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Deductions Under Chapter VI A of The Income Tax Act, 1961

[Submitted by CA. Jayesh Satish Behede,
B.Com ( Hons.), ACA
Jalgaon, Maharashtra]

November 20, 2006
 

Section

Assessee

Qualifying Payments/Income

Conditions/Incidents

Deductions

Qualifying Amt.

Quantum
A. Important Deductions from Gross Total Income
80C   [with effect from A.Y.2006-07]

Individual [HUF]

 1.  LIP; (restricted to 20% of capital sum assured) 1. LIP/PPF/ULIP of  self, spouse, children (including minors) or members of HUF. Rs. 100,000 100%  of  the amount invested / paid or Rs. 100,000 whichever is less. (Note: The total deduction that an assessee can claim under sections 80C, 80CCC and 80CCD would be restricted to Rs. 100,000 per annum as per the provisions of Section 80CCE)
2. (a) PF, (b) Superannuation Fund, (c) PPF; (d) RPF 2.  PF contribution not to exceed 1/5th of salary.
3. Deposits in P.O. Savings Bank (CTD). 3. Land cost for residential house is also qualified.
4.  ULIP of UTI or LIC Mutual Fund's Dhanraksha 1989 4. House should not be transferred for 5 years.
5. Subscriptions to NSC VIII Issues. 5. Term Deposit mentioned at Point 15 would be for a fixed period of not less than five years and as per scheme to be notified by Central Government
6. Deposits with National Housing Bank. 6. Shares and Debentures mentioned at Point Nos. 12 and 13 in previous column will have lock-in-period of three years.
7. Housing Loan repayments 7. No exemption should be claimed in respect of same investment u/s. 54EA/54EB/54EC.
8. Subscription to schemes of PSUs providing long-term
finance for housing. 		8. Sum paid/ invested need not be out of current years chargeable income
9. Notified annuity plan of LIC or of any other approved insurer. 9 Clauses(i) to (vii), Clauses(xii) to (xiii), Clauses (xiiic) to (xiva) & Clause (xv) of sub-section(2) of section 88 shall be eligible for deduction under corresponding provision of this section.
10. Units of Mutual Fund or UTI.  
11. Notified Pension Fund or Mutual Fund.  
12. Tuition Fees (not donation or development fees) towards full time education of any 2 Children of an Individual paid to University, College, School, etc. in India.  
13.  Investments in shares or debentures of approved public company exclusively engaged in infrastructure facility or power sector.  
14. Investments in units of notified mutual fund investing in approved public cos. as in 13 above.  
15. Term Deposit with scheduled bank.
80CCC

Individual

 Payment made out of taxable income to LIC or to any other approved insurer under approved Pension Plan. 1 Rebate is  allowable u/s. 88 to A.Y. 2005-06. Rs. 10,000

(For A.Y. 2006-07) Rs. 1,00,000 (For A.Y. 2007-08)

 Least of amount paid or Rs. 10,000. (refer in 80c above).
2 Deduction is allowable u/s. 80C w.e.f. A.Y. 2006-07
3 Pension received or amount withdrawn is taxable in the year of receipt.
80CCD

Individual who is a Central Government employee, employed on or after 1-1-2004

 Contribution made by the assessee and by the Central Government to the notified Pension scheme 1. Rebate is allowable u/s. 88 up to A.Y. 2005-06.

-

 Amount contributed by the assessee and/or the Central Government as does not exceed in each case 10% of his salary (including D.A. but excluding all other allowances and perks) (refer in 80c above)
2. Deduction is allowable u/s. 80C w.e.f. A.Y. 2006-07
3. Pension received or amount withdrawn by the assessee or his nominee is taxable in the year of receipt
80D

Individual/ HUF

 Premia paid out of taxable income to approved scheme of GIC (Mediclaim, Bhavishya Arogya) or any other approved insurer. 1 Insurance on the health of the assessee, spouse, dependent parents/children, members of HUF.  Rs. 10,000
Rs. 15,000 (for senior citizen)		 100%  of  the  premia  paid  or Rs. 10,000  (Rs. 15,000 for senior citizen) whichever is less.
2 Payment should be made by cheque.
80DD

Individual/ HUF (Resident)

