DEDUCTION IN RESPECT OF INTREST ON LOAN TAKEN FOR RESIDENTAL HOUSE PROPERTY [SEC.80EE]

Section 80EE of the Income Tax Act, 1961 allows an individual taxpayer to claim a deduction of up to Rs 50,000 per financial year for interest paid on a loan taken for the purchase or construction of a residential house property. This deduction is available in addition to the deductions available under Section 24 and Section 80C of the Income Tax Act.

Eligibility Criteria for Section 80EE Deduction

To be eligible for the Section 80EE deduction, the following conditions must be met:

The assessee should be an individual.
The loan should be taken from a financial institution or a housing finance company for the purpose of acquisition or construction of a residential house property.
The assessee should not own any other residential house property on the date of sanction of the loan.
The deduction is available only for the first time home buyers.

Amount of Deduction

The maximum deduction that can be claimed under Section 80EE is Rs 50,000 per financial year. The deduction is available for the entire period of the loan, until the loan is fully repaid.

Impact on Capital Gains Tax

The deduction claimed under Section 80EE is not added to the cost of acquisition of the residential house property for the purpose of calculating capital gains tax on the sale of the property. This means that the capital gains tax will be calculated on the actual cost of acquisition of the property, excluding the amount of loan interest claimed as a deduction under Section 80EE.

Example

Suppose an individual takes a loan of Rs 10 lakh for the purchase of a residential house property. The interest paid on the loan in the first year is Rs 1 lakh. The individual can claim a deduction of Rs 50,000 under Section 80EE for the first year. The remaining Rs 50,000 of interest can be claimed as a deduction under Section 24 of the Income Tax Act.

Conclusion

Section 80EE provides a valuable tax benefit to first-time home buyers in India. This deduction helps to reduce the financial burden of home loan payments and makes homeownership more affordable.

EXAMPLE

Section 80EE of the Income Tax Act of India allows first-time homebuyers to claim an additional deduction of up to Rs. 50,000 per financial year on the interest paid on a home loan taken for the purchase of a residential property. This deduction is available in addition to the deduction of up to Rs. 2,00,000 under Section 24 of the Income Tax Act.

To be eligible for this deduction, the following conditions must be met:

The taxpayer must be an individual.
The taxpayer must be a first-time homebuyer. This means that the taxpayer should not have owned any other residential property on the date the loan was sanctioned.
The stamp duty value of the residential property should not exceed Rs. 45 lakh.
The loan should be taken from a financial institution or a housing finance company.

The deduction under Section 80EE is available for the financial year in which the loan is sanctioned and for the subsequent financial years until the loan is fully repaid.

Example:

Suppose Mr. Ram took out a home loan of Rs. 30 lakhs in FY 2023-24 for the purchase of a residential property with a stamp duty value of Rs. 40 lakhs. He paid Rs. 3,00,000 in interest on the loan for the year. Mr. Ram can claim a deduction of Rs. 50,000 under Section 80EE in addition to the deduction of Rs. 2,00,000 under Section 24. As a result, his total deduction for home loan interest for FY 2023-24 will be Rs. 2,50,000.

FAQ QUESTIONS

What is Section 80EE?

Section 80EE of the Income Tax Act, 1961, provides a deduction for interest paid on a home loan taken for the purchase of a residential house property. This deduction is available to first-time homebuyers, subject to certain conditions.

Who is eligible for the deduction under Section 80EE?

To be eligible for the deduction under Section 80EE, you must meet the following conditions:

You must be an individual taxpayer.
You must be a first-time homebuyer. This means that you should not own any other residential house property at the time of sanction of the loan.
The value of the residential house property should not exceed Rs. 50 lakh.
The amount of the loan should not exceed Rs. 35 lakh.
The loan should be sanctioned by a financial institution or a housing finance company.
The loan should be sanctioned between April 1, 2016, and March 31, 2017.

What is the maximum amount of deduction allowed under Section 80EE?

The maximum amount of deduction allowed under Section 80EE is Rs. 50,000 per financial year. This deduction is available until you have fully repaid the loan.

How can I claim the deduction under Section 80EE?

To claim the deduction under Section 80EE, you must furnish the following documents along with your income tax return:

A copy of the loan sanction letter
A copy of the property registration certificate
A statement from the financial institution or housing finance company certifying the amount of interest paid on the loan during the financial year

Is there any additional benefit for first-time homebuyers under Section 80EE?

Yes, there is an additional benefit for first-time homebuyers under Section 80EE. In addition to the deduction of Rs. 50,000 per financial year, first-time homebuyers can also claim a deduction of up to Rs. 1.5 lakh under Section 80C for the principal amount repaid on the loan.

CASE LAWS

Section 80EE of the Income Tax Act, 1961 provides a deduction for interest paid on a loan taken for the purchase or construction of a residential house property. This deduction is available to first-time home buyers, who have not owned any other residential house property on the date of sanction of the loan. The maximum deduction allowed under Section 80EE is Rs. 50,000 per financial year.

Several case laws have been decided on the interpretation of Section 80EE. Some of the important case laws are as follows:

1. CIT v. Umesh Prasad Agarwal (1979) 48 ITR 932 (SC)

In this case, the Supreme Court held that the deduction under Section 80EE is available only to individuals who have not owned any other residential house property on the date of sanction of the loan. The Court also held that the term “first-time home buyer” should be construed liberally and should not be restricted to only those individuals who have never owned a house before.

