Deductions

Conditions for Claiming Deduction

• Assessees must file returns on or before due dates to claim deduction under Sections 80-IA, 80-IAB, 80-IAC, 80-IB, 80-IC, 80-IE, 80JJAA, 80LA, 80QQB, 80RRB.

• Certain deductions require filing audit or certification reports in prescribed forms such as Form 10CCB, 10CCC, 10CCD, 10CCE, 10CCF, 10DA, etc.

No Deduction to Members if Allowed to AOP or BOI

Section 80A prescribes that if an AOP or BOI is allowed deduction under Section 80G, 80GGA, 80GGC, 80-IA, 80-IB, 80-IC or 80-IE, no deduction shall be allowed to members of such AOP or BOI on income shares.

Investment Linked Deductions [Section 80C]

• An Individual or Hindu Undivided Family (HUF) is eligible to claim deduction up to Rs. 1,50,000 for specified investments, deposits, or payments under this provision.

• Deduction covers payments for life insurance, education expenses, contributions to provident fund, housing loan repayment, small savings schemes, pension funds, and fixed deposits, etc.

• Deduction allowed on an actual payment basis in the year of payment, irrespective of the year to which the payment relates.

• Deduction allowed for amounts paid/deposited in the following categories:

Contribution to Pension Fund of Insurance Companies [Section 80CCC]

• Any individual (resident or non-resident) who has made payment or deposit under an annuity plan of LIC or any other insurer for receiving pension can claim deduction.

• Deduction allowed is the lower of actual amount paid/deposited or Rs. 1,50,000.

• No deduction for interest or bonus accrued or credited to the account.

• If assessee surrenders annuity (whole or part) before maturity after claiming deduction, surrender value and interest or bonus accrued are taxable in the year of receipt.

• Pension received by assessee or nominee, where deduction was claimed, is taxable in hands of receiver in year of receipt.

Deduction for Contribution to Pension Scheme [Section 80CCD]

• An individual (resident or non-resident) can claim deduction for amount contributed to the National Pension Scheme (NPS), Atal Pension Yojana (APY), or NPS Vatsalya Scheme.

• Maximum deduction of Rs. 1,50,000 can be claimed for contributions to own NPS account and APY under Section 80CCD(1). Deduction is allowed up to lower of actual contribution or 10% of salary for employee; 20% of gross total income for self-employed.

• An additional deduction of up to Rs. 50,000 is available under Section 80CCD(1B) for contributions to own NPS account or NPS Vatsalya account of a minor child.

• Total deduction for individual’s own NPS contribution can be up to Rs. 2,00,000 including additional Rs. 50,000 under Section 80CCD(1B).

• Employer's contribution deductible separately under Section 80CCD(2) and not subject to above limits.

• Deduction under Section 80CCD(2) allowed for employer’s contribution to NPS account, limited to:

🞍 14% of salary (Central/State Government employees);

🞍 14% of salary if employee opts for new tax regime under Section 115BAC;

🞍 10% of salary in other cases.

🞍 ‘Salary’ includes basic salary, dearness allowance (if terms provide), and commission as % of turnover, excluding other allowances/perquisites.

• Amount received by the nominee on the death of the assessee or minor is not considered income of such person.

• Pension or annuity received on closure or opting out is fully taxable in hands of recipient.

Deduction for Contribution to Agniveer Corpus Fund [Section 80CCH]

• Individuals enrolled under the Agnipath Scheme (Agniveers) are entitled to claim deduction for contributions made to the Agniveer Corpus Fund.

• Full amount contributed by the Agniveer during the financial year is deductible.

• Contribution made by the Central Government to the Agniveer Corpus Fund account of the Agniveer is included in salary income but allowed as deduction under section 80CCH(2).

Deduction in Respect of Health Insurance Premium [Section 80D]

• Deduction is allowed for amounts paid for health insurance policies, preventive health check-ups, contribution to Central Government Health Scheme (CGHS), and medical expenditure.

• Deduction can be claimed by an individual for himself, family (spouse and dependent children), or parents.

• HUF is allowed deduction for amount incurred on any family member.

• Maximum deduction under this provision is Rs. 1,00,000. An aggregate deduction for preventive health check-ups shall not exceed Rs. 5,000.

• HUFs not eligible for deduction for preventive health check-ups.

• Deduction allowed for medical treatment expenses of senior citizens (aged 60 or above) not covered under health insurance.

• Medical expenditure includes consultation fees, medicines, hearing aids, etc., whether or not covered under insurance.

• Deduction allowed only if payment is made by any mode other than cash. Cash payment allowed for preventive health check-up only.

• Deduction for single premium health insurance policies having cover of more than one year allowed proportionately for number of years covered, subject to maximum limits.

Deduction for Medical Treatment of Person with Disability [Section 80DD]

• Deduction is allowed to a resident individual or Hindu Undivided Family (HUF) who incurs medical expenditure or pays insurance premiums for the benefit of a dependent family member suffering from disability.

• For an individual assessee, dependent means spouse, children, parents, brothers, or sisters wholly or mainly dependent for support and maintenance. For HUF, dependent means any member of HUF wholly or mainly dependent for support and maintenance.

