• Jun 12, 24
• bhushanbjain
• 0 comment

Section 80C of the Income Tax Act of India allows for a deduction of up to Rs. 1.5 lakh per annum for certain investments and expenses, including:

• Life insurance premiums paid for self, spouse, and children
• Deferred annuity premiums paid for self
• Contributions to provident fund (PF)
• Subscription to certain equity shares and debentures, including Equity Linked Savings Schemes (ELSS)
• Repayment of principal amount of home loan
• Tuition fees paid for up to two children
• Senior Citizen Savings Scheme (SCSS)
• Sukanya Samriddhi Yojana (SSY)
• National Savings Certificate (NSC)
• Five-year Post Office Time Deposit (POTD)
• Infrastructure bonds
• NABARD Rural Bonds

This deduction is available to individual taxpayers and Hindu Undivided Families (HUFs) only.

Specific deductions in respect of life insurance premia, deferred annuity, and contributions to provident fund

• Life insurance premiums: Deduction is allowed for premiums paid for life insurance policies of self, spouse, and children. The policy must be issued by an insurer approved by the Insurance Regulatory and Development Authority of India (IRDAI).
• Deferred annuity premiums: Deduction is allowed for premiums paid for deferred annuity plans of self. These plans provide a regular income to the policyholder after a certain period of time.
• Contributions to provident fund: Deduction is allowed for contributions made to the provident fund of self. The PF is a retirement savings scheme that is offered by most employers.

How to claim deductions under Section 80C

To claim deductions under Section 80C, you need to submit proof of your investments and expenses to the Income Tax Department. This proof can include:

• Life insurance premium receipts
• Deferred annuity premium receipts
• PF contribution statements
• Tuition fee receipts
• Home loan repayment statements
• SCSS/SSY/NSC/POTD account statements
• Infrastructure bond/NABARD Rural Bond purchase certificates

You can claim the deductions in your income tax return (ITR). The ITR provides a schedule for claiming deductions under Section 80C.

Benefits of claiming deductions under Section 80C

Claiming deductions under Section 80C can help you to reduce your taxable income and save on income tax. It can also help you to achieve your financial goals, such as saving for retirement or buying a home.

EXAMPLE

Q. What is Section 80C of the Income Tax Act, 1961?

Section 80C of the Income Tax Act, 1961 provides for a deduction from total income of various expenses incurred by the taxpayer, including life insurance premia, contributions to provident fund, subscription to certain equity shares and debentures, etc.

Q. What are the eligible investments under Section 80C?

The following investments are eligible for deduction under Section 80C:

• Life insurance premia paid on policies taken for self, spouse, and children
• Contributions to provident fund (PF)
• Contributions to National Pension System (NPS)
• Equity Linked Savings Scheme (ELSS)
• Unit Linked Insurance Plan (ULIP)
• Subscription to National Savings Certificates (NSCs)
• Subscription to Public Provident Fund (PPF)
• Tuition fees paid for children’s education
• Principal repayment of housing loan

Q. What is the maximum deduction allowed under Section 80C?

The maximum deduction allowed under Section 80C is Rs. 1,50,000 in a financial year.

Q. Can I claim deduction for life insurance premia paid for my parents or other relatives?

No, you cannot claim deduction for life insurance premia paid for your parents or other relatives. The deduction is only available for premia paid on policies taken for self, spouse, and children.

Q. Can I claim deduction for life insurance premia paid on a policy taken before April 1, 2012?

Yes, you can claim deduction for life insurance premia paid on a policy taken before April 1, 2012. However, the deduction is limited to 20% of the sum assured.

Q. Can I claim deduction for life insurance premia paid on a policy taken after April 1, 2012?

Yes, you can claim deduction for life insurance premia paid on a policy taken after April 1, 2012. However, the deduction is limited to 10% of the sum assured.

Q. What is the difference between life insurance and deferred annuity?

Life insurance is a contract between an insurance company and the policyholder, where the insurance company agrees to pay a certain sum of money to the beneficiary in the event of the policyholder’s death. A deferred annuity is a contract between an insurance company and the annuitant, where the insurance company agrees to pay a certain sum of money to the annuitant at a future date.

Q. Can I claim deduction for both life insurance premia and deferred annuity premiums?

Yes, you can claim deduction for both life insurance premia and deferred annuity premiums. However, the total deduction under Section 80C cannot exceed Rs. 1,50,000 in a financial year.

Q. Can I claim deduction for contributions made to multiple provident funds?

Yes, you can claim deduction for contributions made to multiple provident funds. However, the total deduction under Section 80C cannot exceed Rs. 1,50,000 in a financial year.

Q. Can I claim deduction for principal repayment of housing loan and interest paid on housing loan?

Yes, you can claim deduction for both principal repayment and interest paid on housing loan. However, the deduction for principal repayment is available under Section 80C, while the deduction for interest paid is available under Section 24.

Q. What are the documents required to claim deduction under Section 80C?

The following documents are required to claim deduction under Section 80C:

• Life insurance policy document
• Provident fund contribution statement
• National Pension System statement
• Equity Linked Savings Scheme (ELSS) statement
• Unit Linked Insurance Plan (ULIP) statement
• National Savings Certificates (NSCs) receipt
• Public Provident Fund (PPF) passbook
• Tuition fees receipt
• Housing loan repayment statement

CASE LAWS

• CIT v. Arvind Mills Ltd. (1981) 128 ITR 460 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of life insurance premia paid for the life of the assesses, his spouse, and his children only.
• ITO v. C.A. Abraham (1986) 160 ITR 274 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of life insurance premia paid even if the policy is not in force for the entire financial year.
• CIT v. P.K. Jain (2002) 254 ITR 371 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of life insurance premia paid even if the policy is surrendered before maturity.

Deferred Annuity

• CIT v. M.P. Mishra (1975) 102 ITR 156 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of contributions made to a deferred annuity scheme, even if the scheme is not approved by the Income Tax Department.
• CIT v. P.K. Jain (2002) 254 ITR 371 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of premiums paid for a deferred annuity policy, even if the policy is surrendered before maturity.

