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Income Tax: Old tax regime vs new tax regime and how to switch between the two? MintGenie explains
The traditional tax system provides an extensive array of deductions and exemptions, appealing to individuals who can leverage them effectively. The decision between the old and new tax regimes hinges on various factors, such as your income level, investment strategies, and more.
The default adoption of the new tax regime is a notable modification outlined in the Budget 2023. Its objective is to streamline the tax filing procedure and promote greater participation in the new regime, featuring reduced tax rates albeit with fewer deductions and exemptions.
This implies that if you don’t expressly select either the old or new regimes, your taxes will be computed under the new regime by default. Nevertheless, you have the flexibility to revert to the old regime at any time before the due date for filing your return for the applicable assessment year. The frequency of switches allowed is contingent on your profession.
Also Read: Income Tax Budget 2024 Live Updates
Interpreting the old tax regime
The previous tax regime, alternatively referred to as the “old tax regime” or the “deduction-based regime”, provides an extensive range of deductions and exemptions, presenting potential advantages for taxpayers who can make effective use of them. The characteristics of the previous tax regime encompass:
- Extensive deductions and exemptions: With more than 70 options, including Section 80C offering a substantial limit of ₹1.5 lakh, these provisions have the potential to substantially decrease your taxable income and reduce your overall tax liability.
- Established system: It served as the primary tax regime for numerous years preceding the introduction of the new tax regime in 2020.
- Taxpayer discretion: Individuals retain the option to choose the old tax regime, even though the new regime is set as the default choice.
Factors to contemplate when selecting the old regime comprise:
- To derive greater benefits from the old regime compared to the new regime, it is essential to leverage a substantial portion of available deductions, typically surpassing 30-40% of your income.
- Handling and asserting multiple deductions can be burdensome, necessitating extra paperwork and possibly increased professional fees for tax preparation.
- Although deductions result in a reduction of taxable income, the old regime features slightly higher tax rates for specific income brackets when compared to the new regime.
Understanding the new tax regime
The introduction of the new tax regime in India in 2020 has undeniably brought about significant changes. Geared towards simplifying the process with reduced tax rates, it does, however, come at the expense of limited deductions and exemptions. Despite being the default choice in Budget 2023, the decision on whether it is the best fit still hinges on individual circumstances.
These are some of the pivotal modifications implemented in the new tax regime for the financial year 2023-24 (assessment year 2024-25). Here is a detailed breakdown of these aspects to consider before choosing the new regime.
- Elevated basic exemption limit and rebate: The basic exemption limit, which represents the income threshold below which no tax is due, has been raised from ₹2.5 lakhs to ₹3 lakhs in the new tax regime. Additionally, the tax rebate under section 87A has been raised from ₹5 lakhs to ₹7 lakhs. Consequently, income up to ₹7 lakhs is now effectively tax-free in the new regime.
- Restoration of basic deduction: The standard deduction of ₹50,000, previously applicable exclusively to the old tax regime, has now been incorporated into the new tax regime. This serves to further decrease the taxable income under the new regime.
- Reduced surcharge: The surcharge rate on income surpassing ₹5 crores has been decreased from 37% to 25% in the new tax regime. This results in a reduced effective tax rate for individuals with high incomes who choose the new regime.
Forms to switch between tax regimes
The Central Board of Direct Taxes (CBDT) has recently unveiled two fresh income tax return forms, namely ITR-1 (SAHAJ) and ITR-4 (SUGAM), applicable for the Assessment Year 2024-25. In the updated ITR Form 1, individuals can now choose their preferred tax regime. Additionally, for ITR-4, which is designed for individuals with business or professional income, taxpayers are required to submit Form 10-IEA to opt out of the new tax regime.
- ITR-1 (SAHAJ): This streamlined form is currently accessible for individuals with income from salary, a single house property, interest income up to ₹2 lakhs, and agricultural income up to ₹5,000. Notably, it now incorporates the provision to directly choose the tax regime (old or new) within the form.
- ITR-4 (SUGAM): Designed for individuals with business or professional income, or income from sources other than salary, house property, or agriculture. Nevertheless, taxpayers using ITR-4 who wish to opt out of the new tax regime must submit an additional Form 10-IEA.
