1. Deductions from Gross Total Income

2. Faiza Bhatti- 09
Rez

3. Introduction Provided by the Income Tax Act, 1961.
Contained in the form of deductions from section 80C to 80CCD.
They are the permissible amount by which the gross total income is reduced to arrive at the total income liable to tax.
They are intended to act as incentive to the assesses for achieving certain economic objectives.

4. HOW TO COMPUTE TAX UNDER THE HEAD SALARY
( A.Y )
Particulars
Amount
Total Salary Received
xxxxx
( Basic +D.P. +D.A. +H.R.A. +Transport all +C.C.A. +N.P.A. )
Less: Exemption u/s 10
H.R.A.
xxx
Transport Allowance
xxxx
Add: Arrears of Salary Received
Less: Loss under the head house Property or other head. xx
Gross Total Income
Less: Rebate u/s 80C, 80D, 80DD, 80G, 80GG, 80E, 80U
Less: Rebate u/s 89 (1) for Arrears.
Total Taxable Income
Tax Due ( As per applicable rates)
Xxx

5. Basic Rules
Rule 1
The aggregate amount of deductions under sections 80C to 80U cannot exceed gross total income.
Rule 2
These deductions are to be allowed only if the assesses claims these and gives the proof of such investments/ expenditure/ income.

6. Categories of Deductions
To encourage savings
For certain personal expenditure
For socially desirable activities
For physically disabled persons

7. Deduction u/s 80C From AY 2007-08 onwards.
Applicable only to Individual & HUF.
This section provides for deduction in respect of certain expenditure/ investments paid or deposited by the assesses in the previous year.

8. Computation of deduction u/s 80C
Step 1- Gross qualifying amount
Step 2- Amount of deduction

9. The gross qualifying amount under this section refer to the payment/investment under some of the following schemes:-
Life Insurance Premium Paid.
Deferred Annuity Contract.
Statutory Provident Fund and Recognized Provident Fund.
15 Year Public Provident Fund.
Approved Superannuation Fund.
National Savings Certificates.
Unit-linked Insurance Plan (Ulip).
Dhanraksha Plan of LIC Mutual Fund.
Jeevan Dhara, Jeevan Akshay, New Jeevan Dhara.
Notified Units of Mutual Fund or UTI.

10. Amount of Deduction
Gross qualifying amount; or Rs
Whichever is lower
It may be noted that the amount of deduction u/s 80C,80CCC and 80CCD cannot be exceed Rs

11. Deduction u/s 80CCC
Deduction in respect of Contribution to Certain Pension Funds.
Individual
Eligible Amount – amount paid/deposited under an annuity plan of the Life Insurance Corporation of India or any other insurer for receiving pension.

12. Conditions
Taxable income.
This must not be allowed as deduction u/s 80C.
Any amount withdrawn or pension received from the plan is taxable in the hands of the assessee or nominee in the year of receipt.
Amount of Deduction
Amount paid or Rs. 10,000/- whichever is lower.

13. Deduction u/s 80CCD
Deduction in Respect of Contribution to Pension Scheme of Central Government.
Individual who is an employee of Central Government on or after
Eligible Amount – Deposit made under a pension scheme notified by the Central Government.

14. Conditions
No deduction must have been claimed u/s 80C.
Any amount received from the scheme, is taxable in the hands of the assess in that year or receipt.
Salary for the purpose of this section includes dearness allowance if under the terms of employment.
Amount of Deduction
Aggregate of amount deposited by the employee and the Central government, or 10% of the salary, whichever is lower.

15. The aggregate amount of deductions under 80C, 80CCC and 80CCD put together cannot exceed Rs.1,00,000

16. Deduction u/s 80G Deduction in respect to donation to certain funds
Available to any taxpayer (Individual, Company, Firm or any other person)

17. Conditions
Donation not necessarily come out of income chargeable to tax
Donation made without any material return
Cheques issued on 31 march 2006 for donation and realized in April are treated as relevant to A.Y-06-07

18. Steps Gross qualifying amount Any Donation excluding made in kind
Net qualifying amount
10% of the gross total income of assessee deducting following:
1) Amount deductable u/s 80C to 80U (but not u/s 80G)
2) Long term capital gain
3) Short-term capital gain taxable u/s 11A
4) such income on which income tax is not payable

19. Amount deductible Sr no. Donee Maximum Limit
Deduction (as a % of net qualifying amount) 1
National Defence fund set up by central govt
Not Applicable
100 % 2
Jawaharlal Nehru memorial fund
50% 3
Prime minister’s national relief fund
100% 4
National children’s fund 5
An approved institution 6
Zila Saksharta samiti 7
Any notified temple,church or other place
As given below 8
National trust for welfare of mental and disabled 9
Govt. or any local authority utilized for charitable purpose 10
Govt. or any approved authority for purpose of promoting family planning 11
Fund set up by Govt for medical relief

20. Calculation Amount of donation made
10% of adjusted gross total income calculated
Which ever is lower

21. Conclusion
Under the income tax act first of all income under each head is computed.
The aggregate of income under each head is known as ‘Gross Total Income’.
Out of this gross total income certain deductions are allowed.
The income after such deductions is called ‘Total Income’
The total deductions from section 80 C - 80 U cannot exceed the total income.

22. Thank You