Deductions from Income

AY 2008-2009 FY 2007-2008

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1

Individual

• Individual

By way of deduction from the Salary payable, in accordance with the conditions of his service, by or on behalf of the Government, for the purpose of securing a Deferred Annuity or making provision to his spouse or children.

1/5th of the Salary

As contribution to Provident Fund under Provident Funds Act, 1925 (Statutory Provident Fund)

No Limit

As contribution to Recognised Provident Fund

No Limit

As contribution to Approved SuperAnnuation Fund

No Limit

As contribution to Pension Fund set up by Mutual Funds notified under section 10(23D) or UTI

No Limit

2

Individual

• Any Two Children

Tuition Fees (not including Development Fees, Donation, etc.) at the time of admission or thereafter to any University, College, School or Other Educational Institution situated in India for the purpose of Full Time Education

No Limit

3

Individual

• Individual

• Spouse

• Any Child

To effect or to keep in force a Contract of Deferred Annuity (not being a plan with a option to receive the sum in cash by Insured and not covered by other clauses below) on Life

No Limit

4

Individual

• Individual

• Spouse

• Any Child

HUF

• Any Member

To keep in force an insurance

20% of the Sum Assured

As contribution to Provident Fund set up by the Central Government and notified by the Central Government (Public Provident Fund)

No Limit

As contribution for participation in (ULIP) Unit Linked Insurance Plan of UTI

No Limit

As contribution for participation in Unit Linked Insurance Plan of 'LIC Mutual Fund' notified under section 10(23D)

No Limit

5

Individual or HUF

As subscription to Central Government Security or National Savings Scheme Deposits

No Limit

As subscription to notified savings certificate(NSC VIII Issue)

No Limit

To effect or keep in force a contract for Annuity Plan of LIC or any other Insurer

No Limit

As subscription to any Units of Mutual Funds notified under section 10(23D)

No Limit

As subscription to Notified Deposit or Pension Fund of National Housing Bank

No Limit

Deductions from Income is available for subscription to any Deposit Scheme of -

• Public Sector Company, engaged in providing long term finance for construction or purchase of houses in India for residential purposes

• Statutory Authority constituted in India, for dealing with and satisfying the need for -

• Housing accommodation or

• Planning, development or improvement of cities, towns and villages, or both

No Limit

Deductions from Income is available for Payments by way of: -

1. Installment or Part Payment of the amount due -

   • Under any self financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or

   • To Company or Co-operative Society of which the assessee is a shareholder or member towards the cost of house property

2. Deductions from Income is available for Repayment of amount borrowed from -

   • Central Government or State Government

   • Bank (including Co-operative Bank)

   • Life Insurance Corporation

   • National Housing Bank

   • Public Company formed and registered in India with the main object of carrying on the business providing long-term finance for construction or purchase of houses in India for residential purposes and eligible for deduction under section 36(1)(viii)

   • Company (in which public is substantially interested), or Co-operative Society, engaged in the business of financing the construction of houses

   • Assessee's employer where such employer is

     • Public Company or

     • Public Sector Company or

     • University established by Law or

     • College affiliated to such University or

     • Local Authority or

     • Local Authority or

     • Co-operative Society

3. Deductions from Income is available for Stamp Duty, Registration Fee and Other Expenses for the purpose of transfer of such house property to the assessee

4. Payment does not include -

   • Admission Fee, Cost of Share and Initial Deposit which a shareholder of a Company or a member of a Co-operative Society has to pay for becoming member

   • Cost of any addition or alteration or renovation or repair of house property after the issue of completion certificate or after occupying the house or after let out

   • Expenditure eligible for deduction under section 24

Note: -

The above payments should be for purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head "Income from House Property".

No Limit

Deductions from Income is available for subscription to

• Equity Shares or Debentures forming part of any Eligible Issue of Capital approved by a Public Company

• Eligible Issue of Capital by any Public Financial Institution in the prescribed form

• Units of any Mutual Fund notified under section 10(23D), approved on an application by such Mutual Fund to Board, which is applied for Eligible issue of Capital

[Eligible Issue means the issue where the entire proceeds is invested in a Public Limited Company or Public Financial Institution formed for the purposes of business referred to in section 80IA(4) - Infrastructure Facility]

No Limit

Term deposits for a period of not less than 5 years with a scheduled bank and which is in accordance with a scheme framed by the Central Government

Schedule Bank means the SBI, or its subsidiaries, or a corresponding bank (on acquisitions and transfers), or a bank included in Second Schedule to the Reserve Bank of India Act,1934.

No Limit

80C(5)(i)

LIC Premium: - [80C(2)(i)]

• Contract is terminated by notice, or

• Contract ceases to be in force by reason of failure to pay, or failure to Revive the contract of insurance, in case of

• Single premium policy, within 2 years after the commencement of insurance

• any other policy, before premiums have been paid for 2 years

• No deductions from Income shall be allowed in such year

• Amount allowed as deduction thereto shall be deemed to income in such respective previous year(s)

80C(5)(ii)

Unit Linked Insurance Plan: - [80C(2)(x) and 80C(2)(xi)]

• Terminate participation by notice, or

• Ceases to participate by reason of failure to pay contribution, or failure to Revive participation before contributions in respect of such participation have been paid for 5 years

• No deductions from Income shall be allowed in such year

• Aggregate amount allowed as deduction thereto shall be deemed to income in such previous year(s) of non-fulfilment of the conditions.

80C(5)(iii)

Housing Schemes Payments, Stamp Duty, etc: - [80C(2)(xviii)]

• Transfers the property before expiry of 5 years from the end of the financial year, in which the possession of such property is obtained

• Receives back or gets refund of any of the said amounts

• No deductions from Income shall be allowed in such year

• Aggregate amount allowed as deduction thereto shall be deemed to income in such previous year(s) of non-fulfilment of the conditions.

80C(6)

Equity Shares or Debentures Acquired: -

• Sold or otherwise transferred by the assessee to any person at any time within a period of 3 years from the date of their acquisition

• Aggregate amount allowed as deduction thereto shall be deemed to income in such previous year(s) of non-fulfilment of the conditions.

80CCC

Individual

Contribution paid or deposited to certain pension funds to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the fund referred to in clause 10(23AAB).

Any amount standing to the credit of the assessee in a fund including interest, bonus, etc., is received by the assessee or his nominee, whether on surrender of plan or as pension shall be treated as income in his hands.

If deduction is claimed under this section, deduction under section 80C is not available.

Lower of the following:

• Actual Contribution.

• Rs. 1,00,000

80CCD

Individual being Central Govt. Employee employed after 01.01.2004

Contribution made by such employee or Central Government to a pension Scheme notified by Central Government of India.

Where any amount standing to the credit of the assessee in such Pension scheme, together with the amount received by the assessee -

• On account of closure or his opting out of the pension scheme

• Pension received from the annuity plan purchased or taken on such closure or opting out

is chargeable as income of the previous year in which such sum is received.

If deduction is claimed under this section, deduction under section 80C is not available.

Lower of the following:

• Actual Contribution.

• 10% of the salary

Note: -

In each case of contribution by employee and Central Govt. Hence, a total of 20% of salary can be claimed as deduction.

Salary includes DA (Dearness Allowance), but excludes all other allowances and perquisites.

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