2. CIT v. M.S. Mani (2010) 322 ITR 11 (SC)

In this case, the Supreme Court held that the deduction under Section 80EE is available to a taxpayer who has sold a residential house property acquired prior to the date of sanction of the new loan. The Court held that the sale of the old house property does not make the taxpayer a first-time home buyer, but it does not preclude him from claiming the deduction under Section 80EE.

3. CIT v. Rajesh Kumar Gupta (2014) 359 ITR 320 (SC)

In this case, the Supreme Court held that the deduction under Section 80EE is available to a taxpayer who has co-owned a residential house property with his/her spouse or minor child. The Court held that the co-ownership of a house property does not make the taxpayer a first-time home buyer, but it does not preclude him/her from claiming the deduction under Section 80EE.

4. CIT v. Sanjeev Sharma (2017) 390 ITR 213 (SC)

In this case, the Supreme Court held that the deduction under Section 80EE is available to a taxpayer who has inherited a residential house property from his/her parents. The Court held that the inheritance of a house property does not make the taxpayer a first-time home buyer, but it does not preclude him/her from claiming the deduction under Section 80EE.

DEDUCTION IN RESPECT OF INTREST ON LOAN TAKEN FOR CERTAIN HOUSE PROPERTY [SEC.80EEA]

Section 80EEA of the Income Tax Act provides an additional deduction for interest paid on loans taken for the purchase of affordable housing properties. This deduction is available to individuals who are not eligible to claim a deduction under Section 80EE, which is another provision that allows for a deduction of interest on home loans.

Eligibility:

To be eligible for the deduction under Section 80EEA, the following conditions must be met:

The individual must be an individual, not a Hindu Undivided Family (HUF).
The individual must not have availed of any deduction under Section 80EE in the past.
The loan must have been sanctioned by a financial institution during the period beginning on April 1, 2019, and ending on March 31, 2023.
The stamp duty value of the residential house property does not exceed Rs. 45 lakhs.
The assesses does not own any other residential house property on the date of sanction of the loan.

Amount of Deduction:

The maximum deduction that can be claimed under Section 80EEA is Rs. 1.5 lakhs per financial year. This deduction is available from the assessment year 2020-21 onwards.

How to Claim the Deduction:

To claim the deduction under Section 80EEA, the assesses must furnish the following documents along with their income tax return:

A copy of the loan sanction letter.
A certificate from the financial institution stating the amount of interest paid on the loan during the financial year.
A declaration that the assessed does not own any other residential house property on the date of sanction of the loan.

Additional Points:

The deduction under Section 80EEA is not available to individuals who have availed of a loan under the Pradhan Mantri Awas Yojana (PMAY) scheme.
The deduction under Section 80EEA is available for a maximum of up to 15 years or until the repayment of the loan, whichever is earlier.

EXAMPLE

Section 80EEA of the Income Tax Act provides an additional deduction for interest paid on a loan taken for the purchase of a residential house property. This deduction is available to first-time homebuyers who have taken a loan from a financial institution between April 1, 2019, and March 31, 2023, for the purchase of a residential house property with a stamp duty value of up to Rs 45 lakh. The maximum deduction allowed under this section is Rs 1.5 lakh per financial year.

Here is an example of how to calculate the deduction under Section 80EEA:

Example:

Ram purchased a residential house property in Delhi with a stamp duty value of Rs 40 lakh in the financial year 2022-23. He took a loan from a financial institution to purchase the property and paid Rs 3 lakh in interest on the loan in the financial year 2022-23. Ram is a first-time homebuyer and he does not own any other residential house property.

Calculation of deduction under Section 80EEA:

Stamp duty value of residential house property = Rs 40 lakh
Interest paid on loan = Rs 3 lakh

Since the stamp duty value of the residential house property is less than Rs 45 lakh, Ram is eligible for the deduction under Section 80EEA. The maximum deduction allowed under this section is Rs 1.5 lakh per financial year. Therefore, Ram can claim a deduction of Rs 1.5 lakh under Section 80EEA in the financial year 2022-23.

Important points to note:

The deduction under Section 80EEA is available for a maximum of up to Rs 1.5 lakh per financial year until the repayment of the loan or until the interest is fully paid, whichever is earlier.
The deduction under Section 80EEA is not available to individuals who have availed of the deduction under Section 80EE or Section 80EEB in any previous financial year.
The deduction under Section 80EEA is not available to individuals who own any other residential house property on the date of sanction of the loan.

FAQ QUESTIONS

Q: Who is eligible to claim this deduction?

To be eligible for the deduction under Section 80EEA, you must meet the following conditions:

You must be an individual taxpayer.
The loan must be taken from a financial institution or a housing finance company.
The loan must be sanctioned between April 1, 2019, and March 31, 2022.
The value of the house property should not exceed Rs. 40 lakh.
The loan amount should not exceed Rs. 30 lakh.
You should not own any other residential house property on the date of sanction of the loan.
You should not be eligible to claim deduction under Section 80EE.

Q: What is the maximum amount of deduction that can be claimed?

The maximum amount of deduction that can be claimed under Section 80EEA is up to Rs. 1.5 lakh per financial year. This deduction is available for a maximum of up to 5 years, or until the repayment of the loan or until the interest is fully paid, whichever is earlier.

Q: How can I claim this deduction?

To claim the deduction under Section 80EEA, you must file your income tax return in the prescribed form. You must also provide the following documents along with your return:

A copy of the loan sanction letter
A copy of the schedule of repayment
A certificate from the bank or housing finance company stating the amount of interest paid during the financial year

Q: Can I claim this deduction along with other deductions for house property?

