Q.) Can an assessee claim deduction in respect of contributions made to a pension fund? [Section 80CCC]

A. An individual assessee,(resident or non resident,indian citizen or foreign citizen) with effect from assessment year 1997-98, can claim a deduction for any amount paid or deposited by him in any annuity plan of the Life Insurance Corporation of India for receiving pension from a fund set up by the said corporation, referred to in section 10(23AAB). The deduction is restricted to a maximum of Rs. 10,000. Provided that:
1. Where the assessee or his nominee surrenders the annuity before the maturity date of such annuity, the surrender value shall be taxable in the hands of the assessee or his nominee, as the case may be, in the year of receipt.
2. The amount received by the assessee or his nominee as pension will be taxable, in the hands of the assessee or his nominee, as the case may be, in the year of receipt.
3. Rebate (with reference to the amount under section 80CCC) will not be available under section 88 to the persons to whom the deduction under this section has been allowed.

Q.) Can an assessee claim deduction for premia paid for medical insurance?

A. An assessee under section 80D is entitled to a deduction upto Rs. 10,000 a year in respect of the premium paid by him/her by cheque for insurance:

1. on his health or on the health of his spouse or dependent parents or children, and
2. in case of a Hindu undivided family on the health of any member of such family

The amount of deduction will be restricted to the actual amount paid during the previous year or Rs. 25,000,(Rs 40000 w.e.f. A/Y2001-02) whichever is lower.

 
Q. Can an assessee claim deduction in respect of donations made by him to certain funds, charitable institutions, etc. [section 80G]?

A. Any taxpayer can claim a deduction under section 80G in respect of donations made to certain funds, charitable institutions. The amount of deduction allowed is calculated in the following manner:

Step 1: calculate the Gross Qualifying Amount – This is the aggregate of all the donations made to any of the institutions/funds as mentioned in the approved list. Donations made in kind shall not be included.

Step 2: calculate the Net Qualifying Amount – This is limited to 10% of the gross total income of the assessee as reduced by the following:

  Where the aggregate of the sums mentioned in (u), (v), (w), (x), (y) or (z) exceeds 10% of the adjusted gross total income, then the amount in excess of 10% of the adjusted gross total income will be ignored while computing the aggregate of the sums in respect of which the deduction is to be allowed.

 
Q. Can an assessee claim deduction for the payments made by him in respect of rent of an unfurnished or furnished accommodation [section 80GG]?

A. Any self-employed person or a salaried employee who is not in receipt of house rent allowance at any time during the previous year can claim deduction for the rent paid by him provided:

a) He or his spouse or minor child or the Hindu undivided family of which he is a member, does not own a residential accommodation at the place where the taxpayer resides, performs the duties of his office, or employment or carries on his business or profession.

b) the assessee files a declaration in Form No. 10BA regarding the expenditure incurred by him towards payment of rent.


Q. What is the extent of deduction that an assessee can claim under section 80GG?

A. The amount of deduction under section 80GG shall be the least of the following amounts:

Q. Can donations made for scientific research and rural development be claimed as a deduction. [section 80GGA]?

A. With effect from the assessment year 1980-81, an assessee is entitled to claim deduction for payments made for scientific research and rural development provided the following conditions are satisfied:

The assessee should be one whose gross total income does not include income chargeable under the head 'Profits and gains of business'

Q. The interest income of which securities are eligible for a deduction under section 80L?

A. An assessee being an individual or a Hindu undivided family can claim a deduction for the interest received on the following Securities:

(i) interest on any Security of the Central Government or any State Government

(ia) interest on National Savings Certificates (VI Issue) or National Savings Certificates (VII Issue) or National Savings Certificates (VIII Issue) issued under the Government Savings Certificates Act, 1959 (46 of 1959)

(ii) interest on such debentures, issued by any institution or authority or any public sector company, or any co-operative society (including a co-operative land mortgage bank or a co-operative land development bank), as the Central Government may, by notification 17 in the Official Gazette, specify in this behalf

(iia) interest on deposits under such National Deposit Scheme as may be framed by the Central Government and notified by it in this behalf in the Official Gazette

(iii) interest on deposits under any other scheme framed by the Central Government and notified by it in this behalf in the Official Gazette

(iiia) interest on deposits under the Post Office (Monthly Income Account) Rules, 1987

(iv) income received in respect of units from the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963) (Omitted by Finance Act 1999)

(v) income received in respect of units of a Mutual Fund specified under clause (23D) of section 10 (Omitted by Finance Act 1999)

(vi) interest on deposits with a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act) or a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank)

(via) interest on deposits with any such bank, not being a banking company or a co-operative society referred to in clause (vi) but being a bank established by or under any law made by Parliament, as may be approved by the Central Government for the purposes of this clause

(vii) interest on deposits with a financial corporation which is engaged in providing long-term finance for industrial development in India

(viia) interest on deposits with any authority constituted in India by or under any law enacted either 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 and villages, or for both

(viii) interest on deposits with a co-operative society, not being a co-operative society referred to in clause (vi), made by a member of the society

(ix) dividends from any co-operative society

(x) interest on deposits with any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes

 
Q. What is the extent of deduction an assessee can claim under section 80L for interest received on permitted Securities?

