Deductions section 80 d, 80-dd ,80-ddb 80-e and 80-gg of it act.bose

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Deductions section 80 d, 80-dd ,80-ddb 80-e and 80-gg of it act.bose

  1. 1. DEDUCTIONS Under Section 80-D,80-DD, 80-DDB, 80-C to 80-U 80-E,80-GG and 80-GGA of Income Tax Act, 1961 Shankar Bose Inspector of Income-tax MSTU, PuriINDEX
  2. 2. 12.0 Objectives12.1 Introduction12.2 Deductions from gross total income12.3 Basic rules governing deductions under sections 80C to 80U12.4 Deductions12.5 Deductions to encourage savings12.5.1 Deduction in respect of life insurance premium, etc.80C12.5.2 Deduction in respect of pension fund 80CCC12.5.3 Deduction in respect of contribution to pension scheme ofcentral government 80CCD12.6 Deductions for certain personal expenditure12.6.1 Deduction in respect of medical insurance premium 80D12.6.2 Deduction in respect of maintenance including medicaltreatment of dependent who is a person with disability - section80DD12.6.3 Deduction in respect of medical treatment - section 80DDB12.6.4 Deduction in respect of repayment of loan taken for highereducation - section 80E.12.6.5 Amount of rent paid - section 80GG12.7 Deductions for socially desirable activities12.7.1 Donation to certain funds, charitable institution etc.(section 80G)12.8 Deductions for persons with disability12.8.1 Deduction allowed to a person with disability - section 80U________________________________________________________________12.0 OBJECTIVESAfter studying the Unit you should be able to: List the deductions available from gross total income Know who is eligible for deduction List the conditions for claiming deduction Calculate the amount of each deduction_______________________________________________________12.1 INTRODUCTIONIndian tax laws contain certain provisions, which are intended to act as anincentive for achieving certain desirable socio-economic objectives. Theseprovisions are contained in Chapter VIA and are in the form of deductions(80C TO 80U) from the Gross Income. By reducing the chargeable income,these provisions reduce the tax liability, increase the post-tax income and thusinduce the tax-payers to act in the desired manner. This unit is intended togive a broad idea of such deductions._______________________________________________________________12.2 COMPUTATION OF NET INCOMETo compute the net income of the assessees, first of all we compute theincome under the five head. The provisions for the same have been alreadydiscussed in the previous units. The aggregate of income under each head isknown as “gross total income”. Certain deductions which are not deductibleunder any particular head of income are allowed out of gross total income toarrive at the total income liable to tax.Total income is accordingly computed as under:
  3. 3. 1. Income from salaries ___2. Income from House property ___3. Profits and Gains of Business and Profession ___4. Income from capital gains ___5. Income from other sources ___Gross Total Income = ____Less deduction under Chapter VI-A(80C TO 80U)(-) ------Total income ___These deductions are discussed in the following sections.12.3 BASIC RULESFollowing are the basic rules for deduction1.The aggregate amount of deductions under sections 80C to 80U cannotexceed gross total income(gross total income after excluding long termcapital gains, short term capital gain under section 111A, winnings fromlottery, crossword puzzles etc.)2.These deductions are to be allowed only if the assessee claims theseand gives the proof of such investments/ expenditure/ income.16712.4 CATEGORIES OF DEDUCTIONSThere are various kinds of deductions. Some of them are to encourage savings,some are for certain personal expenditure, a few are for socially desirableactivities, and some are for economic growth. For the sake of better understandingwe have categorized them into four kinds. They are To encourage savings For certain personal expenditure For socially desirable activities For physically disabled personsWe will be discussing them one by one__________________________________________________________________12.5 DEDUCTIONS TO ENCOURAGE SAVINGSThe government wants to encourage the habit of people to save for the rainy day.To give impetus to savings these deductions are given on certain investments orcertain expenditure made by the assessee. Deduction is allowed when the savingis invested but normally any withdrawal is treated as income in the year ofwithdrawal.________________________________________________________________12.5.1 DEDUCTION IN RESPECT OF LIFE INSURANCEPREMIA, ETC. (SEC. 80C)A new section 80C has been inserted from the assessment year 2006-07 onwards.Section 80C provides deduction in respect of certain expenditure/ investments(which are specified in this section) paid or deposited by the assessee in theprevious year.Deduction under this section is available only to individual & Hindu UndividedFamily.Gross Qualifying AmountThe following payments/investments qualify for deduction under this section.The total amount of investments made during the P.Y. under these belowmentioned schemes is known as Gross Qualifying Amount ( GQA )1.Life Insurance premium paid on a policy taken on his own life, life of the spouseor any child (child may be dependent/ independent ). In the case of a Hinduundivided family, policy may be taken on the life of any member of the family.