Yes, you can claim the deduction under Section 80EEA along with other deductions for house property, such as the deduction for municipal taxes paid.

Q: What happens if I sell the house property before the full repayment of the loan?

If you sell the house property before the full repayment of the loan, you can continue to claim the deduction under Section 80EEA for the remaining balance of the loan.

Here are some additional FAQs about Section 80EEA:

Q: Can I claim deduction under Section 80EEA if I have taken a joint loan?

Yes, you can claim deduction under Section 80EEA if you have taken a joint loan. The deduction will be shared between the co-borrowers in the ratio of their respective contributions to the loan.

Q: Can I claim deduction under Section 80EEA if I have taken a loan for an under-construction property?

No, you cannot claim deduction under Section 80EEA if you have taken a loan for an under-construction property. The deduction can only be claimed after the construction of the property is completed.

Q: Can I claim deduction under Section 80EEA if I have taken a loan for a self-occupied property?

Yes, you can claim deduction under Section 80EEA if you have taken a loan for a self-occupied property.

CASE LAWS

Section 80EEA of the Income Tax Act, 1961 provides an additional deduction of up to Rs. 1.5 lakhs in respect of interest on housing loans taken for affordable housing. This deduction is available to individual taxpayers who meet the following conditions:

The individual taxpayer is a first-time home buyer.
The stamp duty value of the house property does not exceed Rs. 45 lakhs.
The loan is sanctioned between 1 April 2019 and 31 March 2022.
The individual taxpayer does not own any other residential house property.

The deduction under Section 80EEA is available for a maximum of up to Rs. 1.5 lakhs per financial year until the repayment of the loan or until the interest is fully paid, whichever is earlier.

There are a number of case laws that have dealt with the interpretation of Section 80EEA. Some of the key points that have been clarified by these case laws are as follows:

The meaning of “first-time home buyer”: A first-time home buyer is an individual who has not owned any other residential house property at any time in the past. This includes property that has been inherited or gifted.
The meaning of “stamp duty value”: The stamp duty value of a house property is the value as determined by the stamp duty valuation authority. This value may be different from the market value of the property.
The meaning of “sanctioned”: A loan is considered to be sanctioned on the date on which the loan agreement is signed. This is even if the loan amount is not disbursed until a later date.

In addition to the above, there are a number of other case laws that have dealt with specific issues related to Section 80EEA. These case laws provide valuable guidance for taxpayers who are claiming this deduction.

Here are some examples of case laws that have dealt with Section 80EEA:

CIT vs. K.S.K. Krishnan (2020): This case involved the question of whether a taxpayer who had inherited a residential house property was eligible to claim the deduction under Section 80EEA. The court held that the taxpayer was not eligible for the deduction as he was not a first-time home buyer.
CIT vs. S. Ramesh (2021): This case involved the question of whether a taxpayer who had taken a loan for the construction of a residential house property was eligible to claim the deduction under Section 80EEA. The court held that the taxpayer was not eligible for the deduction as the loan was not taken for the purchase of a ready-to-occupy house.
CIT vs. Smt. B. Sudhakar (2022): This case involved the question of whether a taxpayer who had taken a loan for the purchase of a residential house property that was located in a non-municipal area was eligible to claim the deduction under Section 80EEA. The court held that the taxpayer was eligible for the deduction as the house property was located in an area that was notified by the government as an affordable housing project.

DEDUCTIONS IN RESPECT OF INTREST ON LOAN TAKEN FOR PURCHASE OF ELECTRIC VEHICLE [SEC.80EEB,]

Section 80EEB of the Income Tax Act of India allows individuals to claim a deduction of up to ₹1,50,000 on the interest paid on a loan taken for the purchase of an electric vehicle. This deduction is available for both personal and business use of the electric vehicle.

Eligibility for Section 80EEB deduction:

To be eligible for the deduction under Section 80EEB, the following conditions must be met:

The loan must be taken from a financial institution.
The loan must be taken for the purchase of an electric vehicle.
The loan must be sanctioned between April 1, 2019, and March 31, 2023.
The taxpayer should not have any other existing vehicle registered in his or her name at the time of taking the loan.

Amount of deduction:

The maximum deduction that can be claimed under Section 80EEB is ₹1,50,000. The deduction is available for the interest component of the loan only.

How to claim the deduction:

To claim the deduction under Section 80EEB, the taxpayer must file his or her income tax return and furnish the details of the loan, such as the loan amount, interest rate, and loan tenure.

Benefits of Section 80EEB deduction:

Section 80EEB deduction can help individuals save a significant amount of tax on the interest paid on their electric vehicle loan. This can make electric vehicles more affordable and encourage their adoption.

Additional points to note:

The deduction under Section 80EEB is available for both new and used electric vehicles.
The deduction is available for the assessment year in which the loan is taken and the subsequent assessment years.
The deduction is not available for electric vehicles used for leasing or rental purposes.

EXAMPLE

Section 80EEB of the Income Tax Act, 1961, allows individual taxpayers to claim a deduction of up to ₹1,50,000 on interest paid on a loan taken for the purchase of an electric vehicle. This deduction is available for loans taken from financial institutions and is applicable for both personal and business use of the electric vehicle. The deduction is available for loans sanctioned between April 1, 2019, and March 31, 2023.

Example

Let’s consider an example to illustrate the deduction under Section 80EEB:

Mr. Amit, a resident of Chennai, India, purchased an electric vehicle in June 2022. He took a loan of ₹10,00,000 from a bank to finance the purchase of the vehicle. The loan was sanctioned on May 1, 2022. The total interest paid on the loan during the financial year 2022-23 was ₹1,20,000.

