Hemophilia,Thalassaemia
 Deduction in respect of Interest on Loan
Taken for Higher Education
Sec. 80E
An individual is entitled to a deduction of the amount paid by him in the previous
year by way of interest on loan taken by him from any financial institution or an
approved charitable institution for the purpose of pursuing his higher education or
for the purpose of higher education of his relative.
The deduction will be allowed for the previous year in which the assessee starts
paying the interest and seven succeeding previous years or until the interest is fully
paid (whichever is earlier) by the assessee.
Contd…
• Deduction will be allowed if the amount is paid out of his income
chargeable to tax.
• Meaning of Higher Education: It means any course of study pursued
after passing the Secondary Education or its equivalent from any school,
board or university recognised by the central Government or State
Government or local authority or by any other authority authorised by
the Central Government or State Government or local authority to do so.
• Relative in relation to an individual means the spouse and children of
the individual or the student for whom the individual is the legal
guardian.
 Deduction in respect of Interest on Loan Taken for
Residential House Property

Sec. 80EE
Assessee entitled to deduction – individual
Eligibility : payment of interest on loan taken for residential house
during 1st April 2016 and 31st March 2017
Amount of Deduction : Amount of interest paid or 50,000 whichever is
less

Upto Rs. 2,00,000 claim u/s 24 and addition to Rs. 2,00,000, claim u/s 80EE
subject to maximum of Rs.50,000
 Deduction in respect of Interest on Loan
Taken for Residential House Property
Sec. 80EEA
Assessee entitled to deduction – individual
Eligibility : payment of interest on loan taken for residential house
during 1st April 2019 and 31st March 2021
Amount of Deduction : Amount of interest paid or 1,50,000 whichever is
less
Conditions:
Stamp duty value of the house property does not exceed 45 lakhs
The assessee does not own any residential house on the date of sanction
of the loan
 Deduction in respect of Interest on Loan
Taken to Purchase Electric Vehicle
Section : 80EEB
Assessee entitled to deduction – individual

Eligibility : payment of interest on loan taken for purchase of electric vehicle

during 1st April 2019 and 31st March 2023
Amount of Deduction : Amount of interest paid or 1,50,000 whichever is less.

Deduction shall not be allowed in respect of such interest under any other
provisions of the act
 Deductions in respect of donations to certain funds,
charitable institutions etc

Section:80G
This section allows a deduction in respect of amounts given as
charitable donations and it is allowed to all types of assessees

Where the amount of donations exceeds Rs.2000, it should be paid by any

mode other than cash
 Contd…
The donations may be
• No limit donations
• Deduction allowed @100%
• Deduction allowed @50%
• With limit donations:- The qualifying amount shall not exceed 10% of gross
total income after deducting the following
• Short-term capital gains specified in Sec. 111A
• Long term capital gain
• Deduction under section 80C to 80U except u/s 80G
Such donations can be classified as
• Deduction allowed @100%
• Deduction allowed @50%
 No limit Donations where deduction is
allowed @100%
1) The National Defence Fund set-up by the Central Government; or
2)The Prime Minister's National Relief Fund; or
3) The Prime Minister's Armenia Earthquake Relief Fund; or
4) The Prime Minister's Citizen Assistance and Relief in Emergency
Situations Fund (PM-CARES Fund); or
5) The Africa (Public Contributions-India) Fund; or
6) The National Foundation for Communal Harmony; or
7)A University or Educational Institution of national eminence as may
be approved by the prescribed authority in this behalf; or
 Contd…
8) the Maharashtra Chief Minister's Relief Fund or Chief Minister's Earthquake Relief
Fund, Maharashtra; or
9) Zila Saksharta Samitis constituted under the Chairmanship of Collector of District
for the purpose of improvement of primary education and for literary and post-literary
efforts in villages and towns with a population not exceeding one lakh according to the
latest census; or
10) the National Blood Transfusion Council or any State Blood Transfusion Council; or
11) any Fund set-up by State Govt. to provide medical relief to the poor; or
12) the Central Welfare Fund of the Army and Air Force and the Indian Naval
Benevolent Fund established for the welfare of the past and present members of such
forces or their dependents; or
13)the Andhra Pradesh Chief Minister's Cyclone Relief Fund; or
14) the National Illness Assistance Fund; or
Contd…
15)the Chief Minister's Relief Fund or the Lt. Governor's Relief Fund; or
16) National Sports Fund to be set-up by the Central Govt.; or
17) National Cultural Fund set-up by the Central Govt.; or
18) The fund for Technology Development and Application set-up by the Central Government; or
19)Any fund set-up by the State Government of Gujarat exclusively for providing relief to the
victims of the earthquake in Gujarat; or
20)The National Trust for the welfare of persons with Autism, Cerebral Palsy, Mental
Retardation and Multiple Disabilities.
21) National Children's Fund
22) Swachh Bharat Kosh set up by the Central Government.
23) Sum donated by a resident assessee to the Clean Ganga Fund set up by the Central Govt.
However, under (22) or (23) the payment should not be made from Corporate Social
Responsibility Fund.
24)National fund for control of drug abuse
 No limit donations where the deduction is allowed
50%

• Jawahar Lal Nehru Memorial Fund

• Prime Minister's Drought Relief Fund

• Indira Gandhi Memorial Trust

• Rajiv Gandhi Foundation

 With Limit Donations where the deduction is
allowed 100%
1) The Government or to any such local authority, institution or association as
may be approved in this behalf by the Central Government to be utilized for the
purpose of promoting family planning.

