15831 lecture notes on deductions under section 80 (1)

1. DEDUCTIONS FROM
GROSS TOTAL INCOME

2. COMPUTATION OT TOTAL INCOME
• Income from Salaries XX
• Income from House property XX
• Income from Business XX
• Income from capital gains XX
• Income from other sources XX
Gross Total Income XXX
Less: Deduction section 80C TO 80U XX
Total income XXX

3. 1. Life Insurance premium paid on a policy taken
on own life, life of the spouse or child whether
dependent or not.
The premium paid should not exceed 10% of
actual capital sum assured .
Deduction under section 80C

4. 2.Any sum deducted from salary payable to a
Government employee for the purpose of
securing him a deferred annuity
3.Contribution towards statutory provident
fund and recognized provident fund.
4.Contribution towards public provident
fund (for self, spouse or children).
5.Contribution towards an approved
superannuation fund

5. 6.Subscription to National Savings Certificates,
VIII Issue and interest accrued on such
certificates deemed to be reinvested.
7. Contribution for participating in the Unit-
Linked Insurance Plan (ULIP) of Unit Trust of
India.
8. Payment plan for LIC (i.e. Jeevan Dhara,
Jeevan Akshay.

6. 9. Any sum paid as subscription to scheme
of the National Housing Bank
10. Any sum paid as tuition fees to any
university / college / educational institution
in India for full time education of his two
children
11. A term deposit for at least 5 years in a
scheduled bank .

7. AMOUNT OF DEDUCTION
a) Aggregate amount deposited under sec 80
C; or
b) Rs.1,50,000
whichever is less

8. Practical Problem - I
• Following are the particulars in respect of Mr.
Adarsh in respect of savings made by him in PY
2014-15.
• LIC premium paid on his own life = Rs. 22000
• Policy amount = Rs. 200000
• Contribution to PPF = Rs. 10000
• Interest accrued on NSC VIII Issue = Rs.5000
• LIC Premium paid for married daughter = Rs.
1000
• LIC Premium paid on life policy of his mother =
Rs. 2000
• Calculate eligible deductions under section 80 C

9. Deduction under Section 80D
Assessee ---- > Pay medical insurance premium
----- > Premium paid by any mode, except cash

10. Premium can be paid for

11. AMOUNT OF DEDUCTION
If all the aforesaid conditions are satisfied, then
a) insurance premium paid, OR
b) Rs. 25,000
whichever is lower, is deductible.
In case of senior citizen,
a) insurance premium paid, OR
b) Rs. 30,000
whichever is lower, is deductible.

12. IllustrationDuring the P.Y. , Mr. X pays the following
premiums on Mediclaim insurance policy by
cheque.
Calculate the amount of tax benefit under section
80 D.
1. Mr. X Rs. 8,000 2. Mrs. X Rs. 5,000
3. Son (not dependent) Rs. 3,000
4. Daughter (dependent) Rs. 14,000
5. Father (not dependent) Rs. 1,500
6. Mother (dependent) (age 68 years & resident in
India) Rs. 2,000

13. DEDUCTION FOR MEDICAL TREATMENT OF
DEPENDENT WITH DISABILITY (SECTION
80DD)
 This deduction is available only to Individuals,
resident in India.
 This deduction is given to the assessee if a
person with disability is dependent upon him.

14. • The assessee has incurred expenditure by
way of medical treatment (including
nursing), training and rehabilitation of a
disabled dependent.

15. AMOUNT OF DEDUCTION:
•The amount of deduction is fixed at = Rs. 75,000
•In case of a person with severe disability (over 80
%) deduction = Rs. 1,25,000

16. • Calculate the amount of deduction available to Mr. X for
the following each of the cases:-
• X incurred Rs. 12000 as medical expenses on medical
treatment of his sister who was mentally retarded.
• X incurred Rs. 85000 on the medical treatment of his
spouse who was physically handicapped.
• X incurred Rs. 70000 on the medical treatment of his
dependent father who was suffering from disability.
• X incurred Rs. 130000 on the medical treatment of his
brother who was suffering from severe disability.
• X incurred Rs. 12000 as medical expenses on medical
treatment of his mother (not dependent) who was
mentally retarded

17. DEDUCTION IN RESPECT OF MEDICAL
TREATMENT (SECTION 80DDB)
Deduction is available if following are satisfied
Assessee is an individual
The assessee has actually paid for the medical
treatment of specified disease or ailment, for
himself or any dependent.