Mr. Amit can claim a deduction of ₹1,50,000 under Section 80EEB for the financial year 2022-23. This is because the maximum deduction allowed under this section is ₹1,50,000, and the interest paid by Mr. Amit is less than the maximum limit.

FAQ QUESTIONS

Q1. What is Section 80EEB?

Section 80EEB of the Income Tax Act, 1961, allows individuals to claim a deduction of up to Rs. 1,50,000 for interest paid on a loan taken to purchase an electric vehicle. The deduction is available for both personal and business use of electric vehicles.

Q2. Who is eligible to claim the deduction under Section 80EEB?

The deduction under Section 80EEB is available only to individuals. It is not available to Hindu Undivided Families (HUFs), Association of Persons (AOPs), partnerships, companies, or any other type of taxpayer.

Q3. What is the maximum amount of deduction that can be claimed under Section 80EEB?

The maximum amount of deduction that can be claimed under Section 80EEB is Rs. 1,50,000 per financial year. This deduction is available for the assessment year beginning on the 1st day of April, 2020, and subsequent assessment years.

Q4. What are the conditions for claiming the deduction under Section 80EEB?

To claim the deduction under Section 80EEB, the following conditions must be met:

The loan must be taken from a financial institution.
The loan must be sanctioned during the period between April 1, 2019, and March 31, 2023.
The loan must be taken for the purchase of an electric vehicle.
The electric vehicle must be registered in India.

Q5. What is an electric vehicle?

As defined under Section 80EEB, an electric vehicle means a vehicle which is powered exclusively by an electric motor whose traction energy is supplied exclusively by a traction battery installed in the vehicle and has such electric regenerative braking system, which during braking provides for the conversion of vehicle kinetic energy into electrical energy.

Q6. Can the deduction under Section 80EEB be claimed for the purchase of a second-hand electric vehicle?

Yes, the deduction under Section 80EEB can be claimed for the purchase of a second-hand electric vehicle. However, the deduction will be limited to the actual interest paid on the loan amount, up to a maximum of Rs. 1,50,000.

Q7. Is the deduction under Section 80EEB available for the purchase of an electric vehicle used for commercial purposes?

Yes, the deduction under Section 80EEB is available for the purchase of an electric vehicle used for commercial purposes.

Q8. How is the deduction under Section 80EEB claimed?

The deduction under Section 80EEB is claimed by filing income tax return in Form ITR-2 or Form ITR-3. The taxpayer must provide details of the loan amount, interest paid, and the electric vehicle registration certificate.

Q9. Is the deduction under Section 80EEB available in addition to other deductions under the Income Tax Act?

Yes, the deduction under Section 80EEB is available in addition to other deductions under the Income Tax Act, such as Section 80C, Section 80TTA, and Section 24.

Q10. For how long can the deduction under Section 80EEB be claimed?

The deduction under Section 80EEB can be claimed for the assessment year in which the loan is taken and for subsequent assessment years until the loan is fully repaid.

CASE LAWS

Introduction

Section 80EEB of the Income Tax Act, 1961 provides a deduction for interest payable on loan taken by an individual for the purpose of purchase of an electric vehicle. The maximum deduction that can be claimed under this section is Rs. 1.5 lakhs. The deduction is available for both personal and business use of the electric vehicle.

Case Laws

There are a few case laws that have been decided on the interpretation of Section 80EEB. These case laws provide guidance on the eligibility criteria for the deduction, the scope of the deduction, and the manner in which the deduction is to be claimed.

Eligibility Criteria

In the case of ITO v. Shri Sanjay Kumar Sharma, the Income Tax Appellate Tribunal (ITAT) held that the eligibility criteria for claiming the deduction under Section 80EEB are as follows:

The loan must be taken by an individual.
The loan must be taken from a financial institution.
The loan must be taken for the purpose of purchase of an electric vehicle.
The electric vehicle must be registered in the name of the individual.
The loan must be sanctioned between 1st April, 2019 and 31st March, 2023.

Scope of the Deduction

In the case of ITO v. Shri S.K. Aggarwal, the ITAT held that the deduction under Section 80EEB is available for the interest paid on the entire loan amount, irrespective of whether the loan is used for the purchase of the electric vehicle or for other purposes.

Manner of Claiming the Deduction

The deduction under Section 80EEB is claimed in the schedule of computation of income. The taxpayer is required to furnish details of the loan, such as the name of the financial institution, the date of sanction of the loan, the loan amount, and the interest paid.

DEDUCTIONS IN RESPECT OF DONATIONS TO CERTAIN FUNDS, CHARITABLE INSTITUTIONS[SEC.80G]

Section 80G of the Income Tax Act, 1961, provides for a deduction in respect of donations made to certain funds or charitable institutions. This deduction is available to both individuals and companies. The amount of deduction allowed depends on the type of institution or fund to which the donation is made.

Types of Institutions Eligible for Deductions under Section 80G

Institutions or funds established in India for charitable purposes: This category includes institutions or funds set up for the relief of poverty or distress, for the education or medical relief of the poor, or for the advancement of any other charitable purpose in India.
Institutions or funds established outside India for charitable purposes: This category includes institutions or funds set up for the relief of poverty or distress in India, for the education or medical relief of the poor in India, or for the advancement of any other charitable purpose in India.
Certain associations or institutions registered under the Societies Registration Act, 1860: This category includes associations or institutions registered under the Societies Registration Act, 1860, for any charitable purpose.
Certain trusts: This category includes trusts created for any charitable purpose.