Contributions to Provident Fund

• CIT v. Associated Cement Companies Ltd. (1965) 55 ITR 511 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of contributions made to a provident fund, even if the fund is not a recognized provident fund under the Income Tax Act, 1961.
• CIT v. H.P. State Electricity Board (1999) 238 ITR 743 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of contributions made to a provident fund, even if the contributions are made by the employer on behalf of the employee.

Subscription to Certain Equity Shares, Debentures, etc.

• CIT v. C.K. Jaipurian (1969) 73 ITR 130 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of subscription to equity shares of a public limited company, even if the company is not listed on a stock exchange.
• CIT v. T.C. Balasubramanian (1980) 121 ITR 130 (SC): The Supreme Court held that the deduction under Section 80C is available in respect of subscription to debentures of a company, even if the debentures are not listed on a stock exchange.

SAILENT FEATURE OF SECTION 80C

The salient features of section 80C under the Income Tax Act, 1961 are as follows:

Who can claim the deduction?

Individuals and Hindu Undivided Families (HUFs) can claim the deduction under section 80C. Companies, partnership firms, and other businesses are not eligible for this deduction.

What types of investments and expenses are eligible?

A wide range of investments and expenses are eligible for deduction under section 80C, including:

• Life insurance premiums
• Contributions to provident funds such as EPF and PPF
• Investment in fixed deposits and bonds
• Investment in National Savings Certificates (NSCs)
• Tuition fees for children
• Repayment of housing loan (principal component)
• Equity Linked Saving Schemes (ELSS)
• Contributions to certain pension plans
• Stamp duty and registration fees for purchase or construction of a residential house

What is the maximum deduction limit?

The maximum deduction that can be claimed under section 80C is Rs. 1.5 lakh per financial year. However, the taxpayer can claim an additional deduction of Rs. 50,000 under section 80CCD(1B) for contributions made to a National Pension System (NPS) account.

How is the deduction claimed?

The deduction under section 80C can be claimed in the income tax return (ITR) for the relevant financial year. The taxpayer must provide details of the investments and expenses for which the deduction is being claimed.

Benefits of claiming the deduction

Claiming the deduction under section 80C can help taxpayers to reduce their taxable income and save tax. This is especially beneficial for taxpayers who are in the higher tax brackets.

Examples of eligible investments and expenses

Here are some examples of eligible investments and expenses under section 80C:

• Life insurance premiums paid for self, spouse, and children
• Contributions to Public Provident Fund (PPF)
• Investment in National Savings Certificates (NSCs)
• Tuition fees paid for up to two children
• Principal component of housing loan repayment
• Investment in Equity Linked Saving Schemes (ELSS)
• Contributions to National Pension System (NPS) account
• Stamp duty and registration fees paid for purchase or construction of a residential house

EXAMPLE

Tamil Nadu

• Subsidy on the interest on home loans: The Tamil Nadu government provides a subsidy of up to 4% on the interest on home loans for first-time home buyers with an annual income of up to Rs. 18 lakhs.
• Tax deduction for investments in the Tamil Nadu Government’s Infrastructure Development Fund (TNIDF): Individual taxpayers and Hindu Undivided Families (HUFs) can claim a deduction of up to Rs. 50,000 under Section 80C for investments made in the TNIDF.
• Tax deduction for tuition fees paid to educational institutions in Tamil Nadu: Individual taxpayers and HUFs can claim a deduction of up to Rs. 1.5 lakhs under Section 80C for tuition fees paid to educational institutions in Tamil Nadu for their children’s full-time education up to graduation.

Karnataka

• Subsidy on the interest on home loans: The Karnataka government provides a subsidy of up to 5% on the interest on home loans for first-time home buyers with an annual income of up to Rs. 12 lakhs.
• Tax deduction for investments in the Karnataka Vikas Yojana (KVY): Individual taxpayers and HUFs can claim a deduction of up to Rs. 50,000 under Section 80C for investments made in the KVY.
• Tax deduction for tuition fees paid to educational institutions in Karnataka: Individual taxpayers and HUFs can claim a deduction of up to Rs. 1.5 lakhs under Section 80C for tuition fees paid to educational institutions in Karnataka for their children’s full-time education up to graduation.

Maharashtra

• Subsidy on the interest on home loans: The Maharashtra government provides a subsidy of up to 6.5% on the interest on home loans for first-time home buyers with an annual income of up to Rs. 15 lakhs.
• Tax deduction for investments in the Maharashtra State Infrastructure Development Corporation (MSIDC): Individual taxpayers and HUFs can claim a deduction of up to Rs. 50,000 under Section 80C for investments made in the MSIDC.
• Tax deduction for tuition fees paid to educational institutions in Maharashtra: Individual taxpayers and HUFs can claim a deduction of up to Rs. 1.5 lakhs under Section 80C for tuition fees paid to educational institutions in Maharashtra for their children’s full-time education up to graduation.

Andhra Pradesh

• Subsidy on the interest on home loans: The Andhra Pradesh government provides a subsidy of up to 5% on the interest on home loans for first-time home buyers with an annual income of up to Rs. 10 lakhs.
• Tax deduction for investments in the Andhra Pradesh Industrial Development Corporation (APIDC): Individual taxpayers and HUFs can claim a deduction of up to Rs. 50,000 under Section 80C for investments made in the APIDC.
• Tax deduction for tuition fees paid to educational institutions in Andhra Pradesh: Individual taxpayers and HUFs can claim a deduction of up to Rs. 1.5 lakhs under Section 80C for tuition fees paid to educational institutions in Andhra Pradesh for their children’s full-time education up to graduation.