• A flat deduction of Rs. 75,000 is allowed if the person is suffering from disability; Rs. 1,25,000 if suffering from severe disability.

• Assessee must obtain a certificate of disability in Form 10-IA or any other format, as the case may be.

• If the dependent predeceases the assessee, the amount paid or deposited under the insurance scheme is deemed to be the income of the assessee for the previous years in which the amount is received.

• If the amount is received after the death of the assessee, it is exempt under Section 10(10D).

• If the assessee predeceases the dependent, the lump sum or annuity received by the dependent under the insurance policy is exempt under Section 10(10D).

• If a dependent receives any sum under an insurance policy in the event that the assessee attains the age of 60 years and the payment of such insurance scheme is stopped, the amount received is not taxable.

Deduction for Medical Treatment of Prescribed Disease or Ailment [Section 80DDB]

• Deduction is allowed for amount incurred on medical treatment of specified diseases or ailments.

• An individual can claim deduction for medical expenses for himself or a dependent person (spouse, children, parents, and brothers and sisters).

• Hindu Undivided Family (HUF) can claim deduction for medical expenses incurred for any family member.

• Deduction is allowed for actual amount incurred or Rs. 40,000, whichever is lower. For senior citizens, limit is Rs. 1,00,000.

• Amount reimbursed or received under insurance or by employer reduces the deduction amount.

• A prescription is also required from a specialist with specified qualifications. It contains the name and age of the patient, the name and address of the hospital (in case of a government hospital), the name of the disease or ailment, the name, address, registration number, and qualification of the specialist issuing the prescription.

Deduction for Interest on Education Loan [Section 80E]

• Section 80E allows individuals to claim deduction for interest paid on an education loan taken for higher education for themselves or their relatives. 'Relative' of an individual means his spouse, his children or the student for whom he is the legal guardian

• Higher Education means any course pursued after passing the Senior Secondary Examination or equivalent from recognized institutions, including vocational courses.

• Deduction allowed for the entire amount of interest paid during the financial year. No deduction for repayment of principal.

• Deduction available for a maximum period of 8 assessment years starting from the year interest repayment begins.

• However, if the entire interest is paid before expiry of 8 years, no deduction shall be allowed for any assessment year after the year of full payment.

• To claim deduction, the loan must be taken from any bank, a notified financial institution, or any approved charitable institution.

Deduction for Interest on Housing Loan [Section 80EE]

• Section 80EE allows deduction to an individual in respect of interest payable on housing loan for the acquisition of residential property, subject to specified conditions.

• Deduction is allowed up to Rs. 50,000 per financial year for interest paid or payable.

• Conditions for eligibility:

🞍 Loan sanctioned between 01-04-2016 and 31-03-2017.

🞍 Loan amount must not exceed Rs. 35 lakh.

🞍 Stamp duty value of the residential property should not exceed Rs. 50 lakh.

🞍 Assessee must not own any residential house property on the date of sanction of the loan.

🞍 Loan must be taken from a bank, banking company, housing finance company, or similar institution.

Additional Deduction for Interest on Housing Loan [Section 80EEA]

• Any individual (resident or non-resident) who has taken a housing loan during the specified period and meets certain conditions can claim deduction.

• A deduction of up to Rs. 1,50,000 per financial year is allowed for interest paid or payable on such loan.

• Conditions for eligibility:

🞍 The assessee must not be eligible to claim deduction under Section 80EE.

🞍 Loan must be sanctioned between 01-04-2019 and 31-03-2022.

🞍 Stamp duty value of the property must not exceed Rs. 45 lakhs.

🞍 The assessee must not own any residential house property on the date of loan sanction.

🞍 Loan must be taken from a bank, banking company, or housing finance company.

Deduction for Interest on loan taken to buy Electric Vehicles [Section 80EEB]

• Section 80EEB offers deduction for interest paid on loans taken to purchase electric vehicles, promoting a pollution-free environment.

• Any individual (resident or non-resident) who has taken a loan to purchase an electric vehicle.

• A deduction of up to Rs. 1,50,000 for interest paid or payable during the year is allowed.

• Loan must be sanctioned between 01-04-2019 and 31-03-2023.

• The loan must be taken from a banking company, bank, banking institution, NBFC, or a systematically important non-deposit-taking NBFC.

Deduction in respect of Donations [Section 80G]

• Any assessee (resident or non-resident) who makes a donation to specified funds, institutions, or associations is eligible to claim a deduction under Section 80G. The deduction allowed ranges from 50% to 100% of the donation amount, subject to certain limits and conditions.

• Donations made in cash exceeding Rs. 2,000 are not eligible for deduction; donations in kind are not deductible.

• Deduction under this provision is allowed in accordance with the following:

🞍 100% deduction without a maximum limit

🞍 50% deduction without a maximum limit

🞍 100% deduction subject to maximum limit

🞍 50% deduction subject to a maximum limit

• Notified Funds and Institutions:

Note 1: Where the aggregate amount donated to the funds or institutes specified above exceeds 10% of the adjusted gross total income (AGTI), the amount in excess of such 10% shall not be eligible for deduction.