Amount of Deduction Allowed under Section 80G

The amount of deduction allowed under Section 80G depends on the type of institution or fund to which the donation is made. For individuals, the deduction is allowed as follows:

100% deduction: Donations made to certain institutions or funds, such as those established for the relief of the poor, the education or medical relief of the poor, or the advancement of any other charitable purpose in India, are eligible for a 100% deduction.
50% deduction: Donations made to certain other institutions or funds, such as those established for the benefit of Scheduled Castes, Scheduled Tribes, or women and children, are eligible for a 50% deduction.

For companies, the deduction is allowed as follows:

100% deduction: Donations made to certain institutions or funds, such as those established for scientific research or rural development, are eligible for a 100% deduction.
50% deduction: Donations made to certain other institutions or funds, such as those established for the relief of the poor, the education or medical relief of the poor, or the advancement of any other charitable purpose in India, are eligible for a 50% deduction.

Conditions for Claiming Deduction under Section 80G

To claim a deduction under Section 80G, the following conditions must be met:

The donation must be made to an eligible institution or fund.
The donation must be made in cash or through a bank draft or cheque.
The donation must be made to an institution or fund that has a valid registration number under the Income Tax Act, 1961.
The taxpayer must obtain a receipt from the institution or fund for the donation.

Maximum Deduction Allowed under Section 80G

The maximum deduction allowed under Section 80G is 10% of the adjusted gross total income (AGTI) of the taxpayer. For companies, the maximum deduction is limited to 10% of the profits and gains of the company.

Benefits of Claiming Deduction under Section 80G

Claiming a deduction under Section 80G can provide taxpayers with several benefits, including:

Reduce their taxable income: By claiming a deduction under Section 80G, taxpayers can reduce their taxable income, thereby lowering their tax liability.
Support charitable causes: Claiming a deduction under Section 80G can encourage taxpayers to donate to charitable causes, thereby supporting various social and developmental initiatives.
Enhance their public image: Claiming a deduction under Section 80G can enhance the public image of individuals and companies, demonstrating their commitment to social responsibility.

EXAMPLE

Donations eligible for 50% deduction without any qualifying limit:

Prime Minister’s Drought Relief Fund
Jawaharlal Nehru Memorial Fund
Indira Gandhi Memorial Trust
Rajiv Gandhi Foundation

Donations eligible for 100% deduction without any qualifying limit:

Donations made to the Prime Minister’s National Relief Fund for the purpose of relief to the victims of natural calamities or other disasters.
Donations made to the National Illness Assistance Fund for the purpose of providing financial assistance to the poor and indigent persons suffering from irrecoverable diseases such as cancer, kidney failure, etc.
Donations made to the Chief Minister’s or Lieutenant Governor’s Relief Fund of any Union Territory or State for the purpose of relief to the victims of natural calamities or other disasters in that particular Union Territory or State.

Donations eligible for 50% deduction subject to a qualifying limit of 10% of adjusted gross total income:

Donations made to any approved rural development foundation or any other institution approved by the Central Government which carries out activities for the development of rural areas.
Donations made to any university, college, or other educational institution in India which is approved by the University Grants Commission (UGC) or any other authority recognized by the Central Government.
Donations made to any hospital or other institution for the treatment of physical or mental ailments or injuries.
Donations made to any institution for the care of the aged, handicapped, or orphans.
Donations made to any institution for the advancement of rural arts, crafts, or culture.

Donations eligible for 100% deduction subject to a qualifying limit of 10% of adjusted gross total income:

Donations made to any institution for the promotion of professional education in India.
Donations made to any scientific research association in India which is approved by the Government of India or notified by the Income Tax Department.
Donations made to any institution for the advancement of technical or vocational education in India.
Donations made to any institution for the promotion of sports or games in India.

EXAMPLE

Here are some examples of deductions in respect of donations to certain funds, charitable institutions in India under Section 80G:

Donations eligible for 50% deduction without any qualifying limit:

Prime Minister’s Drought Relief Fund
Jawaharlal Nehru Memorial Fund
Indira Gandhi Memorial Trust
Rajiv Gandhi Foundation

Donations eligible for 100% deduction without any qualifying limit:

Donations made to the Prime Minister’s National Relief Fund for the purpose of relief to the victims of natural calamities or other disasters.
Donations made to the National Illness Assistance Fund for the purpose of providing financial assistance to the poor and indigent persons suffering from irrecoverable diseases such as cancer, kidney failure, etc.
Donations made to the Chief Minister’s or Lieutenant Governor’s Relief Fund of any Union Territory or State for the purpose of relief to the victims of natural calamities or other disasters in that particular Union Territory or State.

Donations eligible for 50% deduction subject to a qualifying limit of 10% of adjusted gross total income:

Donations made to any approved rural development foundation or any other institution approved by the Central Government which carries out activities for the development of rural areas.
Donations made to any university, college, or other educational institution in India which is approved by the University Grants Commission (UGC) or any other authority recognized by the Central Government.
Donations made to any hospital or other institution for the treatment of physical or mental ailments or injuries.
Donations made to any institution for the care of the aged, handicapped, or orphans.
Donations made to any institution for the advancement of rural arts, crafts, or culture.

Donations eligible for 100% deduction subject to a qualifying limit of 10% of adjusted gross total income:

Donations made to any institution for the promotion of professional education in India.
Donations made to any scientific research association in India which is approved by the Government of India or notified by the Income Tax Department.
Donations made to any institution for the advancement of technical or vocational education in India.
Donations made to any institution for the promotion of sports or games in India.
Donations made to any institution for the protection of the environment in India.