  4. 4. The premium paid should be maximum of 20% of sum assured .2. Any sum deducted from salary payable to a Government employee for thepurpose of securing him a deferred annuity (subject to a maximum of 20% ofsalary)3. Contribution towards statutory provident fund and recognized provident fund.4. Contribution towards 15 year public provident fund (maximum of Rs 70,000).5. Contribution towards an approved superannuation fund6. Subscription to National Savings Certificates, VIII Issue .7. Contribution for participating in the Unit-Linked Insurance Plan (ULIP) of UnitTrust of India..8. Contribution for participating in the unit-linked insurance plan (ULIP) of LICMutual Fund (i.e. Dhanraksha plan of LIC Mutual Fund)9.Payment for notified annuity plan of LIC (i.e. Jeevan Dhara, Jeevan AkshayNew Jeevan Dhara ,etc ) or any other insurer.10. Subscription towards notified units of Mutual Fund or UTI11. Contribution to notified pension fund set up by Mutual Fund or UTI .12. Any sum paid (including accrued interest) as subscription to Home LoanAccount Scheme of the National Housing Bank13. Any sum paid as tuition fees to any university/college/educational institutionin India for full time education.Amount of deductionWe add the amounts invested / spent in above mentioned schemes and this amountis known as Gross qualifying amount. The amount deductible isa) Gross qualifying amount; orb) Rs 1,00,000Whichever is less__________________________________________12.5.2 DEDUCTION IN RESPECT OF PENSION FUND(SEC. 80CCC)If the following conditions are fulfilled an assessee may claim deduction under thissection The taxpayer is an individual During the previous year, he has paid/deposited a sum under an annuityplan of the Life Insurance Corporation of India or any other insurer forreceiving pension. If deduction has not been claimed under section 80C.Amount of deductionIf the aforesaid conditions are satisfied, thena) the amount depositedNote:-The maximum deduction under sections 80C, 80CCC and 80CCDis Rs 1,00,000.b) or Rs. 10,000,whichever is lower, is deductible.Tax treatment of pension receivedThe pension amount received by the assessee or his nominee as pensionwill be taxable in the year of the receipt.________________________________________________________________12.5.3 DEDUCTION IN RESPECT OF CONTRIBUTIONTO PENSION SCHEME OF CENTRAL GOVERNMENT
  5. 5. (SEC. 80CCD)This section is for allowing deduction to new central Government employees, ifthe following conditions are satisfied: The taxpayer is an individual He is employed by the Central Government on or after January 1, 2004. He has in the previous year paid or deposited any amount in his accountunder a pension scheme notified by the Central Government.Amount of DeductionThe amount deductible isa) The total employee’s contribution and employer’s contribution to thenotified pension scheme during the year.b) Or 10% of salary of the employee.Whichever is lessThe aggregate amount of deduction under sections 80C, 80CC and 80CCDcannot exceed Rs. 1,00,000.CHECK YOUR PROGRESSActivity AState True or FalseSalary means basic salary including dearness allowance if under the terms ofemployment.Note;-The aggregate deduction under sections 80C, 80CCC and 80CCD cannotexceed Rs.1, 00,000.a) Contribution towards Public Provident Fund qualifies for deduction underSection 80 C.b) The aggregate of investments made in schemes qualifying for deduction underSection 80 C is known as Gross Total Incomec) The aggregate amount of deduction under section 80 C, 80 CCC & 80CCDcannot exceed Rs1, 50,000.d)The maximum deduction under section 80 CCD in respect of pension scheme ofCentral Government is 10% of salary.________________________________________________________________12.6DEDUCTIONS FOR CERTAIN PERSONALEXPENDITURE________________________________________________________________Under Section 80-D, 80-DD ,80-DDB 80-E and 80-GG of IT Act 1961 somedeductions are allowed in respect of personal expenditure such as MedicalInsurance, Medical treatment of handicapped dependent, etc. These deductions areallowed to give impetus to threshold areas like education ,health & housing. Let usnow discuss them one by one.12.6.1 DEDUCTION IN RESPECT OF MEDICALINSURANCE PREMIA SEC 80DIf the following conditions are satisfied then an assessee may claim deductionunder this section. The taxpayer is an individual or a Hindu undivided family . Insurance premium is paid by the taxpayer in accordance with thescheme framed in this behalf by the General Insurance Corporation ofIndia and approved by the Central Government. The scheme is knownas “mediclaim” insurance policy.( The amount deposited in a similarscheme of any other insurer who is approved by the Insurance
  6. 6. Regulatory and Development Authority shall also be eligible fordeduction.) The aforesaid premium is paid by cheque Mediclaim policy is taken on the health of the taxpayer, on the health ofspouse, dependent parents or dependent children of the taxpayer. Incase of HUF on the health of any member of the familyAmount of Deduction:If all the aforesaid conditions are satisfied, then thea) insurance premium paidb) or Rs. 10,000whichever is lower, is deductible.The aforesaid limit has been increased to Rs. 15,000 where the assessee or spouseor dependent parents or any member of the family is a senior citizen (i.e. one whois resident and at least of 65 years of age at any time during the previous year) andmedical insurance is taken for such senior citizen.