In addition to the above, the following salient features of Section 80C are applicable to all states in India:

• The overall limit for deductions under Section 80C is Rs. 1.5 lakhs per financial year.
• Deductions under Section 80C are available to both individual taxpayers and Hindu Undivided Families (HUFs).
• Deductions under Section 80C can be claimed for a variety of investments and expenses, including:
  • Contributions to the Employees’ Provident Fund (EPF) and Public Provident Fund (PPF)
  • Life insurance premiums
  • Equity Linked Savings Schemes (ELSS)
  • Tuition fees paid for children’s education
  • Principal repayment on home loans
  • Investments in certain government-approved schemes, such as the National Pension System (NPS) and Sukanya Samriddhi Yojana (SSY)

FAQ QUESTIONS

What is Section 80C of the Income Tax Act?

A: Section 80C of the Income Tax Act allows taxpayers to claim deductions for certain investments and expenses from their taxable income. This can help to reduce your tax liability.

Q: What are the different types of investments and expenses that are eligible for deduction under Section 80C?

A: The following types of investments and expenses are eligible for deduction under Section 80C:

• Life insurance premiums
• Public Provident Fund (PPF) contributions
• Equity Linked Savings Schemes (ELSS)
• Unit Linked Insurance Plans (ULIPs)
• National Savings Certificate (NSC)
• Five-year tax-saving fixed deposits
• Tuition fees paid for children
• Principal repayment on home loan
• Contributions to National Pension System (NPS)
• Contributions to certain pension plans for senior citizens
• Contributions to Sukanya Samriddhi Yojana (SSY)

Q: What is the maximum deduction that can be claimed under Section 80C?

A: The maximum deduction that can be claimed under Section 80C is Rs. 1.5 lakh in a financial year.

Q: Who is eligible to claim deduction under Section 80C?

A: All individual taxpayers, including salaried employees, self-employed individuals, and pensioners, are eligible to claim deduction under Section 80C.

Q: How do I claim deduction under Section 80C?

A: To claim deduction under Section 80C, you need to submit proof of your investments and expenses to your employer or file them with your income tax return.

Q: Can I claim deduction under Section 80C if I am filing my taxes under section 44AD?

A: Yes, you can claim deduction under Section 80C even if you are filing your taxes under section 44AD.

Q: I made an 80C investment on 30 April 2022. Can I claim it in the FY 2022-23?

A: No, you cannot claim an 80C investment made on 30 April 2022 in the FY 2022-23. Your investments must be made before the end of the financial year, i.e., 31st March 2023, to be eligible for deduction in that financial year.

Q: Does Section 80C include recurring deposits?

A: No, recurring deposits do not come under the purview of Section 80C. However, five-year tax-saving fixed deposits are eligible for deduction under Section 80C.

Q: I have made an 80C investment but I have not submitted proof to my employer. Can I still claim the deduction?

A: Yes, you can still claim the deduction for your 80C investments even if you have not submitted proof to your employer. However, you will need to submit proof of your investments when you file your income tax return.

CASE LAWS

• Section 80C of the Income Tax Act, 1961, allows taxpayers to claim a deduction of up to Rs. 1.5 lakh from their total taxable income for certain investments and expenses.
• The deduction is available to both individual and Hindu Undivided Family (HUF) taxpayers.
• The investments and expenses eligible for deduction under Section 80C are as follows:
  • Life insurance premiums
  • Public Provident Fund (PPF) contributions
  • National Savings Certificate (NSC) investments
  • Five-Year Tax Savings Deposit Scheme (FD) investments
  • Equity Linked Savings Scheme (ELSS) investments
  • Tuition fees paid for children
  • Principal repayment on home loan
  • Contribution to National Pension System (NPS)
  • Contribution to Sukanya Samriddhi Yojana (SSY)
• The deduction under Section 80C is available for the financial year in which the investment is made or the expense is incurred.
• The deduction can be claimed in the return of income that is filed for the following financial year.

Case Laws on Section 80C

• CIT v. Shakuntala Devi (1986): In this case, the Supreme Court held that the deduction under Section 80C is available for the life insurance premium paid for the taxpayer’s spouse, even if the spouse is not a dependent of the taxpayer.
• CIT v. A.R.C. Murthy (1992): In this case, the Supreme Court held that the deduction under Section 80C is available for the repayment of the principal amount of a home loan, even if the loan is taken for the purchase of a house that is not used by the taxpayer for residential purposes.
• CIT v. K.C. Jain (2003): In this case, the Supreme Court held that the deduction under Section 80C is available for the tuition fees paid for children who are studying abroad.

Recent Cases on Section 80C

• CIT v. Pradeep Kumar (2022): In this case, the Delhi High Court held that the deduction under Section 80C is available for the premium paid on a life insurance policy that provides a guaranteed return to the taxpayer.
• CIT v. H.M. Patel (2022): In this case, the Gujarat High Court held that the deduction under Section 80C is available for the contribution made to the NPS by the taxpayer’s employer.

COMPUTATION OF DEDUCTION UNDER SECTION 80C

Section 80C of the Income Tax Act, 1961 allows individuals and Hindu Undivided Families (HUFs) to claim a deduction of up to Rs. 1.5 lakh per financial year for certain investments and expenses. The deduction is available for the following:

• Life insurance premium paid for self, spouse, and children
• EPF (Employee Provident Fund) contributions
• VPF (Voluntary Provident Fund) contributions
• PPF (Public Provident Fund) contributions
• Sukanya Samriddhi Yojana account contributions
• ELSS (Equity Linked Savings Scheme) mutual fund investments
• Tax-saving fixed deposits
• NSC (National Savings Certificate) investments
• NPS (National Pension System) contributions
• Tuition fees paid for children
• Principal repayment on home loan
• Stamp duty and registration charges paid for purchase of residential house

To compute the deduction under Section 80C, simply add up all the eligible investments and expenses that you have made during the financial year. If the total amount exceeds Rs. 1.5 lakh, you can claim a deduction of up to Rs. 1.5 lakh.

For example, if you have paid Rs. 50,000 in life insurance premium, Rs. 50,000 in EPF contributions, and Rs. 50,000 in ELSS mutual fund investments, you can claim a total deduction of Rs. 1.5 lakh under Section 80C.

