Permissible deductions under section 80C to 80U

UNIT: 5

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 Deductions U/S 80 C

Section 80 C provides deductions in respect of specified qualifying amounts paid or deposited by the
assessee in the previous year.

Salient Features of section 80 C

➢ Under section 80 C deduction would be available from gross total income

➢ This deduction is available only for an individual.

➢ The maximum amount deductible under section 80C, 80CCC and 80CCD cannot exceeds Rs 1,50,000

➢ Deduction is available on the basis of specified qualifying investments.

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 Deductions U/S 80C
1. Life Insurance

In this case the policy should be taken on own life, life of the spouse or any child. Child may be dependent/
independent, male/female, minor/major, married/unmarried
Insurance premium cannot exceed the maximum ceiling given below
Deductions U/S 80 C
Policy on the life a person with Policy on the life of any other person
disability or severe disability or on
the life of a person suffering from
disease or ailment as given in section
80DDB

If the policy is issued before 1st April 2012 20% of sum assured 20% of sum assured

If the policy is issued during 2012-13 10% of sum assured 10% of sum assured

If the policy is issued on or after 1st April 15% of sum assured 10% of sum assured
2013

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 Deductions U/S 80 C

2. Payment in respect of non-commutable deferred annuity. Annuity plan should be

taken in the name of the individual, spouse, or child.

3. Any sum deducted from salary payable to government employee for the purpose of
securing him a deferred annuity ( subject to a maximum of 20% of salary)

4. Contribution toward Statutory Provident Fund and Recognized Provident Fund.

5. Contribution towards a 15 year Provident Fund.

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 Deductions U/S 80 C

6. Contribution towards an approved superannuation fund.

7. Subscription to National Savings Certificate, VIII Issue or IX Issue and deposit in Sukanya
Samriddhi Account.

8. Contribution to participating in the ULIP.

9. Payment for notified annuity plan of LIC.

10. Subscription towards notified units of Mutual Funds or UTI.

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 Deductions U/S 80 C
11. Contribution towards a notified pension fund.
12. Any sum paid including accrued interest as subscription to notified Home Loan
Account Scheme of the
National Housing Bank or contribution to any notified pension fund set up by the National
Housing Bank.
13. Any sum paid as tuition fees( not including any payment towards development fee,
donation) whether at the time of admission or otherwise to any university / college/
educational institution in India for full time education of any two children of an individual.
14. Any instalment or part payment towards the cost of purchase / construction of
residential property to a housing or co operative society or repayment of housing loan
taken from government , bank, co operative bank, LIC, National Housing Bank etc.

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 Deductions U/S 80 C
15. Amount invested in approved debenture , equity shares in a public company engaged in infrastructure
including power sector or units of a mutual funds proceeds of which are for the developing , maintaining
of a new infrastructure facility.
16. Amount deposited as a Term Deposit for a period of 5 years or more.
17. Subscription to any notified bonds of National bank for Agriculture and Rural Development.
18. Amount deposited under senior citizen saving scheme
19. Amount deposited in five-year time deposit scheme in post office.
20. Amount contributed for a fixed period of not less than 3 years by a Central Government employee to
his NPS account.

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 Deduction U/S 80 D ( Medical Insurance)
Deduction u/s 80 D is available if the following conditions are satisfied.
1. The taxpayer is an individual may be resident/ nonresident or Indian
citizen/foreign citizen
2. Payment should be made from income chargeable to tax.
3. Payment should be made by any mode other than cash. However,
payment on account of preventive health check up can be made by any
mode including cash.

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Deduction U/S 80 D
Maximum deductible amount and other relevant points are below.

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 Deduction U/S 80 D
Notes to Remember:
1. Family includes individual, spouse, of the individual and dependent children of the
individual.
2. Parents includes father and mother dependent or otherwise. Father-in-law or
Mother-in-law are not included.
3. The aggregate amount of preventive health check up of self, spouse, dependent
children, father and mother cannot exceeds Rs 5000.
4. In case of single premium health insurance policies having cover of more than one
year, the aforesaid deduction will be allowed on proportionate basis for the number of
years for health insurance cover is provided.