________________________________________________________________12.6.2 DEDUCTION IN RESPECT OF DEPENDENTRELATIVE SECTION 80 DDFollowing are the provisions under this section: This deduction is available to only Individuals and HUF, who is residentin India. This deduction is given to the assessee if a person with disability isdependent upon him. A person with disability means disabilities like autism, cerebral palsy,mental retardation, etc. as specified in Persons with Disabilities Act 1995. The assessee has incurred expenditure by way of medical treatment(including nursing), training and rehabilitation of a disabled dependent:or/and He has paid or deposited any amount under any scheme framed by theLIC of India or any other insurer for the payment of an annuity or a lumpsum amount for the benefit of such dependent in the event of the death ofthe assessee. For claiming the deduction the assessee shall have to furnish a certificateby the prescribed medical authority with the return of income.Amount of DeductionIf the above mentioned conditions are satisfied the amount of deduction is fixed atRs. 50,000 irrespective of actual expenditure.In case of a person with severe disability (over 80 %) a higher deduction of Rs.75,000 shall be allowed irrespective of actual expenditure.Illustration 12.1During the P.Y. 2005-06, the gross total income of Mr. X is Rs 4,00,000. Duringthe P.Y. he pays the following premiums on Mediclaim insurance policy bycheque. Calculate the amount of tax benefit under section 80 D.Explanation: Dependent meansi) In case of an individual, the spouse children, parents, brothers, sisters of theindividual or any of them.ii) In case of HUF, a member of the HUF wholly or mainly dependent on suchindividual or HUF for support and maintenance.Amount (in Rs)1. Mr. X 6,000
  7. 7. 2. Mrs. X 4,0003. Son (not dependent) 3,0004. Daughter (dependent) 2,0005. Father (not dependent) 1,5006. Mother (dependent) (age 68 years & resident in India) 2,000SolutionThe insurance premium paid for son and father will not qualify for deductionunder section 80 D as they are not dependent upon Mr. X.Amounts qualifying for deduction are:-Amount (in Rs)Mr. X 6,000Mrs. X 4,000Daughter 2,000Total 12,000 ( limited to 10,000)Additional deduction for mother 2,000Hence total deduction under section 80 D is Rs (10,000 + 2,000) = Rs 12,000CHECK YOUR PROGRESSActivity BX is a resident individual. During the P.Y. 2005-06 he spends Rs 25,000 towardsmedical treatment of his father who is wholly dependent upon him. The disabilityis one which comes under Persons with Disability Act, 1995. A copy of certificateis also submitted. Determine the amount of deduction under section 80DD for theA.Y. 2006-07.---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------___________________________________________12.6.3 DEDUCTION IN RESPECT OF MEDICALTREATMENT SECTION 80DDBDeduction is available if following are satisfied Assessee is an individual or HUF resident in India. The assessee has actually paid for the medical treatment of specifieddisease or ailment, for himself or any dependent* or in case of HUF anymember of the family. The assessee furnishes a certificate, in the prescribed form from prescribedauthority, along with the return of income.Amount of deductioni) a) The amount paidb)or Rs. 40,000whichever is less;ii) Where the amount is paid in relation to a senior citizen the deduction shall beallowed for the amount paid or Rs. 60,000 whichever is less.iii)The deduction shall be reduced by the amount received, if any, under aninsurance from an insurer for the medical treatment of person mentioned in thissection or reimbursed by the employer.* The definition of ‘Dependent’ is the same as in the above section._______________________________________
  8. 8. 12.6.4 DEDUCTION IN RESPECT OF REPAYMENT OFLOAN TAKEN FOR HIGHER EDUCATION - SECTION80EDeduction is available if:- Assessee is an individual. He has taken a loan from any financial institution (bank) or an approvedcharitable institution. The loan is taken is for the purpose of pursuing his higher education. During the previous year he has repaid some amount as interest on suchloan. Such amount is paid out of his income chargeable to tax.Amount of deduction a) The entire amount paid by way of interest on such loanb)or Rs.40,000whichever is less is deductible in this section.Period of DeductionFurther, the deduction shall be allowed for the previous year in which theassessee starts repaying the loan or interest thereon and seven previous yearsimmediately succeeding it or until the loan together with interest thereon ispaid by the assessee in full ,whichever is earlier.Higher education means full-time studies for any graduate or post-graduatecourse in engineering, medicine, management or for post-graduate course inapplied science or pure sciences including mathematics and statistics.___________________________________________12.6.5 AMOUNT OF RENT PAID - SECTION 80GGThis deduction is allowed to an individual assessee in respect of rent paid by himfor an accommodation used for his residential purposes provided the followingconditions are fulfilled: The assessee is either a self-employed person or such a salaried employee whois not in receipt of house-rent allowance from any source. The actual rent paid by him is in excess of 10% of his total income. He or his spouse or minor children or the HUF, of which he is a member, donot own any residential accommodation at the place where the assesseeresides, performs the duties of his office or employment or carries on hisbusiness or profession. Where, however, the assessee owns any residentialaccommodation at any other place and claims the concessions of self-occupiedhouse property for the same, he will not be entitled to any deduction u/s 80GGeven if he does not own any residential accommodation at the place where heordinarily resides, performs the duties of his office or employment or carrieson his business or profession. The assessee files a declaration in Form No. 10BA regarding the payment ofrent.Amount of DeductionThe assessee, who fulfils the above mentioned conditions, is allowed a deductionequal to least of the following three: 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.Illustration 12.2:
