CHAPTER VIA DEDUCTIONS

A deduction from an Income is the investment / expenditure made by person that help to save the tax. Income tax deduction reduce gross income of the person i.e. the income on which is tax has to be paid. In lay man language we can say investment by investment tax can be saved. Income tax department also give tax benefits on some personal expenses like health checkup, stamp duty for home, premium of health policy etc. There are two types of deduction:

1. Deduction respect of Payments.

80C             Life Insurance Premia, Provident Fund Contribution

80CCC        Pension Fund

80CCD(1)   Contribution by an employee or any other individual towards, National Pension System (NPS)

80CCD(1B) Contribution by an individual towards NPS

80CCD(2)   Contribution by the employer towards NPS

80D             Medical Insurance Premia

80DD          Maintenance including medical treatment of a Handicapped dependent who is a person with disability

80DDB        Medical Insurance Expenses

80E              Payment of interest of Loan taken for higher studies

80EE            Interest on loan taken for residential house property.

80G             Donation to certain Funds, Charitable Institutions

80GG          Rent paid for accommodation

80GGA       Certain Donations for Scientific Research or Rural Development

80GGC       Contribution to Political Parties

2. Deduction in respect of certain incomes.

80-IA         Deduction in respect of profits and gains from undertakings or enterprises engaged in infrastructure development, etc.

80-IAB    Deduction in respect of profits and gains by an undertaking or an enterprise engaged in development of Special Economic Zone (SEZ) Developers

80-IAC  Profit and Gains from eligible start-up    Companies / LLPs

80-IB     Profit and Gains from industrial undertakings

80-IBA  Profit and Gains from Housing Projects

80-IC     Profits of certain undertakings or enterprises in certain special category States.

80-ID    Profits and gain from Business of Hotels / Convention Centers.

80-IE    Special provisions in respect of certain undertakings in North Eastern States

80JJA    Deduction in respect of profits and gains from business of collecting and processing of biodegradable waste

80JJAA Deduction in respect of employment of new employees

80LA    Deduction in respect of certain incomes of Offshore Banking Units and International Financial Services Centre

80P       Deduction in respect of income of Co-operative Societies

80PA     Deduction in respect of income of Farm Producer Companies

80QQB Deduction in respect of royalty income, etc., of authors of certain books other than text books

80RRB  Deduction in respect of royalty on patents

80TTA  Deduction in respect of interest on deposits in savings accounts

80TTB   Senior citizen to be allowed a deduction of Rs. 50,000 on account of interest on deposits with Banks / co-operative bank / post office.

80U      Deduction in case of a person with disability

80C             Life Insurance Premia, Provident Fund Contribution :

Who can claim – Individual & Huf

Limit of Deduction – 1,50,000.00

Brief Information about the Section

Amount paid or deposited towards life insurance

contribution to Provident Fund set up by the Government,

National Savings Certificates,

Tuition fees,

Payment/ repayment for purposes of purchase or construction of a residential house

and many other investments For full list refer to section 80C of the Income-tax Act.

80CCC        Pension Fund:

Who can claim – Individual

Limit of Deduction – 1,50,000.00

Brief Information about the Section

Deduction in respect of Payment of premium for annuity plan of LIC or any other insurer

YEAR WISE SERVICE TAX RATES

01/07/1994 – 13/05/2003 – 5%

14/05/2003 – 09/09/2004 – 8%

10/09/2004 – 17/04/2006 – 10.20%

18/04/2006 – 10/05/2007 – 12.24%

11/05/2007 – 23/02/2009 – 12.36%

24/02/2009 – 31/03/2012 – 10.30%

01/04/2012 – 30/05/2015- 12.36%

01/06/2015 – 14/11/2015  – 14%

15/11/2015 – 31/05/2016 – 14.5% [14% Service Tax + 0.50% Swach Bharath Cess]

01/06/2016 – Now – 15% [14% Service Tax +0.50% Swach Bharath Cess + 0.50% Krishi Kalyan Cess]