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 Deduction U/S 80 E
Deduction in respect of payment of interest on loan taken for higher education.
1. Interest is deductible if the loan is taken for pursuing assesse's own education
or for the education of his relative i.e, spouse, children or any student for whom
the individual is the legal guardian.
2. Entire interest is deductible in the year in which the assessee start paying
interest on loan and subsequent 7 years or until interest is paid in full. However,
interest should be paid out of income chargeable to tax.

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 Deduction U/S 80EE

Deduction in respect of Interest on Loan taken for Residential House Property.

The following conditions should be satisfied in order to claim deduction under Sec 80EE
1. The assessee should be an individual. He may be resident or nonresident.
2. The loan should be taken for acquisition of residential house property.
3. Loan should be taken from a bank or housing finance company.
4. If the value of the property is 50 Lakhs and sanctioned loan amount is 35 lakhs,
deduction is available in respect of interest payable on the above loan or Rs 50,000
whichever is less

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 Deduction U/S 80EEA
This is applicable from the AY 20-21 after satisfying the following
conditions.
1. The loan should be sanctioned by the financial institution during 1st
April 2019 to 31st March 2020
2. The assessee can claim a deduction of the above loan or Rs 1,50,000
whichever is less.
3. He is not eligible to claim any deduction under section 80 EE

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Deduction U/S 80EEB
➢Interest paid on Electric Vehicle Loan
➢Upto Rs 1,50,000 subject to some conditions

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 Deduction U/S 80G

This includes deduction in respect of donation to certain funds, charitable institution etc.
Gross Qualifying amount is the aggregate of the donations made to any of the institutions.
Deduction in respect of rent paid 80GG
An individual who does not receive HRA from his employer can avail deduction u/s 80GG.
The deduction is the least of the following.
1. Rs 5000 per month.
2. 25 percent of total income
3. The excess of rent paid over 10 percent of total income.

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Deduction U/S 80GGC

Any sum contributed to any political party in the previous

year shall qualify for deduction u/s 80GGC
No deduction available for contribution made in cash

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Section 80IBA
➢Profits from Housing Projects
➢Any other person engaged in the business of Housing Projects as may be specified
➢100% of the profit

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Section 80RRB
➢Royalty on Patents
➢Individuals (Indian citizen or foreign citizen being resident in India)
➢Rs.3,00,000/- Or Specified Income - whichever is lower

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Section 80QQB

➢Royalty Income of Authors

➢Individuals (Indian citizen or foreign citizen being resident in India)
➢Rs.3,00,000/- Or Specified Income - whichever is lower

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 Deduction U/S 80TTA
Section 80TTA provides a deduction up to Rs 10,000 in aggregate to an
assessee in respect of any income by way of interest on deposit as saving
account with banking company, co operative society, post office.
Post office saving bank interest is exempted up to Rs 3,500 for an
individual.
This deduction is not available for senior citizen.
For senior citizen, the above deductions will come under u/s 80TTB which
is equal to Rs 50,000 or amount of interest whichever is lower.

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Deduction U/S 80TTB
➢Interest Income earned on deposits(Savings/ FDs)
➢Individual (60 yrs or above)
➢Upto Rs 50,000/-

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Deduction U/S 80U
➢Disabled Individuals
➢Normal Disability: Rs. 75,000/-
➢Severe Disability: Rs. 1,25,000/-
Resident individual certified by the medical authority or a government doctor to be a
person with a disability (having a disability of 40% or more) can claim a deduction of Rs.
75,000 under this section. In the case of a person with a severe disability (having a
disability of 80% or more ), the quantum of deduction allowed is Rs. 1,25,000. It is a
fixed deduction and is not based on actual expenses.

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 Set off losses
Set off losses means adjusting the losses against
the profit or income of that particular year.
Set Off and Losses that are not set off against income in the
Carry Forward same year can be carried forward to the
subsequent years for set off against income of
of Losses those years. A set-off could be
a. An intra-head set-off
b. An inter-head set-off

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Intra-head Set Off

The losses from one source of income can be set off

against income from another source under the same head
of income.
For eg: Loss from Business A can be set off against profit
from Business B, where Business A is one source and
Business B is another source and the common head of
income is “Business”.