  9. 9. A’s gross total income is Rs. 1,80,000. Deductions allowed u/s 80D and 80C areRs. 9,000 and Rs. 12,000 respectively. He pays a rent of Rs. 3,500 p.m. for aNote:Deduction under this section can be claimed even if accommodation atconcessional rent is provided by the employer. In such a case the deduction willbe given if the actual rent paid by the employee exceeds 10% of his totalincome. Where a rent-free house is provided to the employee, no deduction willbe allowed under this section.Adjusted Gross Total income( Adj.GTI) for this purpose means his grosstotal income minus long-term capital gain, short term capital gain taxable u/s111A, and all deductions u/s 80CCC to 80U except any deduction under thissection.three-roomed set. He does not own any residential accommodation. Compute histotal income for the assessment year 2006-2007.SolutionRs. Rs.Gross total income 1,80,000Less: Deduction u/s80D - MIP etc. 9,00080C – Insurance etc. 12,00080GG - Rent Paid 24,000 45,000Total Income 1,35,000Note:Adj. GTI = Rs [1,80,000 ( GTI) – 9,000 (80D) -12,000 (80C) ] = Rs. 1,59,000Deductions u/s 80GG will be the least of the following:i) Rs. 2,000 p.m. Rs.24,000ii) Rent paid (Rs 42,000) - 10% of Adj.GTI ( Rs. 1,59,000) Rs.26,100iii) 25% of Adj. GTI (Rs, 1,59,000) Rs 39,750Rs. 24,000 is the least, hence, deductible________________________________________________________________12.7 DEDUCTIONS FOR SOCIALLY DESIRABLEACTIVITIESThere are various funds created by Governments to take care of natural calamitieslike earthquake, floods, etc. Similarly certain funds have been created to promotesocial & economic welfare, & education. To promote these funds and so thatpeople contribute liberally to these funds, deduction has been provided in Section80G for donations given by assessee to these funds.___________________________________________12.7 .1 DONATION TO CERTAIN FUNDS,CHARITABLE INSTITUTION ETC. (SECTION 80G)To encourage donations for social cause all assessees are entitled to this deductionfrom their gross total income, if the donation is made in the previous year to thefollowing funds or charitable institutions. For the sake of convenience we havedivided the donations into four categories depending on the quantum ofdeduction.A. Donations made to following are eligible for 100% deduction without anyqualifying limit.1. Prime Minister’s National Relief Fund2. National Defence Fund3. Prime Minister’s Armenia Earthquake Relief Fund
  10. 10. 4. The Africa (Public Contribution - India) Fund5. The National Foundation for Communal Harmony6. Approved university or educational institution of nationaleminence7. The Chief Minister’s Earthquake Relief Fund, Maharashtra8. Donations made to Zila Saksharta Samitis.9. The National Blood Transfusion Council or a State BloodTransfusion Council.10. The Army Central Welfare Fund or the Indian Naval BenevolentFund or The Air Force Central Welfare Fund.B) Donations made to the following are eligible for 50% deduction withoutany qualifying limit.1. Jawaharlal Nehru Memorial Fund2. Prime Minister’s Drought Relief Fund3. National Children’s Fund4. Indira Gandhi Memorial Trust5. The Rajiv Gandhi Foundation.C) Donations to the following are eligible for 100% deduction subject toqualifying limit (i.e. 10% of adjusted gross total income).1. Donations to the Government or a local authority for the purposeof promoting family planning.2. Sums paid by a company to Indian Olympic AssociationD) Donations to the following are eligible for 50% deduction subject tothe qualifying limit (i.e. 10% of adjusted gross total income).1. Donation to the Government or any local authority to be utilizedby them for any charitable purposes other than the purpose ofpromoting family planning.Amount of deductionThe quantum of deduction is as follows :-Category A- 100 % of amount donatedCategory B -50 % of the amount donated in the fundsCategory C – 100% of the amount donated in the funds subject to maximum limitof 10% of Adjusted GTI.Category D – 50% of the amount donated in the funds subject to maximum limitof 10% of Adjusted GTI.The total of these deductions under categories A,B,C, & D is the quantum ofdeduction under this section without any maximum amount.Adjusted gross Total income for this purpose means his gross total incomeminus long-term capital gain, short term capital gain taxable u/s 111A, andall deductions u/s 80CCC to 80U except any deduction under this section.Illustration 12.3 : X, an Indian citizen gives the following particulars of hisincome and expenditure for the previous year 2005-2006.Rs.Business income 1,10,000Long term capital gain 2,00,000Short term capital gain on sale of shares taxable u/s 111A 10,000Other short-term capital gain 5,000Donation to the Prime Minister’s National Relief Fund 11,000Donation to the Government of India for promotion offamily planning 3,000Donation to an approved institution 12,000Payment of medical insurance premium on own life 5,000Determine the net income X for the assessment year 2006-2007