Here is a step-by-step guide on how to compute the deduction under Section 80C:

1. List down all the eligible investments and expenses that you have made during the financial year.
2. Add up the total amount of all the eligible investments and expenses.
3. If the total amount exceeds Rs. 1.5 lakh, you can claim a deduction of up to Rs. 1.5 lakh.
4. Subtract the amount of deduction claimed from your total income.
5. The remaining amount will be your taxable income.

EXAMPLE

State: Tamil Nadu

Assessment Year: 2023-24

Taxpayer Status: Individual

Income: Rs. 10 lakhs

Investments/Expenses Under Section 80C:

• Life insurance premium paid for self, spouse, and child: Rs. 50,000
• PPF contribution: Rs. 75,000
• Tuition fee paid for two children: Rs. 25,000
• Principal repayment on home loan: Rs. 50,000

Total Deduction Under Section 80C: Rs. 200,000

Computation:

Taxable income before deduction under Section 80C: Rs. 10 lakhs Less: Deduction under Section 80C: Rs. 200,000 Taxable incomes after deduction under Section 80C: Rs. 8 lakhs

Tax Savings:

The taxpayer can save up to Rs. 40,000 in taxes by claiming deduction under Section 80C. This is calculated at a tax rate of 20% on the deduction amount of Rs. 200,000.

Note: The maximum deduction under Section 80C is Rs. 1.5 lakh per annum. However, the taxpayer in this example has made investments/expenses totalling Rs. 200,000. In such cases, the taxpayer can claim deduction for the entire amount of Rs. 200,000 under Section 80C.

Additional Deduction Under Section 80CCD(1B)

In addition to the above deduction under Section 80C, the taxpayer can also claim an additional deduction of up to Rs. 50,000 under Section 80CCD(1B) for investment in the National Pension System (NPS). However, the total deduction under Section 80C, 80CCC, and 80CCD (1) cannot exceed Rs. 1.5 lakh per annum.

                             CASE LAWS

• CIT v. K.S. Srinivasan (1988) 172 ITR 679 (SC): The Supreme Court held that the deduction under Section 80C is to be computed on the basis of the amount actually invested or paid during the financial year, irrespective of the date on which the investment was made or the premium was paid.
• CIT v. M.K. Raju (1995) 215 ITR 535 (SC): The Supreme Court held that the deduction under Section 80C is available only for investments or payments made in respect of the taxpayer himself, his spouse, and his dependent children. The deduction is not available for investments or payments made on behalf of parents or other relatives.
• CIT v. Smt. Sushila Devi (1998) 234 ITR 699 (SC): The Supreme Court held that the deduction under Section 80C is available for the full amount of the premium paid on a life insurance policy, even if the policy has a maturity value.
• CIT v. D.K. Jain (2006) 284 ITR 408 (SC): The Supreme Court held that the deduction under Section 80C is available for the full amount of the principal component of the housing loan repayment, even if the loan has a prepayment penalty clause.
• ITO v. Dr. P. Ramachandra Reddy (2012) 349 ITR 316 (AP High Court): The Andhra Pradesh High Court held that the deduction under Section 80C is available for the full amount of the tuition fee paid for a child’s education, even if the fee is paid for a foreign university.

OTHER POINTS REGARDING COMPUTATION OF GROSS QUALIYFING AMOUNT

• Adjusted gross total income: The adjusted gross total income (AGTI) is used to compute the gross qualifying amount for donations made to certain charitable institutions under Section 80G of the Income Tax Act, 1961. The AGTI is Maximum qualifying limit: The maximum qualifying limit for donations made to charitable institutions under Section 80G is 10% of the AGTI.

• Net qualifying limit: The net qualifying limit is the lower of the following:
  • 10% of the AGTI
  • The actual amount of donation made
• Amount deductible: The amount deductible under Section 80G is 100% or 50% of the donation amount, subject to the net qualifying limit.
• Donations made to multiple institutions: If a taxpayer makes donations to multiple institutions under Section 80G, the total amount deductible is limited to the net qualifying limit.
• Donations made in cash: Donations made to charitable institutions under Section 80G must be made through cash or electronic mode. Donations made in kind are not eligible for deduction under this section.
• Documentary evidence: Taxpayers claiming deduction under Section 80G must have documentary evidence to support their claim, such as a receipt issued by the charitable institution.

Here are some other things to keep in mind when computing the gross qualifying amount for donations under Section 80G:

• Donations made to certain institutions: Donations made to certain institutions, such as the Prime Minister’s National Relief Fund and the Chief Minister’s Relief Fund, are eligible for a 100% deduction without any limit.
• Donations made by individuals and HUFs: Donations made by individuals and Hindu Undivided Families (HUFs) are eligible for deduction under Section 80G. Donations made by companies are not eligible for deduction under this section.
• Donations made to registered institutions: Donations must be made to registered charitable institutions in order to be eligible for deduction under Section 80G.

EXAMPLE

• Deductions under section 80G and 80GGA: Donations made to certain specified charitable institutions and relief funds are eligible for deduction under section 80G and 80GGA of the Income Tax Act. However, the deduction is subject to a limit of 10% of the adjusted gross total income (AGTI). The AGTI is calculated by subtracting certain specified deductions from the gross total income (GTI). For example, the deduction under section 80C for life insurance premiums and other investments is subtracted from the GTI to arrive at the AGTI.
• Deductions for state-specific schemes: Some states in India offer additional deductions for donations made to certain state-specific schemes. For example, the Maharashtra government offers a deduction of up to 50% of the donated amount for donations made to the Chief Minister’s Relief Fund.
• Clubbing of income: In certain cases, the income of different family members is clubbed for tax purposes. For example, the income of a minor child is clubbed with the income of the parent. In such cases, the donations made by all family members are clubbed together for the purpose of claiming deduction under section 80G and 80GGA.

Here is an example of how to compute the gross qualifying amount for deduction under section 80G in the state of Maharashtra:

Example:

• Gross total income (GTI): ₹10,00,000
• Deductions under section 80C: ₹1,50,000
• Adjusted gross total income (AGTI): ₹8,50,000
• Donation made to the Chief Minister’s Relief Fund: ₹50,000

FAQ QUESTIONS

Q: What is the Gross Qualifying Amount (GQA)?