The adjusted gross total Income shall be computed in the manner explained in the table below:

• Under Section 80G, a donor is entitled to a deduction only if the donee fund or institution complies with the conditions specified under Section 80G(5).

• One key condition is that the donee fund or institution must file a statement of donation with the Income-tax Department and furnish a certificate of donation to the donor specifying the amount received during the year. Such certificate serves as evidence to substantiate the deduction claimed.

• The claim for deduction will be allowed only on the basis of information furnished to the Income-tax Department regarding the donation.

• If an amount has been claimed and allowed as a deduction under this provision, then no deduction is allowed for the same amount under any other provision of the Income-tax Act.

• Deduction shall not be denied to the donor on the following grounds:

🞍 If, after donation, the income of the fund or institution becomes taxable due to non-compliance with Sections 11, 12, or 12A; or

🞍 If exemption under Section 11 or 12 is denied under Section 13(1)(c) regarding income arising from investments made in concerns as referred to in Section 13(2)(h), provided such investment does not exceed 5% of the capital of the concern.

Deduction for Rent Paid [Section 80GG]

• Deduction under Section 80GG is available only to individuals (resident or non-resident), including salaried and self-employed persons.

• Not allowed to those claiming HRA exemption under Section 10(13A).

• Deduction can be claimed for rent paid on furnished or unfurnished accommodation used for own residence.

• The deduction is the least of the following:

🞍 Rent paid minus 10% of total income,

🞍 25% of total income, or

🞍 Rs. 5,000 per month (i.e., Rs. 60,000 per year).

• The assessee, his spouse, minor child, or HUF of which he is a member must not own any residential accommodation at the place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession.

• The assessee must also not own a self-occupied residential property at any other location (i.e., one with annual value taken as nil).

• Deduction is allowed only if the assessee furnishes Form No. 10BA electronically.

• Total income is computed after all other deductions under Chapter VI-A, but before deducting the amount under Section 80GG.

Deduction for Donations towards Scientific Research or Rural Development [Section 80GGA]

• Any assessee not having any income taxable under the head “Profits and Gains of Business or Profession” is eligible to claim a deduction for amounts contributed to specified associations or institutions for scientific research or rural development.

• No deduction shall be allowed for cash contributions exceeding Rs. 2,000.

• Eligible Donations:

🞍 Donations made to research associations approved under Section 35(1)(ii)/(iii); or universities, colleges, or other institutions approved under Section 35(1)(ii)/(iii), undertaking scientific or statistical research or social science research.

🞍 Donations made to associations or institutions undertaking approved rural development programmes under Section 35CCA, or associations or institutions with the objective of training persons for implementing rural development programmes. The assessee needs to furnish a certificate from such association or institution to claim a deduction under this provision.

🞍 Donations to notified rural development funds or the National Urban Poverty Eradication Fund are also eligible.

🞍 Donations to public sector companies, local authorities, or associations/institutions approved by the National Committee for projects promoting social and economic welfare or uplift of the public.

• Deduction allowed shall not be denied solely because approval to the institution or programme was withdrawn after the donation.

• 100% of the donation amount is deductible under this provision.

• If any amount has been claimed and allowed under Section 80GGA, no deduction shall be allowed under any other provision for the same amount.

• A deduction is allowed based on information furnished by the donee to the income tax department. It is subject to verification according to the risk management strategy.

Contributions by Companies to Political Parties [Section 80GGB]

An Indian company contributing to a political party or an electoral trust can claim a deduction under this section. However, contributions made in cash are not deductible.

Contributions by persons other than Companies to Political Parties [Section 80GGC]

A deduction is available to any assessee, other than a local authority or an artificial juridical person funded wholly or partly by the Government, for contributions made to a political party or an electoral trust. Contributions made in cash are not eligible for deduction.

Profits from Industrial Undertaking or Infrastructural Development [Section 80-IA]

• Deduction under this section is available to any assessee deriving profits from specified eligible businesses. The deduction is allowed up to 100% of profits for 10 consecutive assessment years out of 15 or 20 years, as applicable.

• Development, operation or maintenance of an infrastructure facility - This includes:

🞍 A road including a toll road, a bridge or a rail system;

🞍 A highway project including housing or other activities being an integral part of the highway project;

🞍 A water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system;

🞍 A port, airport, inland waterway, inland port or navigational channel in the sea.

• Where the housing or other activities are an integral part of the highway project, profits from such activities are exempt if:

🞍 Such profits are computed as per Rule 18BBE;

🞍 Profits are transferred to a special reserve account

🞍 Actually utilised for the core highway project within 3 years from the year the amount was transferred to the reserve.

Unutilised amounts are taxable in the year of transfer to the reserve account. Separate books shall be maintained, and a certificate in Form No. 10CCC (specifying the amount credited to the reserve account and the amount utilised during the relevant previous year for the highway project) must be submitted.