  11. 11. Solution:Computation of Total Income of XRs.Business Income 1,10,000Capital gain: Long-term 2,00,000Short-term u/s 111A 10,000Other short-term 5,000________Gross Total Income 3,25,000Deduction u/s 80D 5,000Less: Deduction: u/s 80G 18,000 23,000Total Income 3,02,000Note:Deduction u/s 80G is computed as under:A Donation to PMNRF fully qualifies for deductionand the rate of deduction is 100% 11,000Qualifying amount of donations for family planning and ApprovedInstitution cannot exceed 10%of Adjusted gross total income[i.e. 3,25,00 - 2,00,000(LTCG) - 10,000(STCG) - 5,000( 80 D)] ofRs. 1,10,000 = Rs. 11,000C Deduction on donation for family planningon Rs. 3,000 @ 100% 3,000D Deduction on other donation Rs.8,000 @ 50% 4,000Total 18,000CHECK YOUR PROGRESSActivity CThe gross total income of Mr. Ram Lal is Rs. 2,00,000. The total deductionsunder Sections 80C to 80U except 80G is Rs. 20,000. He has paid the followingsums to certain funds and charitable institutions:(i) Indira Gandhi Memorial Trust Rs. 5,000 (ii) Delhi MunicipalCorporation to be utilized for promoting family planning Rs. 20,000Compute deduction u/s 80G regarding donations.(Ans. Rs. 21,500 )------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------12.8 DEDUCTION ALLOWED TO A PERSONWITH DISABILITY - SECTION 80UTo help a disabled person by reducing his tax burden, this section has beenincorporated. Following are the provisions. The assessee is an individual being a resident He is a person with disability. He is certified by the medical authority to be a person with disability, at anytime during the previous year. He furnishes a certificate issued by the medical authority in the prescribedform along the return of incomeAmount of deductionA fixed deduction of
  12. 12. Rs. 50,000 in case of a person with disabilityRs. 75,000 in case of a person with severe disability.( having anydisability over 80%)CHECK YOUR PROGRESSActivity DTulsi is a person with disability. He submits the following particulars of hisincome for the previous year 2005-2006.Rs.Business Income 1,10,000Long Term Capital Gains 1,20,000Lottery Winning (gross) 80,000During the year he paid Rs. 12,000 (through crossed cheque) as medical insurancepremium for self and deposited Rs. 5,000 in public provident fund.Compute his total income for the assessment year 2006-07(Ans. Total Income Rs 2,45,000)12.9 SUMMARYUnder the income tax act first of all income under each head is computed. Theaggregate of income under each head is known as ‘Gross Total Income’. Out ofthis gross total income certain deductions are allowed which are in the nature ofincentives aimed at achieving certain socio economic objectives. The income aftersuch deductions is called ‘Total Income’.These deductions are either for certain savings or for certain personal expenditure.Saving based deductions are 80-C ( certain investments towards LIC, PF, etc)80CCC( pension fund), 80CCD( Pension scheme of central Government).Deductions based on personal expenditure are 80D( Medical insurance),80DD(Medical treatment of disable dependent) 80DDB( Medical treatment ofspecified disease) 80E ( Repayment of loan taken for higher education) and80GG(Deduction for rent paid).Certain deductions are for socially desirableactivities like 80 G for donations to certain funds , charitable institutions, etc.There is a special deduction for a person with disability under section 80UOne important point to remember is that the total of all deductions under thesesections 80C to 80U cannot exceed the gross total income.12.8 GLOSSARYDeductions: Permissible amount under sections 80C to 80U by which the grosstotal income is reduced to arrive at the total income liable to tax.Contribution : To give money towards a particular aim or purposeSubscription: To pay to an organization to receive a productAccrued: Increase in amount over a period of timeAggregate: Formed by adding together several amountsNominee : Person officially given a position or jobAutism: a failure to develop social abilities language and other communicationskills to the usual levelCerebral palsy :Physical condition involving permanent tightening of themuscles which is caused by damaging of the brainRehabilitation: To return to a good healthy conditionPre-decease: when a person dies before the other personDonation: To give without wanting anything in exchange__________________________________________________________________12.9 SELF ASSESSMENT EXERCISEQ1. Fill in the blanks
  13. 13. i) Repayment of loan for higher studies under section 80E is allowed to the extentof Rs ---------- every year for ----- years.ii) The maximum deduction u/s 80GG shall be limited to Rs---------- p.m.iii) Deduction under 80D in respect of medical insurance premia is allowed to an------------------ or ---------------.iv) Deduction under section 80CCC is allowed to the extent of Rs------------.v) Deduction under section 80G in respect of donations is allowed to --------------.Q2. Match the followingTable A Table Bi) 80C a) Deduction allowed to a person with disabilityii)80G b) Deduction for repayment of loan for higherstudiesiii)80U c) Deduction in respect of medical treatment of aspecified diseaseiv)80DDB d) Deduction in respect of LIC premia ,etcv)80E e) Deduction in respect of certain donations tocertain funds/ charitable institution ,etcQ3. Write short notes on:(a) Deduction under section 80GG in respect of amount of rent paid(b) Deduction u/s 80DD in respect of medical treatment of dependent who is aperson with disability.___________________________________________12.10 SUGGESTED READINGS1.Bhagwati Prasad, Law and practice of Income Tax, NavamanPrakashan, Aligarh.2. Mahesh Chandra & S.P. Goyal, Income Tax Law and practice,Himalaya Publishing House, Delhi3. Vinod K. Singhania, Monica Singhania, Students Guide to Income Tax,Taxmann Publications Private Ltd.4. Girish Ahuja & Ravi Gupta, Simplified Approach to Income Tax andSales Tax, Sahitya Bhawan Publishers and Distributors Ltd., Agra5.Dinkar Pagare, Law and practice of income tax, Sultan Chand andSons DEDUCTION UNDER SECTION 80G & 80GGA Relevant Sections of the Income Tax Act • Sec 80 G Deduction in respect of donations to certain funds, charitable institutions, etc • Sec 80GGA Deduction In Respect Of Certain Donations For Scientific Research Or Rural Development Sec 80 G Deduction in respect of donations to certain funds, charitable institutions, etc. (1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section,- (i) in a case where the aggregate of the sums specified in sub-section (2) includes any sum or sums of the nature specified in sub-clause (iiia) or in sub-clause (iiiaa) or in sub-clause (iiiab) or in sub-clause (iiie) or in sub-clause (iiif) or in sub-clause (iiig) or in sub- clause(iiiga)or sub-clause (iiih) or sub-clause (iiiha) or sub-clause (iiihb) or sub-clause
