Obscure Indian: January 2016

Deductions on Section 80C, 80CCC & 80CCD

Section 80C

The deduction under section 80C is allowed from your Gross Total Income. These are available to an Individual or a HUF. The deduction is allowed for various investments, expenses and payments.

Total Deduction under section 80C, 80CCC and 80CCD(1) together cannot exceed Rs 1,50,000 for the financial year 2014-15 (assessment year 2015-16). The limit for financial year 2015-16 is also Rs 1,50,000.

Investments in PPF – Under the PPF scheme, Rs 1,50,000 is allowed to be invested in one financial year. The minimum investment required is Rs 500. Interest earned on PPF account is tax free. The PPF account matures after 15 years. Receipts on Maturity or withdrawals are tax free. Money is allowed to be withdrawn after 5 years. Contribution to PPF for individual can be in the name of the assessee, the spouse or any child. For a HUF, it can be in the name of any member of the family
Employee's share of PF Contribution – Amount deducted from your salary as your contribution in Employee's Provident Fund Scheme or Recognized Provident Fund.
Purchase of NSCs – National Savings Certificate e.g. NSC VIII issue and IX issue are eligible for deduction in the year of purchase. These can be bought from designated Post Office. Accrued Interest (which is considered reinvested) qualifies for deduction during the term of the NSCs (except the last year).
Life Insurance Premium Payment - The policy must be in the assessee's or spouse's or any child's name (child may be dependent/independent, minor/major, or married/unmarried). For a HUF, it may be on life of any member of HUF. The 80C deduction is valid on insurance policies purchased after 1st April, 2012 only if the premium is less than 10% of sum assured. Benefits for existing purchased policies continue. The deduction is also allowed on payments made by Government employees to Central Govt Employees Insurance Scheme.
Children's Tuition Fee Payment - Tuition fees paid to any school, college, university or other educational institution situated within India for the purpose of full time education of any two children (including payments for play school, pre nursery and nursery).
Principal Repayments on Loan for purchase of House Property - Payments of installments or part payments or repayment of loan taken for buying or constructing residential house property. Also allowed for stamp duty, registration fees and other expenses for purpose of transfer of such property to the assessee. However, if the property is transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year.
Investment in Sukanya Samridhi account - A maximum of Rs 1,50,000 can be deposited in the Sukanya Samridhi Account for a girl child. The amount deposited shall earn an interest of 9.1% (for financial year 2014-15). This interest is fully exempt from tax. A minimum of Rs 1,000 must be deposited in a year. Receipts on maturity from the account are tax free.
ULIPS or Unit Linked Insurance Plan – ULIPS sold with life insurance cover for deduction under section 80C. Includes Contribution to Unit Linked Insurance Plan of LIC Mutual Fund e.g. Dhanraksha 1989 and contribution to Other Unit Linked Insurance Plan of UTI.
Investment in ELSS - ELSS or Equity Linked Savings Scheme is an Equity Fund. ELSS funds are eligible to be claimed as a deduction under section 80C. These funds have a 3 year lock in period.
Sum paid for securing Deferred Annuity - Sum paid under non commutable deferred annuity for an individual on the life of the assessee, spouse or any child. Also allowed on sum deducted from salary payable to Govt. Servant for securing deferred annuity for self-spouse or child. Payment limited to 20% of salary.
Sum deposited in Five Year Deposit Scheme in Post Office.
Amount deposited under Senior Citizens Saving Scheme.
Subscription to any notified securities/notified deposits scheme. e.g. NSS
Contribution to notified Pension Fund set up by Mutual Fund or UTI.
Sum paid as subscription to Home Loan Account Scheme of the National Housing Bank or contribution to any notified deposit scheme/pension fund set up by National Housing Bank.
Subscription to deposit scheme of a public sector, company engaged in providing housing finance (public deposit scheme of HUDCO).
Contribution to notified annuity Plan of LIC (e.g. Jeevan Dhara and Jeevan Akshay) or Units of UTI / notified Mutual Funds.
Subscription to equity shares/ debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions.
Subscription to any notified bonds of NABARD (National Bank for Agriculture and Rural Development).

Section 80CCC: Deduction in respect of Premium Paid for Annuity Plan of LIC or Other Insurer

This section provides deduction to an Individual for any amount paid or deposited in any annuity plan of LIC or any other insurer for receiving pension from a fund referred to in Section 10(23AAB).
In case the annuity is surrendered before the date of its maturity, the surrender value is taxable in the year of receipt.