• Conditions for Infrastructure Projects:

🞍 Owned by an Indian company, a consortium, or a statutory body;

🞍 Agreement with Central/State Government or authority for developing, operating or maintaining a new infrastructure facility;

🞍 Operation commenced between 01-04-1995 and 31-03-2017.

• Development, operation or maintenance of an industrial park or SEZ - Applicable to developers and operators of industrial parks and SEZs.

🞍 Deduction of 100% profits for 10 consecutive years within 15 years from commencement.

🞍 No deduction for SEZs notified on or after 01-04-2005 (such SEZs fall under Section 80-IAB).

🞍 SEZs and industrial parks must be notified under Central Government schemes:

o SEZ is notified between 01-04-1997 to 31-03-2006; and

o Industrial Parks or SEZs were notified between 01-04-1997 and 31-03-2006.

• Generation or distribution of power—This applies to the generation or generation and distribution of power, transmission or distribution by laying a network of new lines and substantial renovation and modernization of the existing network of transmission/distribution lines.

🞍 Deduction of 100% profits for 10 years within 15 years from commencement

🞍 Power generation: Business commenced between 01-04-1993 and 31-03-2017

🞍 Transmission or distribution of power: Business commenced between 01-04-1999 and 31-03-2017

🞍 Substantial renovation and modernisation: Business commenced between 01-04-2004 and 31-03-2017

🞍 The undertaking should not be formed by splitting up or reconstructing a business already in existence (except Section 33B).

🞍 Second-hand plant or machinery should not be used (except if its value does not exceed 20% of the total value of plant and machinery)

• Reconstruction or revival of power-generating plants – Assessee claiming deduction under this provision is required to fulfil the following conditions:

🞍 It is set up for the reconstruction or revival of a power-generating plant;

🞍 Undertaking shall be owned by an Indian company formed before 30-11-2005 with majority equity participation by public sector companies to enforce the security interest of the lenders to the company owning the power generating plant and notified before 31-12-2005 by the Central Government;

🞍 Such undertaking begins to generate, transmit, or distribute power before 31-03-2011.

🞍 Deduction of 100% profits for 10 years within 15 years from commencement.

• No deduction shall be allowed where the business is in the nature of a works contract awarded by any person, including the Government.

• Other Conditions

🞍 Deduction computed by deeming that the eligible business is the only source of income.

🞍 'Initial Assessment Year' is the first year opted by the assessee for claiming the deduction [Circular No. 1/2016, dated 15-02-2016].

🞍 Deduction cannot be claimed under any other provision of ‘Chapter VI-A under the heading C’ (Section 80HH to 80RRB). Further, the deduction amount shall not exceed the profits and gains of the eligible business.

🞍 Profit must not exceed reasonably expected; AO may recompute income.

🞍 Transfer pricing norms apply to specified domestic transactions.

🞍 Deduction claim under this section requires:

o Audit report under Form 10CCB (electronically filed 1 month before the due date to file return of income under section 139(1));

o Accompanied by separate financials and agreements/approvals with the Government/statutory authority.

🞍 Return of income must be filed within the due date under Section 139(1) to claim a deduction.

Deduction for Profits from Business of Developing a Special Economic Zone (SEZ) [Section 80-IAB]

• Developers of SEZ can claim a deduction for profits and gains from the operation and maintenance of SEZ.

• Deduction available for 100% profits for 10 consecutive assessment years out of 15 years from commencement.

• Deduction amount is computed assuming the eligible business is the sole income source for the previous year.

• No deduction if development of SEZ begins on or after 1st April 2017.

• SEZ must be notified by the Central Government on or after 1st April 2005.

• Development must begin on or before 31st March 2017.

• SEZ notified on or before 31st March 2005 is not eligible here; such deduction is available under Section 80-IA.

• Deduction claim under this section requires books of account audited by a Chartered Accountant. Audit report to be furnished electronically in Form 10CCB one month before the due date of furnishing the return of income under section 139(1).

• Profit must not exceed reasonably expected; AO may recompute income.

• Transfer pricing norms apply to specified domestic transactions.

• Return of income must be filed within the due date under Section 139(1) to claim a deduction.

• Deduction cannot be claimed under any other provision of ‘Chapter VI-A under the heading C’ (Section 80HH to 80RRB). Further, the deduction amount shall not exceed the profits and gains of the eligible business.

• If the operation/maintenance of the SEZ is transferred to another developer, the transferee is allowed a deduction for the remaining period of 10 years as if no transfer occurred.

• The same applies to the amalgamation or demerger of SEZ developer Indian companies.

Deduction to an Eligible Start-up [Section 80-IAC]

• Eligible startups (companies or LLPs) can claim deduction for profits and gains from eligible business activities.

• Deduction is allowed up to 100% of profits and gains for 3 consecutive assessment years out of 10 assessment years beginning from the year of incorporation. Deduction is computed assuming the eligible business is the sole source of income during the relevant year.

• Meaning of Eligible Startup - Section 80-IAC defines an 'eligible start-up' as a Company or a Limited Liability Partnership which fulfils the following conditions:

🞍 Incorporated on or after 1st April 2016 but before 1st April 2030.

