Deductions from Gross Total Income

Presented to:
Prof. Aradhana Tiwari

Presented by:
Atul Madne Preeti Likhmani Sachin Sargar Amit Singh

Income tax slabs (in Rs.) 2012-2013

General
Women Senior Citizen Very Senior Citizen Tax Applicable

0 - 2,00,000
2,00,001-

0-2,00,000

0 To 2,50,000

0 To 5,00,000

No Tax

2,00,001-5,00,000

2,50,001-5,00,000

10%

5,00,000 5,00,00110,00,000 Above 10,00,000

Above 10,00,000 Above 10,00,000 Above 10,00,000 30% 5,00,001-10,00,000 5,00,001-10,00,000 5,00,001-10,00,000 20%

Tax Slabs

 Provided by the Income Tax Act, 1961. Contained in Chapter VI A and in the form of deductions from section 80C to 80U. They are the permissible amount by which the gross total income is reduced to arrive at the total income liable to tax.

Introduction

Rule 1: The aggregate amount of deductions under sections 80C to 80U cannot exceed gross total income. Rule 2: These deductions are to be allowed only if the assessee claims these and gives the proof of such investments/ expenditure/ income.

Basic Rules

 To encourage savings For socially desirable activities For physically disabled persons

Why Deductions?

 Applicable only to Individual & HUF. This section provides for deduction in respect of certain expenditure/ investments paid or deposited by the assessee in the previous year.

Deduction u/s 80C

The gross qualifying amount under this section refer to the payment/investment under some of the following schemes: Life Insurance Premium Paid. Statutory Provident Fund and Recognized Provident Fund. 15 Year Public Provident Fund. National Savings Certificates. Unit-linked Insurance Plan (Ulip). Dhanraksha Plan of LIC Mutual Fund. Jeevan Dhara, Jeevan Akshay, New Jeevan Dhara. Notified Units of Mutual Fund or UTI.

Amount of Deduction 100% of the amount invested or Rs. 1,00,000/whichever is lower.

 Deduction in respect of Contribution to Certain Pension Funds Applicable to Individual Eligible Amount amount paid/deposited under an annuity plan of the Life Insurance Corporation of India or any other insurer for receiving pension

Deduction u/s 80CCC

Conditions Amount should be Taxable income. This must not be allowed as deduction u/s 80C. Any amount withdrawn or pension received from the plan is taxable in the hands of the assessee or nominee in the year of receipt.

Amount of Deduction Amount paid or Rs. 10,000/- whichever is lower.

 Deduction in Respect of Contribution to Pension Scheme of Central Government. Individual who is an employee of Central Government. Eligible Amount Deposit made under a pension scheme notified by the Central Government.

Deduction u/s 80CCD

Conditions No deduction must have been claimed u/s 80C. Any amount received from the scheme, is taxable in the hands of the assessee in that year or receipt.
Amount of Deduction Aggregate of amount deposited by the employee and the Central government, or 10% of the salary, whichever is lower.

 The aggregate amount of deductions under 80C, 80CCC and 80CCD put together cannot exceed

Rs.1,00,000

 Deduction in respect of Medical Insurance Premium. Applicable to Individuals/HUF. Eligible Amount - Insurance premium paid in accordance with the scheme framed by the General Insurance Corporation of India and approved by the Central Government.

Deduction u/s 80D

Conditions

The amount should be paid by cheque out of the taxable income. The policy is taken on the health of the assessee, on the health of spouse, dependent parents or dependent children of the assessee. In case of HUF on the health of any member of the family. Amount of Deduction 100% of premium paid subject to a maximum of:
Rs. 15,000 in case of senior citizens (above 60 years) Rs. 10,000 in case of others.

 Deduction in respect of dependent relative. Applicable to Individuals/HUF who is a Resident of India. Eligible Amount expenditure incurred on medical treatment OR/AND amount paid or deposited under any scheme framed by the LIC of India or any other insurer for the payment of an annuity or a lump sum amount for the benefit of such dependent

Deduction u/s 80DD

Conditions The assess shall have to furnish a certificate in the prescribed form. Dependant means the spouse, children, parents and siblings in case of individuals, or any member of the family in case of HUF. Person with severe disabilities means a person suffering from 80% or more of one or more disabilities. Amount of Deduction Rs. 50,000 in case of normal disabilities and Rs. 75000 in case of severe disabilities.

 Deduction In Respect Of Medical Treatment Applicable to Individuals/HUF who is a Resident of India. Eligible amount expenditure incurred for the medical treatment of such diseases specified in Rule 11D(e.g. Parkinson's disease, malignant cancers, full blown AIDS, chronic renal failure, etc.) for self or dependant individual.

Deduction u/s 80DDB

Conditions The concerned assessee must attach a copy of certificate in the prescribed Form no. 10-1 along with the return of income. Dependant again means the spouse, children, parents and siblings in case of individuals, or any member of the family in case of HUF. The deduction shall be reduced by the amount received, if any, under an insurance from an insurer for the medical treatment of person mentioned in this section or reimbursed by the employer.

Amount of Deduction

100% of the expenses incurred subject to a maximum of

Rs. 60,000 in the case of expenses incurred for senior citizens (above 60 years) Rs. 40,000 in the case of others.

 Deduction in respect of repayment of loan taken for higher education. Applicable to Individuals. Eligible Amount any amount paid by way of interest on loan taken from any financial institution or any approved charitable institution for higher education.

Deduction u/s 80E

Conditions Amount is paid out of his income chargeable to tax. Higher education means full-time studies for any graduate or post-graduate course in engineering, medicine, management or for post-graduate course in applied science or pure sciences including mathematics and statistics.

 Financial institution means banking company or financial institution notified by the central government. Approved Charitable Institutions means an institution referred u/s 10(23C) of the act. Amount of Deduction Actual interest paid or Rs. 40,000 whichever is lower.

 Deduction in respect of amount of rent paid.

Any assessee other than assessee having income allowance consisting HRA.
Eligible Amount Any expenditure incurred by him on payment of rent in excess of 10% of his total income.

Deduction u/s 80GG

Conditions The assessee files a declaration in Form No. 10BA regarding the payment of rent. Such accommodation is occupied by him for his own residence. Deduction under this section can be claimed even if accommodation at concessional rent is provided by the employer.

Amount of Deduction

The amount of deduction under this section will be the least of the following excess of actual rent paid over 10% of adjusted gross total income: 25% of his adjusted gross total income; and Rs. 2,000 p.m.

 Deduction in case of person with disability.

Applicable to Individual resident of India.

Eligible amount Flat deduction to a person with disability.

Deduction u/s 80U

Conditions He is certified by the medical authority to be a person with disability, at any time during the previous year. He furnishes a certificate issued by the medical authority in the prescribed form along the return of income. Amount of Deduction A fixed deduction of
Rs. 50,000 in case of a person with normal disability Rs. 75,000 in case of a person with severe disability.( having any disability over 80%)

 Under the income tax act first of all income under each head is computed. The aggregate of income under each head is known as Gross Total Income. Out of this gross total income certain deductions are allowed. The income after such deductions is called Total Income. The total deductions from section 80 C - 80 U cannot exceed the total income.

Conclusion