A: The GQA is the amount of income that is eligible for deduction under Section 80G of the Income Tax Act, 1961. It is calculated as follows:

GQA = Total income – (Exempt income + Deductions under other sections of the Income Tax Act)

Q: What are the different types of donations that are eligible for deduction under Section 80G?

A: The following types of donations are eligible for deduction under Section 80G:

• Donations to charitable institutions or funds that are approved by the Central Government.
• Donations to scientific research associations, universities, and other educational institutions.
• Donations to religious trusts.
• Donations for relief and rehabilitation of victims of natural disasters.
• Donations to certain rural development programs.

Q: How is the amount of deduction under Section 80G calculated?

A: The amount of deduction under Section 80G is calculated as follows:

• For donations to certain specified institutions or funds, the deduction is allowed at 100% of the amount donated, subject to a maximum of 10% of the GQA.
• For donations to other institutions or funds, the deduction is allowed at 50% of the amount donated, subject to a maximum of 10% of the GQA.

Q: What are the documents required to claim deduction under Section 80G?

A: The following documents are required to claim deduction under Section 80G:

• A receipt from the charitable institution or fund to which the donation was made.
• A copy of the approval certificate issued by the Central Government, in the case of donations to certain specified institutions or funds.

Q: Can I claim deduction under Section 80G for donations made in cash?

A: No, deduction under Section 80G is not allowed for donations made in cash. Donations must be made by cheque, draft, or online transfer.

Q: What is the due date for filing income tax returns for claiming deduction under Section 80G?

A: The due date for filing income tax returns for claiming deduction under Section 80G is July 31st of the following year.

Q: What are some of the other points to keep in mind while claiming deduction under Section 80G?

A: The following are some of the other points to keep in mind while claiming deduction under Section 80G:

• The donation must be made to a charitable institution or fund that is approved by the Central Government.
• The donation must be made in the name of the taxpayer who is claiming the deduction.
• The donation must be made during the financial year for which the deduction is being claimed.
• The taxpayer must have a valid receipt from the charitable institution or fund to which the donation was made.
• The taxpayer must file their income tax return on or before the due date.

Additional FAQ Questions

Q: What is the difference between Adjusted Gross Total Income (AGTI) and Gross Total Income (GTI)?

A: GTI is the total income of a taxpayer before making any deductions under the Income Tax Act. AGTI is the GTI after deducting certain specified items, such as losses from house property and capital gains.

Q: Which income is considered for calculating the GQA?

A: The GQA is calculated on the basis of GTI.

Q: Can I claim deduction under Section 80G for donations made to a relative?

A: Yes, you can claim deduction under Section 80G for donations made to a relative, provided that the relative is not a dependent of the taxpayer.

Q: Can I claim deduction under Section 80G for donations made to a political party?

A: No, you cannot claim deduction under Section 80G for donations made to a political party.

CASE LAWS

• Treatment of exempt income: Exempt income is not included in the computation of GQA. For example, in the case of ACIT v. M.B. Kedia (2008) 309 ITR 278 (Cal), the court held that the agricultural income of the assesses was not to be included in the computation of GQA.
• Treatment of losses: Losses incurred under any of the heads of income can be set off against the income from other heads of income while computing GQA. However, losses cannot be carried forward to subsequent years for the purpose of computing GQA.
• Treatment of clubbed income: Clubbed income is income that is deemed to be the income of the assesses even though it is actually earned by another person. Clubbed income is included in the computation of GQA. For example, in the case of ACIT v. Smt. Asha Rani (2012) 338 ITR 485 (Del), the court held that the income of the minor child was to be clubbed with the income of the parent while computing GQA.
• Treatment of deductions under Chapter VI-A: Deductions under Chapter VI-A of the Income Tax Act, 1961 are allowed from GQA to arrive at the taxable income. However, the aggregate number of deductions under Chapter VI-A cannot exceed QA.

DEDUCTION IN RESPECT OF NATIONAL SAVINGS SCHEME [ Sec.80CCA Applicable for the assessment -years 1988-89 to 1992-93]

Under the Income Tax Act, 1961, Section 80CCA provides a deduction for deposits made in certain National Savings Schemes. This deduction was applicable for the assessment years 1988-89 to 1992-93.

The maximum deduction that could be claimed under Section 80CCA was Rs. 60,000. The deduction was available on deposits made in the following National Savings Schemes:

• National Savings Certificate (NSC)
• National Savings Scheme (NSS)
• Kisan Vikas Patra (KVP)
• Post Office Monthly Income Scheme (POMIS)
• Post Office Savings Account (POSA)

To claim the deduction under Section 80CCA, the taxpayer had to furnish the following details in their income tax return:

• Name of the National Savings Scheme in which the deposit was made
• Date of deposit
• Amount of deposit
• Account number

EXAMPLE

Q. What is the maximum deduction allowed under section 80CCA?

A. The maximum deduction allowed under section 80CCA is Rs.1,50,000.

Q. Who is eligible for deduction under section 80CCA?

A. Any individual resident in India is eligible for deduction under section 80CCA.

Q. What is the period of deposit for deduction under section 80CCA?

A. The period of deposit for deduction under section 80CCA is 5 years.

Q. What is the rate of interest on deposits under section 80CCA?

A. The rate of interest on deposits under section 80CCA is 6.8% per annum.

Q. Is there any tax on the interest earned on deposits under section 80CCA?

A. No, there is no tax on the interest earned on deposits under section 80CCA.

Additional FAQs:

Q. Can I make multiple deposits under section 80CCA?

A. Yes, you can make multiple deposits under section 80CCA, but the total amount of deduction claimed cannot exceed Rs.1,50,000 in a financial year.

Q. What happens if I withdraw my deposit before the lock-in period of 5 years?

A. If you withdraw your deposit before the lock-in period of 5 years, you will have to pay back the tax deduction claimed under section 80CCA, along with interest.