🞍 Turnover does not exceed Rs. 100 crore in the previous year for which deduction is claimed.

🞍 Holds a certificate of eligible business from the Inter-Ministerial Board of Certification notified by the Central Government.

🞍 Engaged in the business of innovation, development or improvement of products/processes/services or scalable business models with high potential for employment generation or wealth creation.

🞍 Registered with the Department for Promotion of Industry and Internal Trade (DPIIT). CBDT had clarified that DPIIT recognition doesn’t automatically qualify a start-up for section 80-IAC deduction.

• Start-up must not be formed by splitting up or reconstructing an existing business, except for re-establishment/revival under Section 33B.

• Start-up must not be formed by transfer of previously used plant/machinery, except if used outside India before installation and imported (with certain conditions). The condition is deemed fulfilled if the second-hand plant/machinery value does not exceed 20% of the total value.

• DPIIT recognized start-up must apply in Form 1 to the Inter-Ministerial Board of Certification with:

🞍 Annual accounts for the last 3 financial years;

🞍 Copy of income-tax returns for the last 3 financial years;

🞍 Copy of Memorandum of Association, LLP deed, board resolution, etc.

The board may request additional information and reject the application with reasons if the criteria are not met.

• DPIIT may revoke the certificate if issued on false information. Revoked certificate deemed never to have been issued/granted.

• Deduction claim under this section requires books of account audited by a Chartered Accountant. Audit report to be furnished electronically in Form 10CCB one month before the due date of furnishing the return of income under section 139(1).

• Profit must not exceed reasonably expected; AO may recompute income.

• Transfer pricing norms apply to specified domestic transactions.

• Return of income must be filed within the due date under Section 139(1) to claim a deduction.

• Deduction cannot be claimed under any other provision of ‘Chapter VI-A under the heading C’ (Section 80HH to 80RRB). Further, the deduction amount shall not exceed the profits and gains of the eligible business.

Deduction for Profits from Certain Industrial Undertakings [Section 80-IB]

• Deduction is available to assessee deriving profits and gains from Processing, Preservation, and Packaging of specified food items [Section 80-IB(11A)]

• Applicable to processing/preservation/packaging of fruits, vegetables, meat and meat products, poultry, marine, dairy products, and integrated business of handling/storage/transportation of food grains.

• Deduction for 10 years from the year in which it begins its operation.

🞍 If assessee is a company, 100% for the first 5 years, 30% for the next 5 years;

🞍 Any other assessee - 100% for the first 5 years and 25% in the next 5 years.

• Assessee must commence its operation on or after 01-04-2001; however, if the assessee is engaged in the business of processing, preservation and packaging of meat or meat products or poultry or marine or dairy products, its business must commence on or after 01-04-2009.

• Deduction claim under this section requires books of account audited by a Chartered Accountant. Audit report to be furnished electronically in Form 10CCB one month before the due date of furnishing the return of income under section 139(1).

• Profit must not exceed reasonably expected; AO may recompute income.

• Transfer pricing norms apply to specified domestic transactions.

• Return of income must be filed within the due date under Section 139(1) to claim a deduction.

• Deduction cannot be claimed under any other provision of ‘Chapter VI-A under the heading C’ (Section 80HH to 80RRB). Further, the deduction amount shall not exceed the profits and gains of the eligible business.

• If the undertaking is transferred in the scheme of amalgamation or demerger, the amalgamated or the resulting company is allowed a deduction for the remaining period as if no transfer occurred.

• The undertaking must not be formed by splitting up or reconstructing an existing business, except for re-establishment/revival under Section 33B.

• Such an undertaking must not be formed by the transfer of previously used plant/machinery, except if used outside India before installation and imported (with certain conditions). The condition is deemed fulfilled if the second-hand plant/machinery value does not exceed 20% of the total value.

Deduction for Profits from Housing Projects [Section 80-IBA]

• Assessees deriving profits from developing and building housing projects or notified rental housing projects are eligible for deduction.

• Deduction is 100% of profits and gains from such business.

• No deduction allowed if the housing project is executed as a works contract awarded by any person, including the Government.

• Time Limit for Approval and Completion:

🞍 Project approved between 01-06-2016 and 31-03-2022.

🞍 Project to be completed within 5 years from the approval date.

🞍 In cases of multiple approvals, it shall be considered approved on the date when the building plan was initially approved.

🞍 The project shall be deemed to be completed on the date the certificate of completion of the project is obtained.

• Area of project and residential units: the total area of the plot of land and the carpet area of the residential units does not exceed:

🞍 Location of residential units is Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region) - 1000 sq. meters for area of land, 60 sq. meters for carpet area of residential unit;

🞍 For other locations - 2000 sq. meters for the area of land, 90 sq. meters for the carpet area of the residential unit.

• The carpet area of the shops/commercial space doesn’t exceed 3% of the aggregate carpet area.

• Utilisation of land - The Project must utilise a specified minimum percentage of the floor area ratio (FAR) as per the rules made by the Government or local authority.

FAR = Total covered area of plinth area on all the floors / Area of the plot of land

Specified percentage in this behalf is as follows:

🞍 Where location is Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region) - % of floor area ratio not less than 90%;

🞍 For other locations - % of floor area ratio not less than 80%.