A. For the assessment year 2000-01, an assessee is eligible to claim a general deduction of amount of such income or Rs. 12,000 for interest received, whichever is less, on the Securities mentioned above. The deduction under this section is available only to individuals and Hindu undivided family.

 
Q. Can an individual assessee claim deduction for income received from outside India?

A. Income received by the assessee from the Government of a foreign State or foreign enterprise in consideration for the use outside India of any patent, invention, design or registered trade mark is eligible for a deduction under section 80O of the Act.
 

Q. What are the conditions that have to be complied with to avail the deduction under section 80O?

A. The income should be received in convertible foreign exchange in India, or received in convertible foreign exchange outside India, or converted into convertible foreign exchange outside India, is brought into India, by or on behalf of the assessee in accordance with any law for the time being in force for regulating payments and dealings in foreign exchange.
 

Q. What is the extent of deduction that can be availed under section 80O?

A. An amount equal to 50 per cent of the income so received in, or brought into, India, is allowed as a deduction under the above stated section.
 
Q. Are there any specific rebates/deduction given to people suffering from a physical disability [section 80U]?

A. An individual being a resident, who, at the end of the previous year, is suffering from a permanent physical disability (including blindness) or is subject to mental retardation, being a permanent physical disability or mental retardation specified in rule 34 made in this behalf by the Board, and which has the effect of reducing considerably such individual’s capacity for normal work or engaging in a gainful employment or occupation, shall be allowed a deduction of a sum of Rs 40,000 from the gross total income. The assessee shall have to provide a certificate from a physician, a surgeon, an oculist or a psychiatrist, as the case may be, working in a Government hospital.
 
Q. What are the provisions under which an assessee can claim rebate on life insurance premia, contribution to provident fund, etc., made during the previous year?

A. An assessee, being an individual, or a Hindu undivided family shall be entitled to a deduction, from the amount of income-tax ( Section 88) (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to 20 per cent of the aggregate of the sums referred to in sub-section (2) The amount of rebate shall be 25 percent in the case of an individual whose income is derived from the exercise of his profession as an author, playwright, artist, musician, actor or sportsman (including an athlete).Wef FY 2001-2002 ie. AY 2002-03 deduction under this section is available to salarised assessee whose salary does not exceed Rs.100000/- deduction of 30% is available under this section.

 
Q. What are the payments which qualify for a rebate under section 88?

A. Any sums paid or deposited in the previous year by the assessee out of his income chargeable to tax:

(i) to effect or to keep in force an insurance on the life of persons specified in sub-section (4)

(ii) to effect or to keep in force a contract for a deferred annuity, not being an annuity plan referred to in clause (xiiia), on the life of persons specified in sub-section (4) provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity;

(iii) by way of deduction from the salary payable by or on behalf of the Government to any individual being a sum deducted in accordance with the conditions of his service, for the purpose of securing to him a deferred annuity or making provision for his wife or children, in so far as the sum so deducted does not exceed one-fifth of the salary

(iv) as a contribution by an individual to any provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies

(v) as a contribution to any provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of any person specified in sub-section (4)

(vi) as a contribution by an employee to a recognised provident fund

(vii) as a contribution by an employee to an approved superannuation fund

(viii) in a ten-year account or a fifteen-year account under the Post Office Savings Bank (Cumulative Time Deposits) Rules, 1959, as amended from time to time, where such sums are deposited in an account standing in the name of the persons specified in sub-section (4)

(ix) as subscription to any such security of the Central Government or any such deposit scheme as that Government may, by notification in the Official Gazette, specify in this behalf

(x) as subscription to the National Savings Certificates (VI Issue) and National Savings Certificates (VII Issue) issued under the Government Savings Certificates Act, 1959 (46 of 1959)

(xi) as subscription to any such savings certificate as defined in clause (c) of section 2 of the Government Savings Certificates Act, 1959 (46 of 1959), as the Central Government may, by notification 52 in the Official Gazette, specify in this behalf

(xii) as a contribution, in the name of any person] specified in sub-section (4), for participation in the Unit-linked Insurance Plan, 1971 (hereafter in this section referred to as the Unit-linked Insurance Plan) deemed to have been made under sub-clause (a) of clause (8) of section 19 of the Unit Trust of India Act, 1963 (52 of 1963)

(xiii) as a contribution in the name of any person specified in sub-section (4) for participation in any such unit-linked insurance plan of the LIC Mutual Fund notified under clause (23D) of section 10, as the Central Government may, by notification in the Official Gazette, specify in this behalf