 1 Expenses incurred for Medical Treatment (including Nursing), Training & Rehabilitation of a dependent with  (severe/ordinary disability). 1 For meaning of the word 'disability' reference is to be made to Sec 2(i) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (PDEOPRFP), and section 2(a), (c) and (h) of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities Act, 1999 (NTWPACPMR MD Act). Disabilities covered are blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, autism, cerebral palsy, multiple disability, mental retardation and mental illness. (Defined in Expln. (f) to sec. 80DD) - Rs. 50,000 for Ordinary disability
Rs. 75,000 for severe disability  
2 Amount paid/deposited to  any scheme framed by LIC/UTI approved insurer/administrator (now known as Specified Company), for payment of annuity or lump sum amount for the benefit of dependent person with disability. 2 Under PDEOPRFP Act, a person with disability means a person suffering from not less than 40% of any disability and severe disability means 80% of one or more of such disability.
3 A certificate in prescribed form and manner from medical authority as defined in Expln. (e) to sec. 80DD, stating the extent of disability and the validity of period, is required to be submitted with the Return of Income. On expiry of the certificate a reassessment of the condition of disability is required to be done.
4 Nomination can be either in favour of disabled dependent or any other person or a trust in case of investment in scheme.
5 If the disabled dependent predeceases the individual or the member of HUF in whose name subscription is made then the entire amount paid/deposited in scheme will be treated as taxable income in the year of receipt.
6 Handicapped dependent has been defined in Expln. (b) to sec. 80DD.
7 "Person with disability" is defined in Expln. (f) and "Person with severe disability" is defined in Expln. (g) to sec. 80DD.
8. "Medical authority" is defined in explanation (e) to section 80DD.
80DDB

Individual/HUF (Resident)

 Amount actually paid for medical treatment of such disease or ailments as may be specifed. 1 Deduction available for expenses on self, dependent  or a member of  HUF. Rs. 40,000 (Rs. 60,000 for senior citizen) 1) Least of amount paid or Rs. 40,000 (Rs. 60,000 for senior citizens)
      2 Assessee is required to furnish a certificate in prescribed form from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist as may be prescribed, working in a Government Hospital along with the return of income. 2) Amount received from an insurer of reimbursed by employer for the medical treatment is to be reduced.
3 Refer to Explanation to Section 80DDB for definitions of relevant terms.
80E

Individual

 Repayment (out of taxable income) of interest on loan taken for pursuing higher education 1 The loan should be from an approved charitable institution notified u/s. 10(23C)/ referred to in S. 80G(2)(a)/a banking co./ notified financial institution. - The entire amount of interest is deductible without any limit 
2 Higher education means full time studies for any graduate/post-graduate course in engg., medicine, management, architecture or for post-graduate course in applied sciences or pure sciences including mathematics and statistics.
3 Available for a maximum of 7 A.Ys. after initial assessment year in which the loan is taken or interest is paid in full, whichever is earlier.
80G

Any Assessee [except u/s. 80G (2)(c)]

 Donations for charitable purposes specified in S. 80G(2) 1 Donations should not be in kind. Amount of Donations, not exceeding 10% of GTI (As reduced by other deductions). In certain cases this limit does not apply. Please see S. 80G(4) 1.  50% generally; and
2 If paid out of another year's income or out of income not includible in the assessment of the current year the deduction still available (Lt. F. No. 45/313/66-ITJ(61) dt. 2-12-1966. 2 100% in cases of  PM's Relief  Funds, Gujarat Earthquake Relief Funds, etc.
[Ref. S. 80G(1)(i)]
80GG

Any Assessee [other than having any income falling u/s. 10(13A)] i.e., House
Rent
Allowance]

 Expenditure incurred towards payment of rent in respect of furnished or unfurnished accommodation occupied for his own residence. 1 This section does not apply where residential accommodation is owned by assessee, his spouse, minor child or by HUF at a place where assessee ordinarily resides or carries on business or profession. Expenditure in excess of 10% of his total income. Not more than
i) Rs. 2,000/- per month
or
ii) 25% of the total income whichever is less
2 This section does not apply where the assessee owns residential accommodation at any other place which is in occupation of the assessee.
3 Assessee to submit a declaration in Form No. 10BA with the Return of Income.
4 Ten per cent of his total income means assessee's total income before allowing deduction for any expenditure under this section.
80GGA

Any Assessee

 Donations for Scientific Research or research in social sciences or Rural Development or Conservation of Natural Resources or to National Urban Poverty Eradication Fund or for eligible project/scheme. 1 Assessee should not have income under the head 'Profits and Gains of Business or Profession'. Amount of Donations 100%
2 Donee should be approved u/s. 35 or 35CCA or 35AC.
80GGB

Indian Company

 Any sum contributed to any political party 1 For the meaning of term 'contribute', refer explanation to section 80GGB Amount of Contribution 100%
2 For the meaning of term 'political party', refer to Explanation to section 80GGC
80GGC (w.e.f. 22-9-2003)

Any Assessee
[Except local authority and artificial juridical person wholly or partly funded by the Government

- do -

 1 For the meaning of term 'political party', refer explanation to section 80GGC Amount of Contribution 100%
Section

Eligible undertaking/enterprise

Date of Commencement

Amount of Deduction and Period

  

80-IA

1

 Infrastructure enterprise : business of (i) developing, (ii) maintaining and operating, or (iii) developing, maintaining and operating new infrastructure facility - i.e., road, bridge, airport, port, waterways, rail systems, highway project, water  treatment/ water supply/ irrigation/ sanitation/ sewerage/ solid waste management systems.