18. AMOUNT OF DEDUCTION:
i) The amount paid OR Rs. 40,000 whichever is
less;
ii) Where the amount is paid in relation to a senior
citizen the deduction shall be allowed for the
amount paid or Rs. 60,000 whichever is less.
iii) Where the amount is paid in relation to a
Super senior citizen the deduction shall be allowed
for the amount paid or Rs. 80,000 whichever is
less.

19. • Following are the particulars of income of Mr. X for AY
2015-16
• Salary Income Rs. 250000
• Rental income received from House Property Rs. 36000
• Profit from business Rs. 220000
• During the PY, he paid by cheque Rs. 17000 premium
on health of himself and wife.
• The unmarried disabled sister is wholly dependent on
him and he spent Rs. 15000 on her treatment.
• His wife is suffering from cancer and he spent Rs. 30000
as her medical expenses on her treatment.
• Calculate the Total income of Mr. X for AY 2015-16.

20. DEDUCTION IN RESPECT OF INTEREST
ON LOAN TAKEN FOR HIGHER
EDUCATION – SECTION 80E
Deduction is available if:-
 Assessee is an individual.
 He has taken a loan from any bank, financial
institution or an approved charitable institution.
 The loan is taken for the purpose of pursuing
higher education. Such education must be of the
assessee himself, his spouse or his children.
 During the previous year, he has repaid some
amount as interest on such loan.

21. DEDUCTIONS FOR SOCIALLY
DESIRABLE ACTIVITIES
There are various funds created by Government
to take care of natural calamities like
earthquake, floods, etc. Similarly, certain funds
have been created to promote social & economic
welfare & education. To promote these funds and
for people to contribute liberally to these funds,
deduction has been provided in Section 80G for
donations given by assessee to these funds.

22. DONATION TO CERTAIN FUNDS,
CHARITABLE INSTITUTION ETC.
(SECTION 80G)
To encourage donations for social cause all
assessees are entitled to this deduction from their
gross total income, if the donation is made in the
previous year to the following funds or charitable
institutions. The donations can be categorized
into four categories depending on the quantum of
deduction.

23. LIST A
Donations made to the following are eligible
for 100% deduction
• Prime Minister’s National Relief Fund
• The Chief Minister’s Earthquake Relief Fund
• National Defence Fund
• The Africa Fund
• The National Foundation for Communal
Harmony

24. •Army Central Welfare Fund
•Indian Naval Fund
•The Air Force Central Welfare Fund
•National Children Fund
•National Blood Transfusion Council

25. LIST B
Donations made to the following are eligible
for 50% deduction
•Jawaharlal Nehru Memorial Fund
•Prime Minister’s Drought Relief Fund
•Indira Gandhi Memorial Trust
•The Rajiv Gandhi Foundation.

26. LIST C
Donations to the following are eligible for 100%
deduction subject to qualifying limit
1. Donations to the Government or a local
authority for the purpose of promoting family
planning
2. Sums paid by a company to Indian Olympic
Association

27. LIST D
Donations to the following are eligible for
50% deduction subject to the qualifying limit
• To State govt.
• To Local authority
• To Educational institutions
• To Charitable institutions
• To Sports institutions
• To place of art, worship or historical
importance

28. Amount of deduction
The quantum of deduction is as follows :-
Category A- 100 % of amount donated
Category B - 50 % of the amount donated in the
funds
Category C – 100% of the amount donated in
the funds subject to maximum limit of 10% of
Adjusted GTI.
Category D – 50% of the amount donated in the
funds subject to maximum limit of 10% of
Adjusted GTI.

29. Practical Problem - I
• Find out the eligible deductions under
section 80G
– Donation to PM National Relief Fund Rs. 10000
– Donation to temple (notified) Rs. 5000
– Donation to institution for the purpose of family
planning Rs. 11000
• The gross total income was Rs. 150000

30. Practical Problem - II
• Find out the eligible deductions under
section 80G
– Donation to National Children Fund Rs. 15000
– Donation to college (notified) for construction
of block Rs. 4000
– Donation to institution for the purpose of
family planning Rs. 10000
• The gross total income was Rs. 200000

31. Practical Problem - III
• GTI = 4000000
• The following donations are made in the PY 2014-15
– To PM National Relief Fund = 100000
– To National Defence Fund = 200000
– To Temple (notified) = 200000
– To local college for construction = 100000
– To poor student as aid = 10000
– To Municipal committee = 100000
– To PGI Chandigarh for family planning = 50000
– To CM Earthquake Relief Fund = 20000
• Calculate Total Income for AY 2015-16