Section 80CCD: Deduction in respect of Contribution to Pension Account

Employee's contribution – Section 80CCD(1)
Allowed to an Individual who makes deposits to his/her NPS account. Maximum deduction allowed is 10% of salary (in case of taxpayer being an employee) or 10% of gross total income (in case of tax payer being self employed) or Rs 1,00,000 whichever is less.
The limit of Rs 1,00,000 has been increased to Rs 1,50,000 for financial year 2015-16 (assessments year 2016-17).
Employer's contribution – Section 80CCD(2)
Maximum deduction available in respect of employer's contribution is allowed up to 10% of the salary of the employee.

For FY 2014-15 (assessment year 2015-16)
Total Deduction under Section 80C, 80CCC and 80CCD(1) cannot exceed Rs 1,50,000.
For FY 2015-16 (assessment year 2016-17)
A new section 80CCD(1B) has been introduced to provide for additional deduction for amount contributed to NPS of up to Rs 50,000.
Therefore for financial year 2015-16, Total Deduction under Section 80C, 80CCC, 80CCD(1) and 80 CCD(1B) cannot exceed Rs 2,00,000.
From assessment year 2012-13, employer's contribution under section 80CCD(2) towards NPS is outside the monetary ceiling mentioned above.

Deductions on Savings Bank Account

Section 80 TTA: Deduction from gross total income with respect to any Income by way of Interest on Savings account

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. Section 80TTA deduction is not available on interest income from fixed deposits.

Deductions on House Rent

Section 80GG: Deduction with respect to House Rent Paid

This deduction is available for rent paid when HRA is not received. Assessee or his spouse or minor child should not own residential accommodation at the place of employment.
Assessee should not be in receipt of house rent allowance.
He should not have self occupied residential premises in any other place.

Deduction available is the least of

Rent paid minus 10% of total income
Rs. 2000/- per month
25% of total income

Deductions on Loan for Higher Studies

Section 80E: Deduction with respect to Interest on Loan for Higher Studies

Deduction in respect of interest on loan taken for pursuing higher education. This loan is taken for higher education for the assessee, spouse or children or for a student for whom the assessee is a legal guardian.

Deduction for First Time Home Owners

Section 80EE: Deductions on Home Loan Interest for First Time Home Owners

This section provided deduction on the Home Loan Interest paid and is valid for financial years 2013-14 & 2014-15 (Assessment year 2014-15 and 2015-16) only. The deduction under this section is available only to Individuals for first house purchased where the value of the house is Rs 40lakhs or less and loan taken for the house is Rs 25lakhs or less. And the Loan has been sanctioned between 01.04.2013 to 31.03.2014. The total deduction allowed under this section is Rs 1,00,000.

Deductions on Rajiv Gandhi Equity Saving Scheme (RGESS)

Section 80CCG: Rajiv Gandhi Equity Saving Scheme (RGESS)

The Rajiv Gandhi Equity Saving Scheme (RGESS) was launched after the 2012 Budget. Investors whose gross total income is less than Rs. 12 lakhs can invest in this scheme. Upon fulfillment of conditions laid down in the section, the deduction is lower of - 50% of amount invested in equity shares or Rs 25,000.

Deductions on Medical Insurance

Section 80D: Deduction in respect of Medical Insurance

For financial year 2014-15 - Deduction is available up to Rs. 15,000/- to an assessee for insurance of self, spouse and dependent children. If individual or spouse is more than 60 years old the deduction available is Rs 20,000. An additional deduction for insurance of parents (father or mother or both) is available to the extent of Rs. 15,000/- if less than 60 years old and Rs 20,000 if parents are more than 60 years old. Therefore, the maximum deduction available under this section is to the extent of Rs. 40,000/-. (From AY 2013-14, within the existing limit a deduction of up to Rs. 5,000 for preventive health check-up is available).
For financial year 2015-16 – Deduction is raised from Rs 15,000 to Rs 25,000. The deduction for senior citizens is raised from Rs 20,000 to Rs 30,000. For uninsured super senior citizens (more than 80 years old) medical expenditure incurred up to Rs 30,000 shall be allowed as a deduction under section 80D. However, total deduction for health insurance premium and medical expenses for parents shall be limited to Rs 30,000.

Deductions on Medical Expenditure for a Handicapped Relative

Section 80DD: Deduction in respect of Rehabilitation of Handicapped Dependent Relative

Deduction is available on:

expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent relative
Payment or deposit to specified scheme for maintenance of dependent handicapped relative.

Where disability is 40% or more but less than 80% - fixed deduction of Rs 50,000. Where there is severe disability (disability is 80% or more) – fixed deduction of Rs 1,00,000.A certificate of disability is required from prescribed medical authority.
Note: A person with 'severe disability' means a person with 80% or more of one or more disabilities as outlined in section 56(4) of the 'Persons with disabilities (Equal opportunities, protection of rights and full participation)' Act.