• Stamp duty value of the residential unit in such project does not exceed Rs. 45 lakhs if approved on or after 01-09-2019.

• Where an individual has been allotted a residential unit in the housing project, no other residential unit in that project shall be allotted to him or his spouse or his minor children.

• The assessee shall maintain separate books of accounts in respect of such housing project.

• Deduction must be claimed in return of income filed on or before the due date.

• Where an assessee fails to complete the project within 5 years from the approval date, prior deductions become taxable as business income in the year the completion period expires.

• Deduction claimed once in any previous year cannot be claimed again in another year.

Deduction for Profits from Undertakings in North-Eastern States [Section 80-IE]

• Any undertaking deriving profits from an eligible business or from the manufacture/production of eligible articles or things in North-Eastern States (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura) can claim a deduction under Section 80-IE.

• Eligible Businesses:

🞍 Service Sector:

o Hotels (minimum two-star category);

o Adventure and leisure sports (including ropeways);

o Medical and health services (nursing homes with at least 25 beds);

o Running an old-age home;

o Operating vocational training institutes for hotel management, catering and food craft, entrepreneurship development, nursing and para-medical, civil aviation-related training, fashion designing and industrial training.;

o Running an IT-related training centre;

o Manufacturing of IT hardware;

o Biotechnology.

🞍 Manufacturing Sector: Manufacture/production of eligible articles or things, excluding:

o Tobacco and manufactured tobacco substitutes (Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985);

o Pan masala (Chapter 21 of the First Schedule to the Central Excise Tariff Act, 1985);

o Plastic carry bags < 20 microns (Notification No. S.O. 705(E), dated 02-09-1999 and S.O. 698(E), dated the 17-06-2003);

o Petroleum oil or gas refinery products (Chapter 27 of the First Schedule to the Central Excise Tariff Act, 1985).

• Eligible if operations begin or a substantial expansion is achieved between 01-04-2007 and 01-04-2017.

• Deduction is allowed equal to 100% of profits and gains for 10 years starting from the year operations commence or the substantial expansion is completed.

• Deduction computed assuming the eligible business is the sole source of income.

• No deduction if the total period of deduction under Section 80-IE or the second proviso to Section 80-IB(4) or Section 80-IC or Section 10C, as the case may be, exceeds 10 assessment years.

• Deduction claim under this section requires books of account audited by a Chartered Accountant. Audit report to be furnished electronically in Form 10CCB one month before the due date of furnishing the return of income under section 139(1).

• Profit must not exceed reasonably expected; AO may recompute income.

• Transfer pricing norms apply to specified domestic transactions.

• Return of income must be filed within the due date under Section 139(1) to claim a deduction.

• Deduction cannot be claimed under any other provision of Chapter VI-A, Section 10A, Section 10AA, Section 10B or Section 10BA. Further, the deduction amount shall not exceed the profits and gains of the eligible business.

• If the undertaking is transferred in the scheme of amalgamation or demerger, the amalgamated or the resulting company is allowed a deduction for the remaining period as if no transfer occurred.

• The undertaking must not be formed by splitting up or reconstructing an existing business, except for re-establishment/revival under Section 33B.

• Such an undertaking must not be formed by the transfer of previously used plant/machinery, except if used outside India before installation and imported (with certain conditions). The condition is deemed fulfilled if the second-hand plant/machinery value does not exceed 20% of the total value.

Deduction for Collection & Processing of Bio-degradable Waste [Section 80JJA]

• Any assessee deriving income from any of the following businesses can claim the deduction under this section:

🞍 Collecting and processing or treating bio-degradable waste for generating power;

🞍 Producing bio-fertilizers, bio-pesticides, other biological agents, or biogas; or

🞍 Making pellets or briquettes for fuel or organic manure.

• 100% of the profits from the eligible business can be claimed as deduction for a period of 5 consecutive assessment years beginning with the assessment year relevant to the previous year in which the business commences.

Deduction in Respect of Employment of New Employees [Section 80JJAA]

• Any assessee with profits from business and liable for tax audit can claim this deduction. The deduction is linked to hiring additional employees.

• Deduction equals 30% of the additional employee cost in each of the 3 years starting from the assessment year relevant to the year of additional employment.

• Additional employee cost refers to the total emoluments paid or payable to additional employees hired during the year.

• For new business, emoluments in the first year are deemed additional costs. However, for existing businesses, the additional cost is nil if there is no increase in employee numbers compared to the previous year’s end or if the payment mode is other than an account payee cheque or bank draft, or by use of electronic clearing systems through a bank account or specified electronic modes.

• 'Additional Employee' means an employee who has been employed by the assessee during the previous year and whose employment has the effect of increasing the total number of employees employed by the assessee as on the last day of the preceding year, but does not include:

🞍 An employee whose total emoluments exceed Rs. 25,000 per month;

🞍 An employee for whom the entire contribution is paid by the Government under the Employees' Pension Scheme [Notified under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 vide Notification No. GSR 748(E), dated 16-11-1995];

🞍 An employee who does not participate in the recognised provident fund;

🞍 An employee employed for a period of less than 240 days. In the case of an assessee engaged in the business of manufacturing of apparel, footwear or leather products, this period is 150 days.