2) Sums paid by a company to the Indian Olympic Association or any other

association or institution established in India and as notified by the central
government for:

a) development of infrastructure for sports and games in India: or

b) for sponsorship of sports and games in India

 With Limit Donations where the deduction is
allowed 50%
1) The Government or any local authority to be utilized for any charitable purpose other than the purpose of promoting family

planning, or

2) Any other fund or any institution which is established in India for a charitable purpose, if it fulfils the following conditions:

(a) its income is not included in total income under sections 11 and 12 of the Income Tax Act, or it is the Regimental Fund

established by armed forces of the Union for the welfare of the past and present members of the force or their dependents

(b) under the rules governing the institution or fund no part of the income or assets of the institution or fund can be used for

non-charitable purpose

(c) the institution or fund is not expressed to be for the benefit of any particular religious,community or caste

(d) the institution or fund maintains regular accounts of its receipt and expenditure;
 Contd..
(e) the institution or fund is a public charitable trust or is registered under the
Societies Registration Act, 1860 or under section 8 of the Companies Act, 2013, or
is a University established by law, or is any other educational institution recognized
by the Government or by a University established by law, or it is an institution
established in India for the control and supervision of the games of cricket, hockey,
football, tennis or any other game approved by the Central Government, or is an
institution financed wholly or in part by the Government or local authority; and

(f ) the fund or institution is approved by the Commissioner,

 Contd..
3) Any authority constituted in India by or under any law enacted either for the purpose of
dealing with and satisfying the need for housing accommodation or for the purpose of
planning development or improvement of cities, towns and villages or for both; or

4) Any corporation established by the Central Govt. or any State Govt. for promoting the
interests of the members of a minority community; or

5) The sums paid by the assessee in the previous year as donations for the renovation or
repair of any temple, mosque, gurudwara, church or any other place which is notified by the
Central Government in the Official Gazette to be of historic, archaeological or artistic
importance or to be a place of public worship of renown throughout any State or States.
 Conditions for Allowing Deduction under the Section
80G
(i) Not in kind. No deduction will be allowed under section 80G unless the donation is of a sum of money. It
should not be given in kind.

(ii) Donation should not be given for the benefit of any particular religion, class, creed, community, etc. Donation
given for the benefit of scheduled castes, scheduled tribes, backward class or women or children is not for any
particular religious community or caste.

(iii) Where an institution or fund incurs an expenditure of a religious nature, not exceeding 5% of its total income
during any previous year, such institution or fund shall be eligible for deduction under this section

(iv) An association or institution having as its object the control, supervision, regulation or encouragement in
India of such games or sports as the Central Government may specify by notification, shall be deemed to be
an institution established in India for a charitable purpose.
 Step by Step Procedure of Calculating Deduction u/s
80G
(1) Add up all approved donations u/s 80G.

(2) Find out the maximum limit of qualifying amount by calculating 10% of G.T.I less (i) deductions u/s 80C to 80U except

u/s 80G; (ii) LTCG, (iii) STCG u/s 111A

(3) The qualifying amount for with limit donations will be restricted to the limit determined as per (2) above.

(4) Add to the amount determined under (3), the total of all donations which qualify without limit.

(5) The aggregate amount as per (4) above is the total qualifying amount.

(6) From the figure arrived at in (5) above, pick out those donations which are 100% deductible and total them up.

(7) Deduct the total of (6) from the total of (5) and find out the difference.

(8) On the figure obtained in (7), find out 50% of it.

(9) Add the amount as per (6) and as per (8), the resultant figure is the amount of deduction allowable under section 80G.
 Problem

Mr. Vivek's gross total income for the previous year 2023-24 was Rs. 5,00,000. He made the
following donations by cheques:

(a) Maharashtra Chief Minister's Earthquake Relief Fund – 10,000

(b) National Foundation for Communal Harmony- 15,000.

(c) 10,000 to an Educational Institution of National Eminence.

(d) 5,000 to National Children's Fund.

(e) To Municipal Corporation for promotion of family planning - 40,000.

(f) To Minority Community Corporation (Notified) - 25,000.

Compute his taxable income for the Assessment Year 2024-25.

Problem 2
Shri Ram Prasad, whose gross total income is 48 lakh, makes the following donations by cheques except donation

mentioned in (xii) during the previous year 2023-24

i) 50,000 to Rajiv Gandhi Foundation

ii) 1,00,000 to Prime Minister's Drought Relief Fund.

iii) 25,000 to National Foundation for Communal Harmony.

iv) 25,000 to Prime Minister's National Relief Fund.

v) 25,000 to Prime Minister's Armenia Earthquake Relief Fund.

Vi) 25,000 to Swachh Bharat Kosh.