  14. 14. (iiihc) or sub-clause (iiihd) or sub-clause (iiihe) or sub-clause (iiihf) or sub-clause (iiihg) orsub-clause (iiihh) sub-clause (iiihi) or sub-clause (iiihj) or in sub-clause (vii) of clause (a) orin clause (c) or in clause (d) thereof, an amount equal to the whole of the sum or, as thecase may be, sums of such nature plus fifty per cent. of the balance of such aggregate; and(ii) in any other case, an amount equal to fifty per cent. of the aggregate of the sumsspecified in sub-section (2).(2) The sums referred to in sub-section (1) shall be the following, namely:-(a) any sums paid by the assessee in the previous year as donations to-(i) the National Defence Fund set up by the Central Government; or(ii) the Jawaharlal Nehru Memorial Fund referred to in the Deed of Declaration of Trustadopted by the National Committee at its meeting held on the 17th day of August, 1964; or(iii) the Prime Ministers Drought Relief Fund; or(iiia) the Prime Ministers National Relief Fund; or(iiiaa) the Prime Ministers Armenia Earthquake Relief Fund; or(iiiab) the Africa (Public Contributions - India) Fund; or(iiib) the National Childrens Fund; or(iiic) the Indira Gandhi Memorial Trust, the deed of declaration in respect whereof wasregistered at New Delhi on the 21st day of February, 1985; or(iiid) the Rajiv Gandhi Foundation, the deed of declaration in respect whereof wasregistered at New Delhi on the 21st day of June, 1991; or(iiie) the National Foundation for Communal Harmony; or(iiif) a University or any educational institution of national eminence as may be approved bythe prescribed authority in this behalf; or(iiig) the Maharashtra Chief Ministers Relief Fund during the period beginning on the 1stday of October, 1993, and ending on the 6th day of October, 1993 or to the Chief MinistersEarthquake Relief Fund, Maharashtra; or(iiiga) any fund set up by the State Goverment of Gujarat exclusively for providing relief tothe victims of earthquake in Gujarat; or(iiih) any Zila Saksharta Samiti constituted in any district under the chairmanship of theCollector of that district for the purposes of improvement of primary education in villagesand towns in such district and for literacy and post-literacy activities.Explanation: For the purposes of this sub-clause, "town" means a town which has apopulation not exceeding one lakh according to the last preceding census of which therelvant figures have been published before the first day of the previous year; or(iiiha) the National Blood Transfusion Council or to any State Blood Transfusion Councilwhich has its sole object the control, supervision, regulation or encouragement in India ofthe services related to operation and requirements of blood banks.Explanation: For the purposes of this sub-clause,-(a) "National Blood Transfusion Council" means a society registered under the SocietiesRegistration Act, 1860 (21 of 1860) and has an officer not below the rank of an AdditionalSecretary to the Government of India dealing with the AIDS Control Project as itsChairman, by whatever name called;(b) "State Blood Transfusion Council" means a society registered, in consultation with theNational Blood Transfusion Council, under the Societies Registration Act, 1860 (21 of 1860)or under any law corresponding to that Act in force in any part of India and has Secretaryto the Government of that State dealing with the Department of Health, as its Chairman, bywhatever name called; or(iiihb) any fund set up by a State Government to provide medical relief to the poor; or(iiihc) the Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air ForceCentral Welfare Fund established by the armed forces of the Union for the welfare of thepast and present members of such forces or their dependants; or(iiihd) The Andhra Pradesh chief Ministers cyclone Relief Fund 1996; or(iiihe) the National Illness Assistance Fund; or(iiihf) the Chief Ministers Relief Fund or the Lieutenant Governors Relief Fund in respect ofany State or Union territory, as the case may be:Provided that such Fund is-(a) the only Fund of its kind established in the State or the Union territory, as the case maybe;(b) under the overall control of the Chief Secretary or the Department of Finance of theState or the Union territory, as the case may be;(c) administered in such manner as may be specified by the State Government or the
  15. 15. Lieutenant Governor, as the case may be; or(iiihg) the National Sports Fund to be set up by the Central Government; or(iiihh) the National Cultural Fund set up by the Central Government; or(iiihi) the Fund for Technology Development and Application set up by the CentralGovernment; or(iiihj) the National Trust for Welfare of Persons with Autism, Cerebral Palsy, MentalRetardation and Multiple Disabilities constituted under sub-section (1) of section 3 of theNational Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation andMultiple Disabilities Act, 1999 (44 of 1999); or(iv) any other fund or any institution to which this section applies; or(v) the Government or any local authority, to be utilised for any charitable purpose otherthan the purpose of promoting family planning; or(vi) any authority referred to in clause (20A) of section 10; orThe following sub-clause (vi) shall be substituted for the existing sub-clause (vi) in clause(a) of sub-section (2) of section 80G by the Finance Act, 2002, w.e.f. 1-4-2003:(vi) an authority constituted in India by or under any law enacted either for the purpose ofdealing with and satisfying the need for housing accommodation or for the purpose ofplanning, development or improvement of cities, towns and villages, or for both;(via) any corporation referred to in clause (26BB) of section 10; or(vii) the Government or to any such local authority, institution or association as may beapproved in this behalf by the Central Government, to be utilised for the purpose ofpromoting family planning;(b) any sums paid by the assessee in the previous year as donations for the renovation orrepair of any such temple, mosque, gurdwara, church or other place as is notified by theCentral Government in the Official Gazette to be of historic, archaeological or artisticimportance or to be a place of public worship of renown throughout any State or States.