After 1.4.1995

   100% for 10 consecutive A.Ys. out of 15 A.Ys In case of road, highway project water supply project, port, etc. 100% for 10 consecutive A.Ys. out of 20 A.Ys.  

2

 Telecommunication undertakings : basic or cellular, radio paging, domestic satellite service or network of trunking and electronic data interchange services, broadband network & internet services.

1.4.1995 to 31.3.2005

   100% for first 5 A.Ys. 30% for next 5 years Any 10 consecutive A.Ys. out of first 15 years.  

3

 Industrial parks including special economic zone : undertakings that

a.       develops;

b.      develops and operates; or

c.       maintains and operates a notified industrial park.

1.4.1997 to 31.3.2009

   100% for 10 consecutive A.Ys. out of 15 years  

4

 Power undertakings :      
- undertakings engaged in

a.       generation; or

b.      generation and distribution of power

1.4.1993 to 31.3.2010

  100% for 10 consecutive A.Ys. out of 15 years.  
- undertakings engaged in transmission or distribution (only profits derived from laying of such network of new lines)

1.4.1999 to 31.3.2010

  
- undertakes substantial renovation and modernization (i.e., increase in book value of plant & machinery by 50% as compared to book value as on 1-4-2004)  of existing transmission or distribution lines as defined in Explanation to sec. 80-1A(4)(iv)(c)

1.4.2004 to 31.3.2010

 

5

 Undertaking owned by an Indian company and set up for reconstruction or revival of a power generating plant:  
a) Indian company should be formed before 30.11.2005 and notified by Cent. Govt. before 31.12.2005  
b) Undertaking should begin to generate or transmit or distribute power before the 31st day of March 31.12.2007
Note: 1) All the assessees claiming benefit under 80-IA is required (including companies & co-operative societies) to furnish separate Audit Report in Form No. 10CCB u/s 80-IA w.e.f. A.Y. 2003-2004  
2) The assessee needs to comply with the conditions stipulated in sub-sections (3), (4) and (7) of section 80-1A.  
3) The provisions of this section shall not apply to any Special Economic Zone notified on or after 1.4.2005 in accordance with the scheme referred to in sub-clause (iii) of clause (c) of sub-section (4)

80-IB

1

 Industrial Undertakings :      
a) Other than (b), (c) & (d)

1.4.1991 to 31.3.1995

25%
(30% for Cos.)

First 10 A.Ys.

 [12 A.Ys. if assessee is a co-op. society]  
b) SSI U/Cold Storage other than (c) & (d) below

1.4.1995 to 31.3.2002

25%
(30% for Cos.)

First 10 A.Ys.

 [12 A.Ys. if assessee is a co-op. society]  
c) i. Backward State (Eighth Schedule)
(In the case of State of Jammu & Kashmir, the date of commencement has been extended to 31-3-2007)

1.4.1993 to 31.3.2004

100%
25%
(30% for Cos.)

First 5 A.Ys.
Next 5 A.Ys.

[12 A.Ys. if assessee is a co-op. society]  
ii. Notified Industries in N.E. Region

1.4.1993 to 31.3.2004

100%

First 10 A.Ys.

    
d) Backward District        
- Category 'A'

1.10.1994 to 31.3.2004

100%
25%
(30% for Cos.)

First 5 A.Ys.
Next 5 A.Ys.

 [12 A.Ys. if assessee is a co-op. society]  
- Category 'B'

1.10.1994 to 31.3.2004

100%
25%
(30% for Cos.)

First 3 A.Ys.
Next 5 A.Ys.

 [12 A.Ys. if assessee is a co-op. society]  

2

 Ships :

1.4.1991 to 31.3.1995

30%

First 10 A.Ys.

    

3

 Hotels (approved by prescribed authority) :        
- Hilly Area/Rural Area/Place of Pilgrimage/other notified areas

1.4.1990 to 31.3.1994 or 1.4.1997 to 31.3.2001

50%

First 10 A.Ys.

    
-  Other places

1.4.1991 to 31.3.1995 or
1.4.1997 to 31.3.2001

30%

First 10 A.Ys.

    

4

 Company carrying on Scientific Research & Development a) If approved by prescribed authority before 1.4.1999

100%

First 5 A.Ys.

    
b) If approved by  prescribed authority after 31.3.2000 but before  1.4.2007

100%

First 10 A.Ys.