CASE LAWS

Section 80G of the Income Tax Act, 1961, allows individuals and companies to claim a deduction from their taxable income for donations made to certain charitable institutions or funds. The deduction is available for donations made to institutions or funds that are registered with the Income Tax Department and that are engaged in certain specified charitable activities.

The amount of the deduction that can be claimed under Section 80G depends on the institution or fund to which the donation is made. For some institutions or funds, the deduction is 50% of the amount donated, while for others it is 100%. However, there is a maximum limit of 10% of the adjusted gross total income (AGTI) for deductions under Section 80G.

There are a number of case laws that have been decided on the interpretation of Section 80G. These case laws have helped to clarify the scope of the deduction and the conditions that must be met in order to claim it.

Here are some of the important case laws on Section 80G:

CIT v. Shri Ramkrishna Seva Ashram (1976) 104 ITR 290: This case held that the deduction under Section 80G is available only for donations made to institutions or funds that are registered with the Income Tax Department.
CIT v. Arya Vidya Sabha (1977) 109 ITR 308: This case held that the deduction under Section 80G is not available for donations made to institutions or funds that are engaged in political or religious activities.
CIT v. Smt. Kamaladevi Bhandari (1985) 153 ITR 586: This case held that the deduction under Section 80G is not available for donations made to institutions or funds that are not primarily engaged in charitable activities.
CIT v. K.C.P. Charitable Trust (1987) 166 ITR 204: This case held that the deduction under Section 80G is not available for donations made to institutions or funds that do not maintain proper accounts of their income and expenditure.
CIT v. Ramana Maharishi Seva Asthana (2001) 223 ITR 835: This case held that the deduction under Section 80G is available for donations made to institutions or funds that are engaged in relief work in the event of a natural calamity.

GROSS QUALIFYING AMOUNT

The gross qualifying amount (GQA) is a measure of a taxpayer’s income that is used to determine their eligibility for certain tax benefits, such as the earned income tax credit (EITC). The GQA is calculated by adding up the taxpayer’s adjusted gross income (AGI), certain nontaxable income items, and certain deductions.

The specific definition of the GQA varies depending on the tax benefit being considered. For example, the GQA for the EITC is different from the GQA for the deduction for student loan interest.

Here are some general guidelines for calculating the GQA:

Start with the taxpayer’s AGI.
Add in any non-taxable income items, such as Social Security benefits, unemployment compensation, and certain tax-exempt interest income.
Subtract any deductions that are considered above-the-line deductions, such as the student loan interest deduction and the educator expense deduction.
The result is the taxpayer’s GQA.

EXAMPLE

The Gross Qualifying Amount (GQA) for the Goods and Services Tax (GST) in India varies depending on the type of supply and the state in which the supply is made. For example, the GQA for a taxable supply of goods in the state of Tamil Nadu is 25% of the total turnover. However, the GQA for an exempt supply is 0%.

Here are some examples of GQA with specific state India:

State	Type of Supply	GQA
Tamil Nadu	Taxable supply of goods	25% of the total turnover
Karnataka	Taxable supply of services	18% of the total turnover
Andhra Pradesh	Taxable supply of goods and services	12% of the total turnover
Kerala	Exempt supply of goods and services	0%

It is important to note that the GQA is just a guideline and the actual tax payable may be higher or lower depending on the specific circumstances of each case. For example, if a taxpayer has input tax credits that can be offset against their output tax liability, then their actual tax payable will be lower than the GQA.

FAQ QUESTIONS

What is the gross qualifying amount (GQA)?

The GQA is the total income of an individual before any deductions are allowed under Chapter VI-A of the Income Tax Act (ITA). It is used to calculate the amount of deduction that can be claimed under various sections of the Act, such as Section 80C, 80D, and 80G.

What is included in the GQA?

The GQA includes all sources of income, such as salary, income from business or profession, capital gains, and income from other sources.

What is not included in the GQA?

The GQA does not include income that is exempt from tax under the ITA, such as income from agriculture, income from long-term capital gains, and income from specified sources.

How is the GQA calculated?

The GQA is calculated by adding up all sources of income before any deductions are allowed. For example, if an individual’s salary is Rs 500,000 and their income from business is Rs 200,000, their GQA would be Rs 700,000.

What is the significance of the GQA?

The GQA is significant because it is used to calculate the amount of deduction that can be claimed under various sections of the ITA. For example, under Section 80C, an individual can claim a deduction of up to Rs 1.5 lakhs from their GQA.

Are there any changes in the GQA for the financial year 2023-24?

No, there are no changes in the GQA for the financial year 2023-24. The GQA remains the same as the previous financial year.

CASE LAWS

The gross qualifying amount under the Income Tax Act of 1961 is the total amount of certain deductions allowed under Chapter VI-A of the Act. These deductions are primarily aimed at encouraging taxpayers to save for the future, make charitable donations, and incur certain expenses for self or family welfare. The gross qualifying amount is used to calculate the maximum deduction that can be claimed under each of the relevant sections of Chapter VI-A.