(c) any sums paid by the asseessee, being a company, in the previous year as donations tothe Indian Olympic Association or to any other association or institution as notified by theCentral Government under clause (23) of section 10 for-(i) the development of infrastructure for sports and games; or(ii) the sponsorship of sports and games, in India.(d) any sum paid by the assessee, during the period beginning on the 26th day of january,2001 and ending on the 30th day of september, 2001, to any trust, institution or fund towhich this section applies for providing relief to the vicitms of earthquake in Gujarat.(4) Where the aggregate of the sums referred to in sub-clauses (iv), (v), (vi), (via) and (vii)of clause (a) and in clauses (b) and (c) of sub-section (2) exceeds ten per cent. of the grosstotal income (as reduced by any portion thereof on which income-tax is not payable underany provision of this Act and by any amount in respect of which the assessee is entitled to adeduction under any other provision of this Chapter), then the amount in excess of ten percent. of the gross total income shall be ignored for the purpose of computing the aggregateof the sums in respect of which deduction is to be allowed under sub-section (1).(5) This section applies to donations to any institution or fund referred to in sub-clause (iv)of clause (a) of sub-section (2), only if it is established in India for a charitable purpose andif it fulfils the following conditions, namely:- i. where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of section 11 and section 12 or clause (23) or clause (23AA) or clause (23C) of section 10: Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11 shall not apply in relation to such income, if- a. the institution or fund maintains separate books of account in respect of such business; b. the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and c. the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business; ii. the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer
  16. 16. or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose; iii. the institution or fund is not expressed to be for the benefit of any particular religious community or caste; iv. the institution or fund maintains regular accounts of its receipts and expenditure; v. the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India or under section 25 of the Companies Act, 1956 (1 of 1956), or is a University established by law, or is any other educational institution recognised by the Government or by a University established by law, or affiliated to any University established by law, or is an institution approved by the Central Government for the purposes of clause (23) of section 10, or is an institution financed wholly or in part by the Government or a local authority; and vi. in relation to donations made after the 31st day of March, 1992, the institution or fund is for the time being approved by the Commissioner in accordance with the rules made in this behalf:Provided that any approval shall have effect for such assessment year or years, notexceeding five assessment years, as may be specified in the approval.(5A) Where a deduction under this section is claimed and allowed for any assessment yearin respect of any sum specified in sub-section (2), the sum in respect of which deduction isso allowed shall not qualify for deduction under any other provision of this Act for the sameor any other assessment year.(5B) Notwithstanding anything contained in clause (ii) of sub-section (5) and Explanation 3,an institution or fund which incurs expenditure, during any previous year, which is of areligious nature for an amount not exceeding five per cent. of its total income in thatprevious year shall be deemed to be an institution or fund to which the provisions of thissection apply.(5C) This section applies in relation to amounts referred to in clause (d) of sub-section (2)only if the trust or institution or fund is established in India for a charitable purpose and itfulfils the following conditions, namely: i. it is approved in terms of clause (vi) of sub-section(5); ii. it maintains seperate accounts of income and expenditure for providing relief to the victims of earthquakes in Gujarat; iii. the donations made to the trust or institution fund are applied only for providing relief to the earthquake victims of Gujarat on or before the 31st day of March, 2003; iv. the amount of donation remaining unutilised on the 31st day of March, 2003 is transferred to the Prime Ministers National Relief Fund on or before the 31st day of March, 2003; v. it renders accounts of income and expenditure to such authority and in such manner as may be prescribed, on or before the 30th day of June, 2003.Explanation 1: An institution or fund established for the benefit of Scheduled Castes,backward classes, Scheduled Tribes or of women and children shall not be deemed to be aninstitution or fund expressed to be for the benefit of a religious community or caste withinthe meaning of clause (iii) of sub-section (5).Explanation 2: For the removal of doubts, it is hereby declared that a deduction to whichthe assessee is entitled in respect of any donation made to an institution or fund