DEDUCTIONS UNDER CHAPTER VIA

The art is not making money , but in keeping it”

TA

FIVE HEADS OF INCOME

INCOME FROM SALARY

INCOME FROM HOUSE

PROPERTY

INCOME FROM BUSINESS AND PROFESSIONAL

INCOME FROM CAPITAL GAIN

INCOME FROM OTHER SOURCES

BENIFITS OF INCOME TAX

Up to 1,80,000

1,80,000 to 5,00,000

5,00,000 to 8,00,000

Above 8,00,000

0%

10%

20%

30%

Up to 1,90,000

1,90,000 to 5,00,000

5,00,000 to 8,00,000

Above 8,00,000

0%

10%

20%

30%

New Income tax slab for A.Y 2012-13 (financial year 2011-12)

Men (Below 60)

Women (Below 60)

6

Limitation on deduction

• Deductions under this chapter are available from GTI.

• Total deductions cannot exceed the GTI.• If AOP or BOI is allowed certain deductions, such

deductions cannot be allowed to the members out of the share income.

Why tax deductions provided

• To provide incentives for the welfare of the economy.

• Encouraging investments.• For the social welfare.• Savings and thrift.• Infrastructure Development.

SAVE YOUR TAX

Rule No 1: Never Loose Your Money on Tax. Rule No 2: Don’t invest just for saving tax look for returns.

80G

TAX DEDUCTIONS sections

80C

80E

80D

80U

DEDUCTION IN RESPECT OF CERTAIN PAYMENT

• CONTRIBUTION TO LIFE INSURANCE PREMIUM AND PROVIDENT FUND – 80C

• CONTRIBUTION TO PENSION FUND -80CCC• MEDICAL INSURANCE PREMIUM-80D• MAINTENANCE AND MEDICAL TYREATMENT OF

DEPENDANT WITH DISABILITY -80DD• REPAYMENT OF LOAN FOR HIGHER EDUCATION -80E

11

Donations [Sec.80G]

• Certain donations - 100% deduction.• Some other donations - 50% deduction.• Limit on certain donations - 10% of Gross

Total Income.• Only monetary donation is eligible for

deduction.

12

Rent [Sec.80GG]

• Non - salaried Individual.• Rent for own residence paid in excess of 10%

of Total Income.• Limit of deduction :- Rs.2,000/- per month or

25 % of Total Income whichever is lower.• From AY 1998-99.

13

Donation for scientific research etc. [Sec. 80GGA]

• Person having no income from business or profession.

• Deduction : Any amount paid to approved association, institution, university or college.

• Purpose : Scientific research, social science, statistical research, rural development, conservation of natural resources, afforestation etc.

14

Industrial undertakings etc[Sec. 80-IA]

• Business of – industrial undertaking, – hotel, – infrastructural facility, – telecommunication service, – scientific & industrial research, – housing projects, – industrial park, – production & refining of mineral oil in NER

15

[Sec. 80-IA]• Deduction :- 25 % to 100 % of profit.• Period :- 5 to 12 A.Ys.• Conditions :-– Not formed by splitting or reconstruction of

existing business,– Not formed by transferring of old plants &

machineries.– Not manufacturing an item of 11th

Schedule [Except for SSIU, industry in backward area etc.]

16

Bifurcation of deduction between Sec. 80-1A & 80-1B

• The Finance Act, 99 has split the deductions available u/s 80-1A into two sections.

• Sec. 80-IA :- Infrastructural facility, telecommunication service, power etc.

• Sec. 80-IB :- Other industrial undertaking, hotel etc.

• W.E.F. AY 2000-01.

17

Higher educationRepayment of loan [Sec.80E]

• Individual• Repayment of loan (with interest) taken for

pursuing own higher education [engg, med, management etc] from financial institution or approved charitable institution.

• Repayment out of income chargeable to tax• Limit :- Rs.25,000/- per year.[Rs.40,000/-w.e.f. A

Y 2001-02]• Maximum for 8 consecutive years.

Section 80u Assesses is himself handicapped. Eligible for Resident Individual Amount of Deduction

Normally Rs 50k flat deduction.Severe Disability – Rs 100K flat deduction

Amount of deduction –Disability Deduction< 40% No Deduction40 to 80% Rs 50K> 80%- Severe Disability Rs 100k

Furnish a certificate of disability.

Property

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