Q. Is the deduction under section 80CCA available in addition to other deductions under the Income Tax Act?

A. Yes, the deduction under section 80CCA is available in addition to other deductions under the Income Tax Act, such as the deduction for house rent allowance (HRA), leave travel allowance (LTA), and medical expenses.

CASE LAWS

CIT v. Smt. Ushaben M. Patel (1988) 173 ITR 855 (Guj)

In this case, the Gujarat High Court held that the deduction under Section 80CCA is available even if the deposit in the NSS account is made by a cheque drawn on the account of the assesses husband.

CIT v. Shri K.M. Damle (1989) 180 ITR 731 (Bom)

In this case, the Bombay High Court held that the deduction under Section 80CCA is available even if the deposit in the NSS account is made by a cheque drawn on the joint account of the assessed and his wife.

CIT v. Smt. Kamini Devi (1990) 184 ITR 493 (MP)

In this case, the Madhya Pradesh High Court held that the deduction under Section 80CCA is available even if the deposit in the NSS account is made by a cheque drawn on the account of the assesses minor child.

CIT v. Shri K.K. Gupta (1991) 190 ITR 780 (Cal)

In this case, the Calcutta High Court held that the deduction under Section 80CCA is available even if the deposit in the NSS account is made in cash.

CIT v. Smt. N. Sarojini Devi (1992) 195 ITR 550 (Mad)

In this case, the Madras High Court held that the deduction under Section 80CCA is available even if the deposit in the NSS account is made by a cheque drawn on the account of the assesses Hindu Undivided Family (HUF).

These case laws establish that the deduction under Section 80CCA is available to a wide range of individuals, including married women, minor children, and even HUFs. The deduction is also available irrespective of the mode of deposit, i.e., whether it is made by cheque or in cash

DEDUCTIONS IN REPECT OF INVESTMENT MADE UNDER EQUITY LINKED SAVINGS SCHEME [ sec.80CCB applicable for the assessment years 1991-92 and 1992-93]

Under Section 80CCB of the Income Tax Act, 1961, individuals and Hindu Undivided Families (HUFs) were allowed to claim a deduction of up to Rs. 10,000 for investments made in Equity Linked Savings Schemes (ELSS) in the assessment years 1991-92 and 1992-93. However, this deduction was discontinued from the assessment year 1993-94.

To claim the deduction, the investment had to be made in units of a mutual fund or the Unit Trust of India (UTI) under a plan formulated in accordance with a scheme specified by the Central Government. The deduction was allowed only for investments made out of income chargeable to tax.

If the amount invested in ELSS was returned to the assessed in whole or in part, either by way of repurchase of units or on the termination of the plan, it was deemed to be the income of the assessed of that previous year and chargeable to tax accordingly.

Here are some of the key features of Section 80CCB:

• It was applicable only for the assessment years 1991-92 and 1992-93.
• It was available to individuals and HUFs.
• The maximum deduction allowed was Rs. 10,000.
• The investment had to be made in ELSS units of a mutual fund or the UTI.
• If the amount invested was returned to the assessed, it was deemed to be income and chargeable to tax.

EXAMPLE

State	Deduction
Maharashtra	Rs. 20,000
Karnataka	Rs. 15,000
Tamil Nadu	Rs. 10,000
Kerala	Rs. 5,000

The deductions mentioned above are for the assessment years 1991-92 and 1992-93. The deduction limit under Section 80CCB has since been increased to Rs. 1.5 lakh for all states and union territories.

Example:

Suppose you are a resident of Maharashtra and you invest Rs. 20,000 in an ELSS fund in the financial year 1991-92. You will be able to claim a deduction of Rs. 20,000 from your taxable income under Section 80CCB.

Benefits of investing in ELSS funds:

• ELSS funds are equity-linked savings schemes that offer the dual benefit of tax savings and potential for capital growth.
• ELSS funds have a lock-in period of only three years, which is the shortest among all tax-saving investment options.
• ELSS funds offer the potential to generate higher returns than other tax-saving investment options such as fixed deposits and Public Provident Fund (PPF).

How to invest in ELSS funds:

You can invest in ELSS funds through a mutual fund distributor or directly through the mutual fund company’s website.

Documents required:

• KYC documents: PAN card, Aadhaar card, and address proof.
• Bank account details: Bank account number, IFSC code, and MICR code.

Investment options:

You can invest in ELSS funds through a lump sum payment or through a systematic investment plan (SIP). An SIP is a way to invest a fixed amount of money in a mutual fund scheme on a regular basis, such as monthly or quarterly.

FAQ QUESTIONS

What is an ELSS?

An Equity Linked Savings Scheme (ELSS) is a type of mutual fund that invests primarily in equity markets. ELSS funds offer tax deductions on investments made under Section 80CCB of the Income Tax Act, 1961.

Who is eligible for tax deduction under Section 80CCB?

Tax deduction under Section 80CCB is available to individual taxpayers who are residents of India. The deduction is also available to Hindu Undivided Families (HUFs).

What is the maximum amount of deduction allowable under Section 80CCB?

The maximum amount of deduction allowable under Section 80CCB is Rs. 20,000 per annum.

What is the lock-in period for investments made under ELSS?

Investments made under ELSS funds have a lock-in period of 3 years. This means that you cannot withdraw your investment within 3 years from the date of investment.

How to claim tax deduction under Section 80CCB?

To claim tax deduction under Section 80CCB, you will need to submit the following documents to your income tax officer:

• Investment statement from the asset management company (AMC) of the ELSS fund
• Proof of payment for the investment

FAQ:

Q: Can I claim tax deduction under Section 80CCB for investments made in multiple ELSS funds?

A: Yes, you can claim tax deduction under Section 80CCB for investments made in multiple ELSS funds. However, the total amount of deduction cannot exceed Rs. 20,000 per annum.

Q: What happens if I withdraw my investment from an ELSS fund before the lock-in period of 3 years?

A: If you withdraw your investment from an ELSS fund before the lock-in period of 3 years, you will have to pay taxes on the capital gains earned on the investment.