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 Exceptions to an intra-head set off:

1. Losses from a Speculative business will only be set off against the profit of the
speculative business. One cannot adjust the losses of speculative business with the
income from any other business or profession.
2. Loss from an activity of owning and maintaining race-horses will be set off only
against the profit from an activity of owning and maintaining race-horses.
3. Long-term capital loss will only be adjusted towards long-term capital gains.
However, a short-term capital loss can be set off against both long-term capital gains
and short-term capital gain.
4. Losses from a specified business will be set off only against profit of specified
businesses. But the losses from any other businesses or profession can be set off against
profits from the specified businesses.

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 Inter-head Set Off

After the intra-head adjustments, the taxpayers can set off remaining
losses against income from other heads.
Eg. Loss from house property can be set off against salary income
If in any year, the taxpayer has incurred loss under one head of income and
is having income under other head of income, then he can adjust the loss
from one head [As amended by Finance Act, 2020] against income from
other head

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Restrictions to be kept in mind while making inter-head adjustment of loss

✓Before making inter-head adjustment, the taxpayer has to first make intra-
head adjustment.
✓ Loss from speculative business cannot be set off against any other income.
However, non-speculative business loss can be set off against income from
speculative business.
✓Loss under head “Capital gains” cannot be set off against income under
other heads of income.
✓No loss can be set off against income from winnings from lotteries,
crossword puzzles, race including horse race, card game, and any other game
of any sort or from gambling or betting of any form or nature.

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Restrictions to be kept in mind while making inter-head adjustment of loss

➢Loss from the business of owning and maintaining racehorses cannot be set off
against any other income.
➢Loss from business specified under section 35AD cannot be set off against any
other income (section 35AD is applicable in respect of certain specified businesses
like setting up a cold chain facility, setting up and operating warehousing facility for
storage of agricultural produce, developing and building housing projects, etc.)
➢Loss from business and profession cannot be set off against income chargeable to
tax under the head “Salaries”
➢With effect from the assessment year 2018-19, loss under the head “house
property” shall be allowed to be set-off against any other head of income only to
the extent of Rs. 2,00,000 for any assessment year

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Carry forward of losses

If the losses cannot be set off either under the same head
or under the different head, because of absence or
inadequacy of the income of the same year, it may be
carried forward and set off against the income of the
subsequent year.

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 Carry forward of losses

Losses from House Property :

•Can be carry forward up to next 8 assessment years from the
assessment year in which the loss was incurred
•Can be adjusted only against Income from house property
•Can be carried forward even if the return of income for the loss
year is belatedly filed.

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 Carry forward of losses
Losses from Non-speculative Business (regular business) loss :
•Can be carry forward up to next 8 assessment years from the assessment
year in which the loss was incurred
•Can be adjusted only against Income from business or profession
•Not necessary to continue the business at the time of set off in future
years
•Cannot be carried forward if the return is not filed within the original due
date.

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 Carry forward of losses
Speculative Business Loss :
•Can be carry forward up to next 4 assessment years from the assessment
year in which the loss was incurred
•Can be adjusted only against Income from speculative business
•Cannot be carried forward if the return is not filed within the original due
date.
•Not necessary to continue the business at the time of set off in future
years

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 Carry forward of losses

Capital Losses :
•Can be carry forward up to next 8 assessment years from the assessment year
in which the loss was incurred
•Long-term capital losses can be adjusted only against long-term capital
gains.
•Short-term capital losses can be set off against long-term capital gains as well
as short-term capital gains
•Cannot be carried forward if the return is not filed within the original due date

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 Carry forward of losses
Losses from owning and maintaining race-horses :
•Can be carry forward up to next 4 assessment years from the
assessment year in which the loss was incurred
•Cannot be carried forward if the return is not filed within the original
due date
•Can only be set off against income from owning and maintaining race-
horses only

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