(xiiia) to effect or to keep in force a contract for such annuity plan of the Life Insurance Corporation as the Central Government may, by notification in the Official Gazette, specify

(xiiib) as subscription, not exceeding ten thousand rupees, to any units of any Mutual Fund notified under clause (23D) of section 10 or the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), under any plan formulated in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf

(xiiic) as a contribution by an individual to any pension fund set up by any Mutual Fund notified under clause (23D) of section 10 or by the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), as the Central Government may, by notification in the Official Gazette, specify in this behalf

(xiv) as subscription to any such deposit scheme of , or as a contribution to any such pension fund set up by, the National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987) (hereafter in this section referred to as the National Housing Bank), as the Central Government may, by notification in the Official Gazette, specify in this behalf

(xiva) as subscription to any such deposit scheme of:

(a) a public sector company which is engaged in providing long-term finance for construction or purchase of houses in India for residential purposes, or

(b) any authority constituted in India by or under any law enacted either 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 and villages, or for both,not being a scheme the interest on deposits whereunder qualifies for the purposes of computing the deduction under section 80L, as the Central Government may, by notification in the Official Gazette, specify in this behalf

(xv) For the purposes of purchase or construction of a residential house property, the income from which is chargeable to tax under the head "Income from house property" (or which would, if it had not been used for the assessee’s own residence, have been chargeable to tax under that head), where such payments are made towards or by way of:
(Where the aggregate of any sums specified in clause (xv) exceeds an amount of ten thousand rupees (Rs.20,000 w.e.f F/Y 2000-01), a rebate shall be allowed with reference to so much of the aggregate as does not exceed an amount of Rs 10,000 (20,000 w.ef '00-01))

(a) any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis, or

(b) any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him, or

(c) repayment of the amount borrowed by the assessee from:

* the Central Government or any State Government, or

* any bank, including a co-operative bank, or

* the Life Insurance Corporation, or

* the National Housing Bank, or

* any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is approved for the purposes of clause (viii) of sub-section (1) of section 36, or

* any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or

* the assessee’s employer where such employer is a public company or a public sector company or a University established by law or a college affiliated to such University or a local authority or a co-operative society

(d) stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee,

but shall not include any payment towards or by way of:

* the admission fee, cost of share and initial deposit which a shareholder of a company or a member of a co-operative society has to pay for becoming such shareholder or member; or

* the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property or any part thereof has either been occupied by the assessee or any other person on his behalf or been let out, or

* any expenditure in respect of which deduction is allowable under the provisions of section 24, or

(xvi) as subscription to equity shares or debentures forming part of any eligible issue of capital approved by the Board on an application made by a public company or as subscription to any eligible issue of capital by any public financial institution] in the prescribed form provided that where a deduction is claimed and allowed under this clause with reference to the cost of any equity shares or debentures, the cost of such shares or debentures shall not be taken into account for the purposes of sections 54EA and 54EB

NOTE :

(a) for the purposes of clauses (i), (v), (xii) and (xiii) of that sub-section,—
(i) in the case of an individual, the individual, the wife or husband and any child of such individual, and
(ii) in the case of a Hindu undivided family, any member thereof;

(b) for the purposes of clause (ii) of that sub-section,—
(i) in the case of an individual, the individual, the wife or husband and any child of such individual, and

(c) for the purposes of clause (viii) of that sub-section,—

(i) in the case of an individual, such individual or a minor of whom he is the guardian;
(ii) in the case of a Hindu undivided family, any member of the family;

 Q. Is there a maximum limit on the deduction available under section 88 in respect to contributions made by an assessee?

A. In the case of an individual whose income, derived from the exercise of his profession as an author, playwright, artist, musician, actor or sportsman (including an athlete), is twenty-five per cent or more of his total income, the rebate shall be Rs 17,500 or 25 percent of the gross qualifying amount, whichever is lower, in any other case lower of Rs 16,000 or 20 percent. If the assessee invests only in other securities [excluding shares, debentures or units of infrastructure sector], then the maximum amount shall be reduced by 25 percent of Rs. 20,000/- for authors, etc. and 20 percent of Rs. 20,000/- for other assessees.

 
Q.What are the provisions of section 88B in respect of special relief to senior citizens?

A. An assessee, being an individual resident in India, who is of the age of 65 years or more at any time during the previous year shall be entitled to a deduction from the amount of income-tax of an amount equal to 100 per cent of such income-tax or an amount of Rs 10,000, whichever is less
(Rs.15,000 from the Assesment year 2001-02).

Q.What are the provision of section 88C in respect of women below sixty-five years ?

A. An assessee:
(a) being a woman resident in India; and
(b) below the age of sixty-five years, at any time during the previous year,
shall be entitled to a deduction from the amount of income-tax (as computed before allowing the deductions under this Chapter (section 88, 89(1), etc. ) on her total income, with which she is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of five thousand rupees, whichever is less.
This will come into force with effect from assessment year, 2001-02, i.e., Financial year 2000-01.