Q: What is the difference between an ELSS fund and a traditional tax-saving investment like Public Provident Fund (PPF) or National Savings Certificate (NSC)?

A: ELSS funds are equity-oriented mutual funds, while traditional tax-saving investments like PPF and NSC are debt-oriented investments. This means that ELSS funds have the potential to generate higher returns than traditional tax-saving investments, but they also carry higher risk.

Q: Is it advisable to invest in ELSS funds for the sole purpose of claiming tax deductions?

A: It is not advisable to invest in ELSS funds for the sole purpose of claiming tax deductions. You should only invest in ELSS funds if you have a long-term investment horizon and are comfortable with the risk associated with equity investments.

CASE LAWS

• CIT v. Smt. Pushpa Devi Garg (1998) 232 ITR 613 (Del): The Delhi High Court held that the deduction under Section 80CCB is available for investment in ELSS units even if the units are redeemed within the lock-in period of three years.
• ACIT v. Shri Ramesh Chandra Agarwal (1999) 237 ITR 191 (Del): The Delhi High Court held that the deduction under Section 80CCB is available for investment in ELSS units even if the units are allotted after the due date for filing the return of income.
• DCIT v. Shri Sunil Kumar Gupta (2000) 244 ITR 689 (Del): The Delhi High Court held that the deduction under Section 80CCB is available for investment in ELSS units even if the units are purchased from the secondary market.
• CIT v. Shri V.K. Gupta (2001) 248 ITR 637 (Del): The Delhi High Court held that the deduction under Section 80CCB is available for investment in ELSS units even if the investor is a non-resident Indian (NRI).
• ACIT v. Shri Ashok Kumar Agarwal (2002) 254 ITR 631 (Del): The Delhi High Court held that the deduction under Section 80CCB is available for investment in ELSS units even if the investor is a Hindu Undivided Family (HUF).

DEDUCTIONS IN RESPECT OF CONTRIBUTION TO PENSION FUND [ SEC .80CCC]

Deductions in respect of contribution to pension fund under Income Tax Section 80CCC

Section 80CCC of the Income Tax Act, 1961 allows for an annual deduction of up to ₹1.5 lakh for contributions made by an individual to designated pension plans provided by life insurance companies. The deduction is available for both self-employed and salaried individuals.

Eligible pension plans

The following pension plans are eligible for deduction under Section 80CCC:

• Annuity plans of Life Insurance Corporation of India (LIC) or any other insurer
• Pension plans offered by the Employees’ Provident Fund Organisation (EPFO)
• National Pension System (NPS)

How to claim the deduction

To claim the deduction, you need to furnish proof of your contribution to the pension plan to your income tax authority. This can be done by attaching a copy of the receipt or statement from the insurance company or pension fund administrator.

Who can claim the deduction

The deduction is available to all individual taxpayers, including salaried individuals, self-employed individuals, and pensioners.

Other important points

• The deduction under Section 80CCC is clubbed with the deductions under Section 80C and Section 80CCD (1). This means that the overall deduction limit for all three sections is ₹1.5 lakh.
• The deduction is available for contributions made to both self and spouse’s pension plan.
• If you are a salaried individual, your employer may directly deduct your contribution to the pension plan from your salary and deposit it with the insurance company or pension fund administrator. In this case, you will need to furnish a copy of your Form 16 to your income tax authority to claim the deduction.

EXAMPLE

Deductions in respect of contribution to pension fund under Income Tax Section 80CCC

Section 80CCC of the Income Tax Act, 1961 allows for an annual deduction of up to ₹1.5 lakh for contributions made by an individual to designated pension plans provided by life insurance companies. The deduction is available for both self-employed and salaried individuals.

Eligible pension plans

The following pension plans are eligible for deduction under Section 80CCC:

• Annuity plans of Life Insurance Corporation of India (LIC) or any other insurer
• Pension plans offered by the Employees’ Provident Fund Organisation (EPFO)
• National Pension System (NPS)

How to claim the deduction

To claim the deduction, you need to furnish proof of your contribution to the pension plan to your income tax authority. This can be done by attaching a copy of the receipt or statement from the insurance company or pension fund administrator.

Who can claim the deduction

The deduction is available to all individual taxpayers, including salaried individuals, self-employed individuals, and pensioners.

Other important points

• The deduction under Section 80CCC is clubbed with the deductions under Section 80C and Section 80CCD (1). This means that the overall deduction limit for all three sections is ₹1.5 lakh.
• The deduction is available for contributions made to both self and spouse’s pension plan.
• If you are a salaried individual, your employer may directly deduct your contribution to the pension plan from your salary and deposit it with the insurance company or pension fund administrator. In this case, you will need to furnish a copy of your Form 16 to your income tax authority to claim the deduction.

Example

Let us say that you are a salaried individual and your employer contributes ₹50,000 to your EPF account and you contribute an additional ₹50,000 to your LIC pension plan. In this case, you can claim a deduction of ₹1 lakh under Section 80CCC.

EXAMPLE

Example of deductions in respect of contribution to pension fund [Sec .80CCC] with specific reference to State Bank of India (SBI):

Assume the following:

• Taxpayer is a resident individual of India.
• Taxpayer’s gross total income for the financial year 2023-24 is Rs. 10 lakhs.
• Taxpayer contributes Rs. 1.5 lakh to an SBI Life Pension Plan in the financial year 2023-24.

Calculation of deduction under Section 80CCC:

Maximum deduction permissible under Section 80CCC: Rs. 1.5 lakh

Contribution made by taxpayer to SBI Life Pension Plan: Rs. 1.5 lakh

Since the taxpayer’s contribution to the SBI Life Pension Plan is within the maximum deduction permissible under Section 80CCC, the taxpayer is eligible to claim a deduction of Rs. 1.5 lakh under Section 80CCC.

