Deductions 80C+80CCC+80CCD

DEDUCTION U/S 80C, 80CCC, 80CCD

BY:Sumit Kumar Yadav

WHY DEDUCTIONS.

.??

1) To Encourage

Savings

2) To Encourage Investments

3) To Accumulate Funds for Old Age

4) For Encouraging

Education

5) For Encouraging

Residence For all

INTRODUCTIONCharging Section 4

( Income Tax Act 1961)As per Sec.4 Income Tax shall be charged for any Asstt.Year at the rate prescribed in Finance Act.

For Computing Income Tax , First of all we need to calculate income of the assessee.For calculating the total Income, First of all we will divide taxable income in five different categories which are called heads of Income.

The sum of all the heads will be known as Gross Total Income & every assessee shall be allowed certain concessions from gross total income. No such deduction is allowed from Casual Income/LTCG/ ST111A i.e. deduction shall be allowed only from Normal Income.

WHO ARE ELIGIBLE..??ALLOWED ONLY TO:1. Individual2. Hindu Undivided Family (As per Hindu Act)

NOT ALLOWED TO:1. Company (Including Pvt.Ltd & Public Ltd.2. Partnership Firm (Including LLP)3. And other Persons not mentioned in Eligibility list

HOW MUCH IS ALLOWED..??Deduction is allowed equal to amount invested.

Investment in:1. Subscription to National Savings Certificates (VIII Issue)

2. Contribution towards public provident fund.

3. Fixed Deposit with a bank for a period of 5 years or more.

4. Investment in post office in 5 year time deposit account

5. Life Insurance premium paid on a policy taken on his own life, life of the spouse or any child (child may be dependent/ independent ). In the case of a Hindu undivided family, policy may be taken on the life of any member of the family. The premium paid should be maximum of 10% of sum assured

6. Contribution for participating in the Unit-Linked Insurance Plan (ULIP) of Unit trust of india.

7. Repayment of Housing Loan taken from banks or other notified org.and loan should be taken for residential house and deduction is allowed for repayment of principal amount (Not for interest).

8. Any sum paid as tuition fees to university / college / educational institution in India for full time education. 

9. Investment in eligible issue

10.Investment in notified bonds of NABARD

11.Investment in senior citizens saving scheme

12.Employee contribution to recognized Provident Fund

13.Investment in approved superannuation fund

14.Investment in Statutory provident fund

15.Account Scheme of the National Housing Bank

16.Any other investment notified u/s 80c.

ACCRUED BASIS OR PAYMENT BASIS

Deduction u/s 80C is allowed only on actual payment basis

If payment is due but not paid in that case deduction is not allowed.

DEDUCTION U/S 80CCC

If the following conditions are fulfilled an assessee may claim deduction under this section

• The taxpayer is an individual

• During the previous year, he has paid/deposited a sum under an annuity plan of the Life Insurance Corporation of India or any other insurer for receiving pension.

DEDUCTION IN RESPECT OF PENSION FUND (SEC. 80CCC)

• The amount must have been paid from income chargeable to tax: Another condition for claiming deduciton u/s 80CCC is that the amount to be invested under eligible plan should be out of the income chargeable to tax.

Maximum Deduction u/s 80C+80CCC+80CCD shall be

Rs.150000/-

To whom not allowed..??Deduction is not allowed to Company, Firm and other artificial

legal person.

However dedution is not only limited to resident individual. Deduction u/s 80CCC can be taken by non resident individaual also.

Quantum of DeductionDeduction shall be allowed to equal to the amount invested in eligible investment

Paid or Accrual Basis..??

Deduction shall be allowed only on paid basis.

DEDUCTION U/S 80CCD

Who can claim deductionA1:   As per the provisions of section 80CCD of the Income Tax Act, 1961,Where an assessee, being an individual employed by the Central Government on or after the 1st day of January, 2004, has in the previous year paid or deposited any amount in his account under a pension scheme as notified vide Notification No. F.N. 5/7/2003- ECB&PR dated 22.12.2003, he shall be allowed a deduction in the computation of his total income, of the whole of the amount so paid or deposited as does not exceed ten per cent of his salary in the previous year.

Quantum of deduction u/s 80CCD

Circular No-1/2010 dated 11th Jan’2010 clarifies that deduction in respect of contribution made by an individual in the previous year to his account under a pension scheme notified, is allowed in computation of his total income –(a) In the case of an employee, ten per cent of his salary in the previous Year; and(b) In any other case, ten per cent of his gross total income in the Previous year.

Meaning of salary for the purposes of section 80CCD

Salary for the purpose of section 80 CCD includes dearness allowance if the terms of employment so provide, but excludes all other allowances and perquisites.

LIMIT ON DEDUCTIONS

As per Sec 80CCE,Maximum Deduction

allowed u/s 80C+80CCC+80CCD shall

be Rs.150000/-

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