  

5

 Undertaking engaged in commercial production or refining of mineral oil          
- North Eastern Region

Before 1.4.1997

100%

First 7 A.Ys.

    
- Other Region

On or after 1.4.1997

100%

First 7 A.Ys.

    

6

 Undertaking developing & building housing projects




Conditions :

If approved by Local Authority before 31.03.2007

100%

Projectwise

 1. The assessee has to comply with the conditions stipulated in sub-section (10).  
2. Also refer to the definitions of relevant terms given in sub-section (10)
i) minimum plot area : one acre
ii) residential unit has maximum built up area of 1,000 sq. ft. in  Delhi/Mumbai; 1,500 sq. ft. in other areas built up area of shops / other commercial establishments not to exceed 5% of agreegate built up area or 2000 sq. ft., whichever is less.  
iii) Construction should be completed within 4 years from the end of F.Y. in which the project is approved or by 31.3.2008 where project is approved before 1-4-2004.  

7

 Undertaking engaged in integrated business of handling, storage and transportation of foodgrains or the business of processing, preservation of packaging of fruits and vegetables

On or after 1.4.2001

100% 25%
(30% for Cos.)

First 5. A.Ys.
Next 5 A.Ys.

    

8

 Business of building, owning and operating a multiplex theatre other than in Mumbai, Delhi, Kolkata or Chennai.

01.04.2002 to 31.03.2005

50%

First 5 A.Ys.

    

9

 Business of building owning and operating a convention centre.

01.04.2002 to 31.03.2005

50%

First 5 A.Ys.

    

10

 Undertaking engaged in setting up and operating a cold storage facility for agricultural produce

01.04.1999 to 31.03.2004

100%
25%
(30% for Cos.)

First 5 A.Ys. 
Next 5 A.Ys.

[12 A.Ys. in case of co-op. society]

  

11

 Undertaking engaged in operating and maintaining a hospital with at least 100 beds in a rural area.

Hospital constructed between 1.10.2004 and 31.3.2008

100%

First 5 A.Ys.

 The assessee has to comply with conditions stipulated in sub-section(11B)  
Note 1: Deduction u/s 80-IB shall not be allowed w.e.f. AY 2004-05 to those undertaking covered u/s 80-IC
Note 2 : No deduction u/s 80-IB (4) will be available to an industrial undertaking set up in the State of Jammu & Kashmir, which is engaged in the manufacture or production of any item listed in Part C of the Thirteenth Schedule ("the Negative list")		  

80-IAB

Undertaking which is engaged in development of Special Economics Zones (SEZ)

SEZ notified on or after 1-4-2005 under the SEZ Act, 2005

100%

For 10 Consecutive A.Ys. out of 15 years

  
 

Notes
 

i)

 Where a Developer transfers the operation and maintenance of such SEZ to another Developer, the deduction under sub-section(1) shall be allowed to the latter for the remaining period in the ten consecutive assessment years.  

ii)

 Provisions of sub-sections (5), (7) to (12) of section 80-IA shall apply to the SEZ  

iii)

 "Developer" and "Special Economic Zone" shall have meanings assigned to them in clauses (g) and (za) of section 2 of SEZ Act, 2005

80-IC

1

 Undertaking which begins to manufacture or manufactures and undertakes substantial expansion of article or things not being article or thing specified in Thirteenth Schedule in Export Processing Zone or Integrated Infrastructure Development Centre or  Industrial Growth Centre or Industrial Park or Software Technology Park, or Industrial Area or Theme Park as notified by board and Central Government in :          

a)

 State of Sikkim

23.12.2002 - 01.04.2012 

100%

First 10 A.Ys.

    

b)

 States of Himachal Pradesh & Uttaranchal

07.01.2003 - 01.04.2012

100%
25%
(30% for Cos.)

First 5 A.Ys.
Next 5 A.Ys.

    

c)

 North-Eastern States

24.12.1997 - 01.04.2007

100%

First 10 A.Ys.

    

2

 Undertaking which begins to manufacture or commences operation or manufactures and undertakes substantial expansion article or things mentioned in Fourteenth Schedule:          

a)

 State of Sikkim

23.12.2002 - 01.04.2012

100%

First 10 A.Ys.

    

b)

 States of Himachal Pradesh & Uttaranchal

07.01.2003 - 01.04.2012

100%
 25%
(30% for Cos.)

First 5 A.Ys.
Next 5 A.Ys.

    

c)

 North-Eastern States

24.12.1997 - 01.04.2007

100%

First 10 A.Ys.

    
Note :        
  i) The Assessee must fulfil other conditions prescribed u/s 80-IA, like Audit Report, etc.          
ii) No deduction under any other section in Chapter VIA or 10A or 10B.          
iii) Period of 10 A.Ys. shall include period deduction availed u/s 80-IB/ 10C