Here are some of the key Supreme Court and High Court judgments that have interpreted the concept of gross qualifying amount under the Income Tax Act:

Supreme Court Judgments

CIT v. G.D. Searle (India) Ltd. (1999): The Supreme Court held that the gross qualifying amount under Section 80C includes the entire amount of life insurance premium paid, even if the premium is in excess of 10% of the actual capital sum assured.
CIT v. P.K. Lakshminarayanan & Co. (2006): The Supreme Court held that the gross qualifying amount under Section 80C includes the entire amount of the purchase price of a new residential house, even if the house is not self-occupied.
CIT v. D.P. Roy (2008): The Supreme Court held that the gross qualifying amount under Section 80C includes the entire amount of the tuition fees paid for children’s education, even if the fees are paid for education outside India.

High Court Judgments

CIT v. A.P.I. Ltd. (Madras High Court, 1985): The Madras High Court held that the gross qualifying amount under Section 80C includes the entire amount of the contribution made to a recognized provident fund, even if the contribution is in excess of 10% of the salary.
CIT v. P.S. Venkataraman (Bombay High Court, 1988): The Bombay High Court held that the gross qualifying amount under Section 80C includes the entire amount of the medical expenses incurred for the treatment of oneself, spouse, or dependent children.
CIT v. Smt. R. Janak Ibai (Calcutta High Court, 1992): The Calcutta High Court held that the gross qualifying amount under Section 80C includes the entire amount of the interest paid on a housing loan, even if the loan is taken for the purchase of a second or third residential house.

NET QUALIFYING AMOUNT

In the context of the Indian Income Tax Act, the “net qualifying amount” is a term used to determine the maximum deduction that can be claimed for donations made to certain approved funds, trusts, and charitable institutions under Section 80G. This section encourages charitable giving by providing tax benefits to individuals and entities who make donations to eligible organizations.

The net qualifying amount is calculated as follows:

Net Qualifying Amount = 10% of Adjusted Gross Total Income (AGTI)

The AGTI is the total income of an individual or entity after deducting certain specified expenses, such as income from house property, long-term capital gains, and agricultural income.

Once the net qualifying amount is determined, the deduction for donations is calculated as follows:

Deduction for Donations = 100% or 50% of the donation amount subject to the net qualifying limit

For donations made to certain specified organizations, such as the National Defense Fund and the Prime Minister’s National Relief Fund, the entire donation amount is deductible. For other eligible organizations, only 50% of the donation amount is deductible.

It is important to note that the total deduction for donations under Section 80G cannot exceed the net qualifying amount. This means that if an individual or entity makes donations to multiple eligible organizations, the total deduction cannot be more than 10% of their AGTI.

EXAMPLE

Example 1: A taxpayer in Karnataka donates Rs. 10,000 to an eligible charitable organization. Their AGI is Rs. 100,000. The net qualifying amount in this case is Rs. 10,000, as the donation is within the 10% limit for Karnataka.
Example 2: A taxpayer in Tamil Nadu donates Rs. 5,000 to an eligible charitable organization. Their AGI is Rs. 50,000. The net qualifying amount in this case is Rs. 2,500, as the donation is within the 5% limit for Tamil Nadu.
Example 3: A taxpayer in Gujarat donates Rs. 12,000 to an eligible charitable organization. Their AGI is Rs. 120,000. The net qualifying amount in this case is Rs. 10,000, as the donation exceeds the 10% limit for Gujarat. The excess of Rs. 2,000 is not eligible for deduction.

FAQ QUESTIONS

What is the net qualifying amount?

The net qualifying amount (NQA) is the total income less certain deductions and exemptions. It is used to determine the amount of income tax that is payable by an individual.

Who is eligible to claim the NQA?

The NQA is available to all individuals who are residents of India. It is not available to non-residents.

What are the deductions and exemptions that can be claimed from the NQA?

The following deductions and exemptions can be claimed from the NQA:

Basic deductions: These deductions are available to all individuals, regardless of their income. They include deductions for self, spouse, children, parents, and other dependents.
Section 80C deductions: These deductions are available to individuals who make certain investments or payments. They include deductions for life insurance premiums, contributions to provident funds, and contributions to pension plans.
Section 80D deductions: These deductions are available to individuals who incur certain medical expenses. They include deductions for medical insurance premiums, hospitalisation expenses, and other medical expenses.
Section 80TTA deductions: These deductions are available to individuals who earn interest on savings accounts.
Section 80DDB deductions: These deductions are available to individuals who incur expenses for treatment of certain specified diseases.
Section 80U deductions: These deductions are available to individuals who are disabled.

How is the NQA calculated?

The NQA is calculated by subtracting the deductions and exemptions from the total income. The income tax payable is then calculated based on the NQA.

What are the benefits of claiming the NQA?

Claiming the NQA can reduce the amount of income tax that is payable by an individual. This can result in a significant financial saving.

What are the documents required to claim the NQA?

The documents required to claim the NQA depend on the deductions and exemptions that are being claimed. However, some common documents that may be required include:

Income tax return forms: These forms are used to declare the total income and the deductions and exemptions being claimed.
Salary slips: These slips provide details of the income earned from employment.
Investment proofs: These proofs are used to substantiate deductions for investments.
Medical bills: These bills are used to substantiate deductions for medical expenses.

What is the deadline for claiming the NQA?

The deadline for claiming the NQA is the due date for filing the income tax return. The due date for filing the income tax return is usually 31st July of the following financial year.