to whichsub-section (5) applies shall not be denied merely on either or both of the followinggrounds, namely:- (i) that, subsequent to the donation, any part of the income of theinstitution or fund has become chargeable to tax due to non-compliance with any of theprovisions of section 11, section 12 or section 12 A; (ii) that, under clause (c) of sub-section (1) of section 13, the exemption under section 11 or section 12 is denied to theinstitution or fund in relation to any income arising to it from any investment referred to inclause (h) of sub-section (2) of section 13 where the aggregate of the funds invested by itin a concern referred to in the said clause (h) does not exceed five per cent. of the capitalof that concern.Explanation 3: In this section, "charitable purpose" does not include any purpose thewhole or substantially the whole of which is of a religious nature.Explanation 4: For the purposes of this section, an association approved by the CentralGovernment for the purposes of clause (23) of section 10 shall also be deemed to be aninstitution, and every association or institution approved by the Central Government for the
  17. 17. purposes of the said clause shall be deemed to be an institution established in India for acharitable purpose.The following Explanation 4 shall be substituted for the existing Explanation 4 to section80G by the Finance Act, 2002, w.e.f. 1-4-2003:Explanation 4: For the purposes of this section, an association or institution having as itsobject the control, supervision, regulation or encouragement in India of such games orsports as the Central Government may, by notification in the Official Gazette, specify in thisbehalf, shall be deemed to be an institution established in India for a charitable purpose.Explanation 5: For the removal of doubts, it is hereby declared that no deduction shall beallowed under this section in respect of any donation unless such donation is of a sum ofmoney. Sec 80GGADeduction In Respect Of Certain Donations For Scientific Research Or RuralDevelopment 1. In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2). 2. The sums referred to in sub-section (1) shall be the following, namely:- (a) any sum paid by the assessee in the previous year to a scientific research association which has as its object the undertaking of scientific research or to a University, college or other institution to be used for scientific research: Provided that such association, University, college or institution is for the time being approved for the purposes of clause (ii) of sub-section (1) of section 35; (aa) any sum paid by the assessee in the previous year to a university, college or other institution to be used for research in social science or statistical research : Provided that such university, college or institution is for the time being approved for the purposes of clause (iii) of sub-section (1) of section 35; (b) any sum paid by the assessee in the previous year- i. to an association or institution, which has as its object the undertaking of any programme of rural development, to be used for carrying out any programme of rural development approved for the purposes of section 35 CCA; or ii. to an association or institution which has as its object the training of persons for implementing programmes of rural development: Provided that the assessee furnishes the certificate referred to in sub-section (2) or, as the case may be, sub-section (2A) of section 35 CCA from such association or institution; (bb) any sum paid by the assessee in the previous year to a public sector company or a local authority or to an association or institution approved by the National Committee, for carrying out any eligible project or scheme: Provided that the assessee furnishes the certificate referred to in clause (a) of sub- section (2) of section 35 AC from such public sector company or local authority or, as the case may be, association or institution. Explanation: For the purposes of this clause, the expressions "National Committee" and "eligible project or scheme" shall have the meanings respectively assigned to them in the Explanation to section 35 AC; (c) any sum paid by the assessee in the previous year to an association or institution, which has as its object the undertaking of any programme of conservation of natural resources or of afforestation, to be used for carrying out any programme of conservation of natural resources or of afforestation approved for the purposes of section 35 CCB: Provided that the association or institution is for the time being approved for the purposes of sub-section (2) of section 35 CCB; (cc) any sum paid by the assessee in the previous year to such fund for afforestation as is notified by the Central Government under clause (b) of sub- section (1) of section 35 CCB; (d) any sum paid by the assessee in the previous year to a rural development fund set up and notified by the Central Government for the purposes of clause (c) of sub-
  18. 18. section (1) of section 35 CCA. (e) any sum paid by the assessee in the previous year to the National Urban Poverty Eradication Fund set up and notified by the Central Government for the purposes of clause (d) of sub-section (1) of section 35 CCA.3. Notwithstanding anything contained in sub-section (1), no deduction under this section shall be allowed in the case of an assessee whose gross total income includes income which is chargeable under the head "Profits and gains of business or profession".4. Where a deduction under this section is claimed and allowed for any assessment year in respect of any payments of the nature specified in sub-section (2), deduction shall not be allowed in respect of such payments under any other provision of this Act for the same or any other assessment year. Thanks

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