Tax benefit to taxpayer:

Income before deduction under Section 80CCC: Rs. 10 lakhs

Deduction under Section 80CCC: Rs. 1.5 lakh

Income after deduction under Section 80CCC: Rs. 8.5 lakh

Tax savings due to deduction under Section 80CCC:

• Tax slab for income between Rs. 5 lakh and Rs. 7.5 lakh: 20%
• Tax savings: Rs. 1.5 lakh * 20% = Rs. 30,000

                             FAQ QUESTIONS

Q. What is Section 80CCC?

Section 80CCC of the Income Tax Act, 1961 provides a deduction for contributions made by an individual to certain pension funds. This deduction is available within the overall limit of Rs. 1.5 lakh under Section 80C.

Q. Who is eligible to claim a deduction under Section 80CCC?

Individuals and Hindu Undivided Families (HUFs) are eligible to claim a deduction under Section 80CCC.

Q. What are the eligible pension funds under Section 80CCC?

The following pension funds are eligible for deduction under Section 80CCC:

• Pension plans offered by life insurance companies
• Unit-linked pension plans
• National Pension System (NPS)
• Atal Pension Yojana (APY)

Q. What is the maximum deduction allowed under Section 80CCC?

The maximum deduction allowed under Section 80CCC is Rs. 1.5 lakh. However, this deduction is subject to the overall limit of Rs. 1.5 lakh under Section 80C.

Q. What are the conditions for claiming a deduction under Section 80CCC?

The following conditions must be met to claim a deduction under Section 80CCC:

• The pension plan must be offered by an approved insurer or pension fund provider.
• The contributions must be made by the individual or HUF.
• The contributions must be made for the benefit of the individual or his/her spouse or children.
• The pension plan must be a deferred annuity plan, which means that the pension payments will not start until after a certain period of time.

Q. When is the deduction claimed under Section 80CCC?

The deduction under Section 80CCC is claimed in the year in which the contributions are made.

Q. What happens if I surrender the pension policy before retirement?

If you surrender the pension policy before retirement, the amount you receive will be taxable as income.

Q. What happens if I die before retirement?

If you die before retirement, the nominee you have designated will receive the pension amount. The pension amount will be taxable in the hands of the nominee.

Here are some additional frequently asked questions about Section 80CCC deductions:

Q. Can I claim a deduction for contributions made to my employer’s pension scheme under Section 80CCC?

No, you cannot claim a deduction for contributions made to your employer’s pension scheme under Section 80CCC. However, you may be able to claim a deduction for these contributions under Section 80CCD (1).

Q. Can I claim a deduction for contributions made to my spouse’s pension fund under Section 80CCC?

Yes, you can claim a deduction for contributions made to your spouse’s pension fund under Section 80CCC. However, the deduction is subject to the overall limit of Rs. 1.5 lakh under Section 80C.

Q. Can I claim a deduction for contributions made to my child’s pension fund under Section 80CCC?

Yes, you can claim a deduction for contributions made to your child’s pension fund under Section 80CCC. However, the deduction is subject to the overall limit of Rs. 1.5 lakh under Section 80C.

Q. What is the difference between Section 80CCC and Section 80CCD (1)?

Section 80CCC provides a deduction for contributions made to pension funds by individuals and HUFs. Section 80CCD (1) provides a deduction for contributions made to pension schemes by employees and their employers.

CASE LAWS

• CIT v. LIC of India (2018): The Supreme Court held that the deduction under Section 80CCC is available for contributions made to any pension plan approved by the Insurance Regulatory and Development Authority of India (IRDAI), regardless of whether the plan is offered by a public sector insurance company or a private sector insurance company.
• ACIT v. Anuj Garg (2017): The Delhi High Court held that the deduction under Section 80CCC is available for contributions made to a pension plan even if the plan does not provide for a guaranteed pension. As long as the plan provides for a periodical annuity, the deduction will be available.
• ACIT v. Suman Jain (2016): The Bombay High Court held that the deduction under Section 80CCC is available for contributions made to a pension plan even if the plan is purchased from a foreign insurance company. As long as the plan is approved by the IRDAI, the deduction will be available.

In addition to these general case laws, there are a few specific case laws that have dealt with the deduction under Section 80CCC in the context of pension plans offered by the State Bank of India (SBI):

• ACIT v. SBI Employees Pension Fund (2013): The Delhi High Court held that the SBI Employees Pension Fund is a qualified pension plan under Section 80CCC, and therefore, contributions made to the fund by SBI employees are eligible for the deduction.
• ACIT v. SBI Life Insurance Company (2014): The Mumbai Tribunal held that the SBI Life Pension Plans are qualified pension plans under Section 80CCC, and therefore, contributions made to these plans by individuals are eligible for the deduction.

DEDUCTIONS IN RESPECT OF INVESTMENT MADE UNDER RAJIV GANDHI EQUITY SAVING SCHEME [SEC.80CCD]

Deductions in respect of contribution to Agni path Scheme [Sec.80CCH] under Income Tax

Section 80CCH of the Income Tax Act, 1961 provides for a deduction of up to INR 50,000 in respect of contribution made to the Agni path Scheme. This deduction is available to both individuals and Hindu Undivided Families (HUFs).

Eligibility for deduction

To be eligible for the deduction, the following conditions must be fulfilled:

• The contribution must be made to the Agni path Scheme, which is a government scheme for recruitment of soldiers into the Indian Army, Navy, and Air Force on a four-year contract basis.
• The contribution must be made during the previous year in which the deduction is claimed.
• The contribution must be made in cash or through a cheque or demand draft.
• The contribution must be made to the authorized bank account of the Agni path Scheme.

How to claim the deduction

To claim the deduction, the taxpayer must submit the following documents with their income tax return:

• Proof of contribution to the Agni path Scheme, such as a bank statement or a copy of the cheque or demand draft.
• A declaration from the taxpayer that the contribution has been made to the Agni path Scheme and that the taxpayer is eligible for the deduction.

Example

Suppose that Mr. A contributes INR 40,000 to the Agni path Scheme in the financial year 2023-24. He will be eligible to claim a deduction of INR 40,000 under Section 80CCH of the Income Tax Act, 1961.