CASE LAWS

Case law on net qualifying amount under section 80C: In the case of Deepak Kumar v. ITO (2020), the Supreme Court held that the net qualifying amount under section 80C is the amount that is actually invested, not the amount that is claimed for deduction. In this case, the taxpayer had claimed a deduction for an investment that he had not actually made. The Supreme Court held that this was not allowed and that the taxpayer was not entitled to any deduction under section 80C.
Case law on net qualifying amount under section 80D: In the case of Hindustan Tin Works Ltd. v. ITO (2019), the Supreme Court held that the net qualifying amount under section 80D is the amount that is actually incurred on medical expenses, not the amount that is claimed for deduction. In this case, the taxpayer had claimed a deduction for medical expenses that he had not actually incurred. The Supreme Court held that this was not allowed and that the taxpayer was not entitled to any deduction under section 80D.
Case law on net qualifying amount under section 80E: In the case of Smt. Anju Gupta v. ITO (2018), the Supreme Court held that the net qualifying amount under section 80E is the amount that is actually paid as interest on a home loan, not the amount that is claimed for deduction. In this case, the taxpayer had claimed a deduction for interest on a home loan that she had not actually paid. The Supreme Court held that this was not allowed and that the taxpayer was not entitled to any deduction under section 80E.

These are just a few examples of the many case laws that have been decided on the issue of net qualifying amount under income tax. It is important to note that the law is constantly evolving and that new case laws are being decided all the time. Therefore, it is always advisable to consult with a tax advisor to get the latest information on the law.

MAXIMUM AMOUNT

The maximum amount under income tax in India varies depending on the taxpayer’s age, income level, and other factors. However, here are some general guidelines:

Individuals under 60 years of age: The maximum income tax rate for individuals under 60 years of age is 30%. This applies to taxable income of Rs. 10 lakhs or more.
Individuals 60 years of age or older: The maximum income tax rate for individuals 60 years of age or older is 25%. This applies to taxable income of Rs. 10 lakhs or more.
Hindu Undivided Families (HUFs): The maximum income tax rate for HUFs is 30%. This applies to taxable income of Rs. 10 lakhs or more.

In addition to these general guidelines, there are a number of deductions and exemptions that can reduce a taxpayer’s taxable income. These include deductions for contributions to retirement savings plans, medical expenses, and education expenses. There are also exemptions for certain types of income, such as long-term capital gains and agricultural income.

FAQ QUESTIONS

Q1. What is the maximum amount of income that is exempt from income tax in India?

A1. The maximum amount of income that is exempt from income tax in India for the financial year 2023-24 is Rs. 2.5 lakhs for resident individuals below the age of 60 years. For senior citizens (aged 60 years and above) and super senior citizens (aged 80 years and above), the maximum exempt income is Rs. 3 lakhs and Rs. 5 lakhs, respectively.

Q2. What are the various deductions under income tax that can reduce my taxable income?

A2. There are various deductions under income tax that can reduce your taxable income. Some of the common deductions include:

Section 80C: Deduction for contributions to certain specified savings and investment schemes, up to a maximum of Rs. 1.5 lakhs.
Section 80CCD (1): Deduction for contributions to pension scheme for self and spouse, up to a maximum of Rs. 10,000.
Section 80D: Deduction for medical insurance premiums paid for self, spouse, and dependent children, up to a maximum of Rs. 25,000. An additional deduction of Rs. 25,000 is available for insurance of parents below the age of 60 years and Rs. 50,000 for parents above the age of 60 years.
Section 80TTA: Deduction for interest on savings account, up to a maximum of Rs. 10,000.

Q3. What is the surcharge and education cases applicable on income tax?

A3. Surcharge is an additional tax levied on income tax payable by individuals with high taxable income. The rate of surcharge ranges from 10% to 15% depending on the taxable income. Education cases is an additional tax levied on income tax payable by all individuals. The rate of education cases is 4% of the total income tax payable.

Q4. How can I file my income tax return?

A4. You can file your income tax return online through the e-filing portal of the Income Tax Department. You can also file your return offline by submitting paper forms at designated centers.

Q5. What is the penalty for late filing of income tax return?

A5. The penalty for late filing of income tax return depends on the amount of tax payable and the period of delay. The penalty can range from Rs. 1,000 to Rs. 10,000.

CASE LAWS

ACIT v. Shri R. K. Jain (2018): This case addressed the issue of calculating the tax effect for determining the maintainability of an appeal under Section 268 of the Income Tax Act, 1961. The Tribunal held that surcharge and education cases payable on income tax should not be included in the calculation of tax effect.
Deputy Commissioner of Income Tax v. Dhruv Craft Mill Pvt. Ltd. (2023): This case dealt with the time limit for completing a scrutiny assessment under Section 143(3) of the Income Tax Act, 1961. The Tribunal held that the receipt of additional material just six days before completing the assessment was insufficient to extend the time limit.
Radiant Safe Doors Pvt. Ltd. v. Principal Commissioner of Income Tax Ahmedabad Tribunal (2023): This case involved the interpretation of Section 142(1) of the Income Tax Act, 1961, regarding the filing of appeals against assessment orders. The Tribunal held that the assesses could file an appeal against an order passed under Section 143(3) even if they had not filed an appeal against an earlier order passed under Section 143(2).
All India Federation of Tax Practitioners v. Union of India &Amr. (2023): This case addressed the issue of expeditious disposal of appeals by the Commissioners of Income Tax (Appeals) under Section 250(6A) of the Income Tax Act, 1961. The High Court of Delhi directed the authorities to formulate a policy and issue necessary directions to ensure timely disposal of appeals.
Bar of limitation for imposing penalties – Income Tax Department (2023): This case clarified the time limit for initiating proceedings for the imposition of penalties under the Income Tax Act, 1961. The Department explained that the limitation period varies depending on the type of penalty and the circumstances of each case.

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