Vii) 1,00,000 to Clean Ganga Fund

Contd…
Viii) 50,000 to the National Children's Fund.

ix)2,50,000 to Agra Municipal Corporation for opening a girl’s high school at Agra, which will not be of national eminence.

x) 4,00,000 for the repair of Taj Mahal

xi) 20,000 for repair of temple used by the residents of assesee’s locality as a place of worship

xii) 10,000 worth of books given to a school for distribution among poor and deserving students

xiii) 10,000 given as a aid to a brilliant but poor boy for going to the USA. for higher studies.

xiv) 1,00,000 to a Dharamshala managed by a registered trust which is established wholly for charitable purpose and is

approved by the commissioner of Income Tax u/s 80G(5)(vi). The Dharamshala is open to all castes and creeds.

xv) 50,000 for the construction of a Night-Shelter-home where only Hindus are to be allowed to sleep

xvi) 100,000 to the State of Uttar Pradesh for promoting family planning.

Compute the Total Income of Shri Ram Prasad for the Assessment Year 2024-25.
 Deduction in respect of rent paid
An employee who is not in receipt of house rent allowance from his employer or self-

employed person (an individual) can claim relief under section 80GG in respect of rent paid

by him towards furnished or unfurnished residential accommodation occupied by him

Deduction: Least of the following amounts shall be allowed as a deduction under this section:

(i) the Excess of rent paid over 10% of Total Income; or

(ii) 25% of Total Income; or

(iii) 5,000 p.m.

Contd…
The total income for this purpose means Gross Total Income after deducting the deductions allowable u/s 80C to

80U (except u/s 80GG).

Conditions: This deduction can be claimed if the following conditions are satisfied

(1) The assessee, his spouse or minor child or the H.U.F of which he is a member does not own any residential

house at the place where he ordinarily resides or performs duties of his office or employment or carries on

his business or profession; or

(2) If the assessee owns any residential house at any other place and he chooses this house for claiming

concession regarding self-occupied house no deduction will be allowed under this section in respect of rent

paid by him.

(3) The assessee files a declaration in Form No. 10BA.

Problem

• Mr. Ram's gross total income is 8,22,000 for the Assessment Year
2024-25. He lives in a rented house at Delhi and pays a rent of 10,000
p.m. He is entitled to deductions under sections 80D and 80C of
10,000 and 12,000 respectively. He is the owner of a factory building
which is situated at Mumbai and let out. Compute the amount
deductible under section 80GG, if any
 Deduction in respect of certain donations for scientific
research or rural development
In computing the total income of an assessee 100% of the following sums paid
shall be deducted:
(i) Sums paid in the previous year to a research association or to a university,
college or other institution to be used for scientific research, provided that such
association, university, college or institution, etc. is approved for the purpose.
(ii) Sums paid in the previous year to a research association or a university,
college or other institution to be used for research in social science or statistical
research, provided that such association, university, college or institution is
approved for the purpose
(iii) Sums paid by the assessee in the previous year to a rural development fund
set-up and notified by the Central Government for the purpose of section 35CCA
 Contd…
(iv) Sums paid to a public sector company, local authority or an approved
association or institution for carrying out any eligible project or scheme for
promoting social and economic welfare or uplift of the public, as may be
specified by the Central Government on the recommendations of the National
Committee. The National Committee consists of persons of eminence in public
life.
(v) Sums paid to the National Urban Poverty Eradication Fund set-up and
notified by the Central Government.
No deduction shall be allowed under this section in respect of any sum
exceeding 2,000 unless such sum is paid by any mode other than cash

If the assesse has any income under the head ‘Profits and Gains of Business or
Profession’ he shall not be entitled to the aforesaid deduction u/s 80GGA
Problem
Mr. B having gross total income of 8,00,000, furnishes the following information:
(a) Deposited 50,000 in tax saver deposit in the name of his major son in a
nationalized bank.
(b) Paid 50,000 towards premium on life insurance premium of his married daughter
against policy amount of 4,00,000 taken in 2017.
(c) Deposited in Sukanya Samriddhi Account 30,000.
(d) Contributed 1,00,000 to P.M. National Relief Fund.
(e) Donated 20,000 to a Government Recognised Institution for scientific research.
His gross total income does not include any income under the head Profits and
Gains of Business or Profession'.
Compute the total income of Mr. B for the Assessment Year 2024-25.
 Deduction in respect of contributions given
by an Indian Company to Political Parties
• In computing the total income of an Indian company, any sum contributed
by it in the previous year to any political party or an electoral trust shall be
allowed as a deduction

• No deduction shall be allowed in respect of any sum contributed by way of

cash

• Explanation: The word 'Contribute' has the meaning assigned to it u/s 182
of the Companies act 2013
 Deduction in respect of contributions given
by any person to Political Parties
Section. 80GGC
• In computing the total income of an assessee (except local authority
and artificial juridical person wholly or partly funded by the
Government), any amount contributed by him in the previous year to
any political party or an electoral trust shall be allowed as a deduction
• No deduction shall be allowed in respect of any sum contributed by
way of cash.
• Explanation: Political Party means a political party registered u/s 29A
of the Representation of the People Act, 1951.