Where an employee is employed during the previous year for a period of less than 240/150 days, but is employed for a period of 240/150 days in the immediately succeeding year, he shall be deemed to have been employed in the succeeding year.

• 'Emoluments' means any sum paid or payable to an employee in lieu of his employment. However, it does not include the following:

🞍 Employer's contribution to the pension fund, provident fund or any other fund for the benefit of the employee under any law;

🞍 Lump-sum payment paid or payable at the time of termination of service or superannuation or voluntary retirement, such as gratuity, severance pay, leave encashment, voluntary retrenchment benefits, commutation of pension, etc.

• Conditions for claiming deduction -

🞍 Business not formed by splitting/reconstruction except as per Section 33B.

🞍 Business not acquired via transfer or reorganization.

🞍 Assessee must furnish the accountant’s report electronically in Form 10DA at least one month before the due date for return filing.

Deduction to Offshore Banking Units and International Financial Services Centres (IFSC) [Section 80LA]

• Eligible assessee - The following person can claim deduction under this section:

🞍 Scheduled banks having offshore banking units in a SEZ.

🞍 A bank incorporated by or under laws outside India with offshore banking units in a SEZ.

🞍 Units of International Financial Services Centres (IFSC).

• Income Eligible for Deduction - The following incomes are eligible for deduction:

🞍 Income arising from an offshore banking unit in a SEZ;

🞍 Income arising from business referred under Section 6(1) of the Banking Regulation Act, 1949, with an undertaking located in a SEZ or related to SEZ development, operation or maintenance;

🞍 Income from any unit of the IFSC approved for setting up in SEZ; or

🞍 Income from the transfer of an asset (aircraft or ship) leased by an IFSC unit referred to above, provided the IFSC unit commenced operations on or before 31-03-2030.

• Quantum and Period of Deduction –

🞍 For Units of an IFSC: 100% deduction for 10 consecutive assessment years out of 15 years, starting from the year relevant to obtaining permission under the Banking Regulation Act, SEBI Act or the IFSC Authority Act.

🞍 For Others: 100% deduction for 10 consecutive years, starting from the year relevant to obtaining permission under the Banking Regulation Act, SEBI Act or under any other applicable law.

• Conditions to Claim Deduction - The assessee must electronically furnish the following documents with the return of income:

🞍 Chartered Accountant’s report in Form No. 10CCF certifying the correctness of the claimed deduction.

🞍 Copy of permission obtained under Section 23(1)(a) of the Banking Regulation Act, 1949, or registration under the International Financial Services Centre Authority Act, 2019.

Deduction for Inter-Corporate Dividend [Section 80M]

• A domestic company is eligible to claim deduction for dividend income received from another domestic company, a foreign company, or a business trust.

• Deduction is allowed when the domestic company further distributes the dividend to its shareholders on or before one month prior to the due date of furnishing the original return of income.

• Dividend amount claimed as deduction in a previous year cannot be claimed again in any other year.

Deduction in Respect of Income of Co-operative Societies [Section 80P]

• Every co-operative society is eligible to claim deduction under this section except:

🞍 Co-operative banks (other than primary agricultural credit societies or primary co-operative agricultural and rural development banks)

🞍 Regional rural banks

• Amount of deduction to a co-operative society engaged in specified activities: A co-operative society engaged in the following activities is allowed deduction for 100% of its income:

🞍 Business of banking or providing credit facilities to its members;

🞍 Marketing of agricultural produce grown by its members;

🞍 Purchase and supply of agricultural implements, seeds, livestock, or other articles intended for agriculture to its members;

🞍 Processing of agricultural produce of its members without the aid of power;

🞍 Collective disposal of the labour of its members;

🞍 Fishing or allied activities, including the purchase of material and equipment for supplies to members;

🞍 Cottage industry fulfilling prescribed conditions (Circular No. 722, dated 19-09-1995).

• A co-operative society engaged in the activities of collective disposal of labour or fishing or allied activities is eligible to claim deduction only if rules and bye-laws of the society restrict voting rights to individuals contributing labour or carry on the fishing or allied activities, co-operative societies providing financial assistance to the society, or the State Government.

• Amount of deduction to a primary society: A primary society is allowed to claim a deduction for the whole of the profits or gains arising from a business if it is engaged in supplying milk, oilseeds, fruits or vegetables grown by its members to the following:

🞍 Federal co-operative societies, engaged in the business of supplying milk, oilseeds, fruits, or vegetables; or

🞍 The Government/local authorities, or

🞍 Government companies/corporations established by or under a Central, State or Provincial Act which is engaged in the supplying of milk, oilseeds, fruits or vegetables to the public.

• Amount of deduction to any other co-operative society: Any other co-operative society engaged in any activities, other than those specified above, is allowed to claim a deduction for profit and gains attributable to such activities. However, the maximum amount that can be claimed as a deduction is Rs. 1,00,000 for consumer co-operative societies and Rs. 50,000 for other co-operative societies.