For financial year 2015-16 – The deduction limit of Rs 50,000 has been raised to Rs 75,000 and Rs 1,00,000 has been raised to Rs 1,25,000.

Deductions on Medical Expenditure on Self or Dependent Relative

Section 80DDB: Deduction in respect of Medical Expenditure on Self or Dependent Relative

A deduction to the extent of Rs. 40,000/- or the amount actually paid, whichever is less is available for expenditure actually incurred by resident assessee on himself or dependent relative for medical treatment of specified disease or ailment. The diseases have been specified in Rule 11DD. A certificate in form 10 I is to be furnished by the assessee from any Registered Doctor.

In case of senior citizen the deduction can be claimed up to Rs 60,000 or amount actually paid, whichever is less.

For financial year 2015-16 – for very senior citizens Rs 80,000 is the maximum deduction that can be claimed.

Deductions on Person suffering from Physical Disability

Section 80U: Deduction with respect to Person suffering from Physical Disability

Deduction of Rs. 50,000/- to an individual who suffers from a physical disability (including blindness) or mental retardation. Further, if the individual is a person with severe disability, deduction of Rs. 100,000/- shall be available u/s 80U. Certificate should be obtained from a Govt. Doctor. The relevant rule is Rule 11D.

For financial year 2015-16 – The deduction limit of Rs 50,000 has been raised to Rs 75,000 and Rs 1,00,000 has been raised to Rs 1,25,000.

Deduction for donations towards Social Causes

Section 80G: Deduction for donations towards Social Causes

The various donations specified in Sec. 80G are eligible for deduction up to either 100% or 50% with or without restriction as provided in Sec. 80G. 80G deduction not applicable in case donation is done in form of cash for amount over Rs 10,000.

Donations with 100% deduction without any qualifying limit:

National Defence Fund set up by the Central Government
Prime Minister's National Relief Fund
National Foundation for Communal Harmony
An approved university/educational institution of National eminence
Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
Fund set up by a State Government for the medical relief to the poor
National Illness Assistance Fund
National Blood Transfusion Council or to any State Blood Transfusion Council
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
National Sports Fund
National Cultural Fund
Fund for Technology Development and Application
National Children's Fund
Chief Minister's Relief Fund or Lieutenant Governor's Relief Fund with respect to any State or Union Territory
the Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister's Cyclone Relief Fund, 1996
The Maharashtra Chief Minister's Relief Fund during October 1, 1993 and October 6,1993
Chief Minister's Earthquake Relief Fund, Maharashtra
Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat
Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of earthquake in Gujarat (contribution made during January 26, 2001 and September 30, 2001) or
Prime Minister's Armenia Earthquake Relief Fund
Africa (Public Contributions — India) Fund
Swachh Bharat Kosh (applicable from financial year 2014-15)
Clean Ganga Fund (applicable from financial year 2014-15)
National Fund for Control of Drug Abuse (applicable from financial year 2015-16)

Donations with 50% deduction without any qualifying limit.

Jawaharlal Nehru Memorial Fund
Prime Minister's Drought Relief Fund
Indira Gandhi Memorial Trust
The Rajiv Gandhi Foundation

Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income

Government or any approved local authority, institution or association to be utilised for the purpose of promoting family planning
Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India.

Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income

Any other fund or any institution which satisfies conditions mentioned in Section 80G(5)
Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning
Any authority constituted in India 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, villages or both
Any corporation referred in Section 10(26BB) for promoting interest of minority community
For repairs or renovation of any notified temple, mosque, gurudwara, church or other place.

Deductions on Contribution by Companies to Political Parties

Section 80GGB: Deduction in respect of contributions given by companies to Political Parties

Deduction is allowed to an Indian company for amount contributed by it to any political party or an electoral trust. Deduction is allowed for contribution done by any way other than cash.
Political party means any political party registered under section 29A of the Representation of the People Act. Contribution is defined as per section 293A of the Companies Act, 1956.

Deductions on Contribution by Individuals to Political Parties

Section 80GGC: Deduction in respect of contributions given by any person to Political Parties

Deduction is allowed to an assessee for any amount contributed to any political party or an electoral trust. Deduction is allowed for contribution done by any way other than cash.

Political party means any political party registered under section 29A of the Representation of the People Act.

Deductions on Income by way of Royalty of a Patent

Section 80RRB: Deduction with respect to any Income by way of Royalty of a Patent

Deduction in respect of any income by way of royalty is respect of a patent registered on or after 01.04.2003 under the Patents Act 1970 shall be available up to Rs. 3 lacs or the income received, whichever is less. The assessee must be an individual resident of India who is a patentee. The assessee must furnish a certificate in the prescribed form duly signed by the prescribed authority.

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