• Amount of deduction for interest or dividends - Deduction allowed for the entire interest or dividend income from investments in other co-operative societies.

• Amount of deduction for rental income - Deduction allowed for the entire amount of income from letting out godowns or warehouses used for storage, processing, or marketing of commodities.

• Amount of deduction for interest on securities or income from house property - Deduction allowed for the entire amount of income if the gross total income is up to Rs. 20,000. However, this deduction is not available to the housing societies, urban consumer societies, societies carrying on a transport business, or societies engaged in manufacturing operations with the aid of power.

• If the assessee is eligible to claim deduction under other provisions also, the deduction under this section is allowed after reducing the amount claimed elsewhere.

Deduction in Respect of Royalty Income [Section 80QQB]

• A resident individual author (including joint authors) can claim deduction for deriving income by:

🞍 Lump-sum consideration for the assignment or grant of his copyright interest in any book;

🞍 Royalty or copyright fees for such book;

🞍 Non-refundable advance payment of royalties/copyright fees.

• Deduction is allowed for an amount equal to the income earned as royalty or Rs. 3 lakhs, whichever is lower. If there are joint authors, each can claim deduction up to Rs. 3 lakhs.

• If royalty or copyright fees are not a lump sum consideration, the deduction is limited to 15% of the value of books sold during the previous year (without allowing any expenses). Any excess royalty beyond 15% not considered for deduction.

• If the royalty income is earned outside India, deduction is allowed only for royalty income earned in foreign exchange that is brought to India within 6 months from the end of the previous year (or an extended period allowed by RBI or other competent authority). Assessee is required to furnish a certificate in Form 10H electronically.

• To claim the deduction, the assessee must furnish a certificate in Form 10CCD from the payer of income, filed electronically with the return of income.

• Amount claimed under this provision cannot be claimed under any other provision in any other year.

Deduction in Respect of Royalty on Patents [Section 80RRB]

• A resident individual, being a patentee, can claim deduction for royalty income received in respect of patents registered on or after 01-04-2003 under the Patents Act, 1970.

• Royalty means consideration (including lump sum consideration) for:

🞍 Transfer or granting of a licence of patent rights; or

🞍 Imparting information about the use or working of a patent; or

🞍 Use of patent; or

🞍 Rendering services connected to activities referred to above.

But excludes:

🞍 Consideration that is taxable as capital gains; or

🞍 Consideration for the sale of products manufactured using patented processes or patented articles for commercial use.

• Deduction is allowed for an amount equal to the income earned as royalty or Rs. 3 lakhs, whichever is lower. If there are joint owners, each can claim deduction up to Rs. 3 lakhs.

• Where a compulsory license is granted under the Patent Act, 1970, the deduction is limited to the royalty amount under the terms and conditions of a licence settled by the Controller General of Patents, Designs and Trade Marks.

• If the royalty income is earned outside India, deduction is allowed only for royalty income earned in foreign exchange that is brought to India within 6 months from the end of the previous year (or an extended period allowed by RBI or other competent authority). Assessee is required to furnish a certificate in Form 10H electronically.

• To claim the deduction, the assessee must furnish a certificate in Form 10CCE, duly signed by the Controller General of Patents, Designs and Trade Marks, filed electronically with the return of income.

• Amount claimed under this provision cannot be claimed under any other provision in any other year.

Deduction for Interest on Deposits in Savings Account [Section 80TTA]

• Section 80TTA provides deduction to an individual or Hindu Undivided Family (HUF) from interest income earned on deposits in a savings bank account (excluding time deposits) held with:

🞍 Banking companies or institutions;

🞍 Co-operative societies engaged in banking business (including land mortgage or land development banks);

🞍 Post offices.

• Senior citizens must claim deduction for interest under Section 80TTB, not Section 80TTA.

• Partners or members cannot claim deduction on interest income from savings accounts held by the firm/AOP/BOI.

• Deduction is allowed equal to the interest credited or Rs. 10,000, whichever is lower.

Deduction to Senior Citizens from Interest on Deposits [Section 80TTB]

• Section 80TTB provides deduction to an individual being a resident senior citizen from interest income earned on bank deposits held with:

🞍 Banking companies or institutions;

🞍 Co-operative societies engaged in banking business (including land mortgage or land development banks);

🞍 Post offices.

• Partners or members cannot claim deduction on interest income from deposits held by the firm/AOP/BOI.

• Deduction is allowed equal to the interest credited or Rs. 50,000, whichever is lower.

Deduction in Case of a Person Suffering from a Disability [Section 80U]

• Resident individuals suffering from disability or severe disability can claim deduction under this section.

• A flat deduction of Rs. 75,000 is allowed if the person is suffering from disability; Rs. 1,25,000 if suffering from severe disability.

• Assessee must obtain a certificate of disability in Form 10-IA or any other format, as the case may be.

• If the disability is temporary and requires reassessment after a specified period, the certificate is valid for such specified period, and to claim further deductions, a new certificate shall be required.