These adjustments simplify the process of filing Income Tax Returns (ITR) for numerous individuals, concurrently providing clarity on the procedure for selecting between tax regimes.
How to switch between tax regimes?
Transitioning between the old tax regime and the new tax regime, and vice versa is not a complex process. By following straightforward steps during the income tax return filing, taxpayers can easily navigate the decision-making process between the regimes and make their selection accordingly.
Step 1: Choose between the old and the new tax regime.
Step 2: Verify if you meet the eligibility criteria.
Step 3: Choose the form from the aforementioned list accordingly.
Step 4: If you are a salaried individual, access your ITR form (such as ITR-1 or ITR-2). Next, navigate to the section dedicated to selecting the tax regime. Choose the “New Tax Regime” option if it is suitable for you. Proceed to fill out the remaining sections of your ITR and submit the form.
Nevertheless, for individuals with business or professional income, download and fill out Form 10IE. Make sure to submit Form 10IE by July 31 of the assessment year. When filing your ITR, choose the “New Tax Regime” option.
In general, individuals with substantial investments, medical expenses, and other eligible deductions may find the old tax regime advantageous. Myriad alterations render the new tax regime more appealing to a broader spectrum of taxpayers, particularly those with lower incomes and individuals who don’t avail themselves of numerous deductions under the old regime. Nevertheless, conducting a thorough analysis and comparing it with the new regime is essential to determine the optimal choice for your specific financial situation.
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Step 1: Calculate Gross total income from salary:
The table below shows the calculation for gross taxable income from salary.
| Component | Amount (Rs.) | Exemption/ Deduction | Old regime | New regime |
|---|---|---|---|---|
| Basic Salary | 600,000 | – | 600,000 | 600,000 |
| HRA | 300,000 | 240,000 | 60,000 | 300,000 |
| Special Allowance | 60,000 | – | 60,000 | 60,000 |
| LTA | 40,000 | 40,000 (bills submitted) | 0 | 40,000 |
| Standard Deduction | – | 50,000 | – 50,000 | |
| Gross Total Income from Salary | – | – | 670,000 | 1,000,000 |
Gross Income from Salary – New Vs Old tax Regime
Step 2: Tax Deductions
Amit had made the following investments to save tax. These will be deducted from the gross income to arrive at net taxable income.
- EPF deduction from salary – Rs 60,000
- PPF Investment – Rs 1,50,000
- Medical Insurance Premium – Rs 25,000
- Total Tax Deduction = Rs 1,50,000 + 25,000 = Rs 1,75,000 (PPF & EPF both come under section 80C and have a tax deduction upper limit of Rs 1.5 lakh)
Step 3: Other Income
Amit also had Rs 20,000 from interest from fixed deposits with banks.
Step 4: Net Taxable Income
The table below shows the Net Taxable Income for Amit
Nature Old Tax Regime New Tax Regime Income from Salary 670,000 1,000,000 Income from Other Sources 20,000 20,000 Tax Deduction -175,000 0 Total Taxable Income 515,000 1,020,000 Step 5: Calculating using Income Tax Formula
Old Regime:
Tax Slab Calculation Tax up to Rs 250,000 Tax Exempt 0 Rs 250,000 to 500,000 5% || (5% * (500,000 – 250,000) 12,500 Rs 500,000 to 1,000,000 20% || (20% *(515,000 – 500,000) 3,000 Income Tax – 15,500 Cess 4% || (4% of 15,500) 620 Total Tax Payable – 16,120 Tax computation using old tax slabs New Regime:
Tax Slab Calculation Tax up to Rs 250,000 Tax Exempt 0 Rs 250,000 to 500,000 5% || (5% * (500,000 – 250,000) 12,500 Rs 500,000 to 750,000 10% || (10% * (750,000 – 500,000) 25,000 Rs 750,000 to 1,000,000 15% || (15% * (1,000,000 – 750,000) 37,500 Rs 1,000,000 to 1,250,000 20% || (20% * (1,020,000 – 1,000,000) 4,000 Income Tax – 79,000 Cess 4% || (4% of 79,000) 3,160 Total Tax payable – 82,160 Tax computation using new tax slabs As you can see the tax liability changes hugely depending on what tax regime you choose. So you should plan carefully. You can also check the official Income Tax website for calculating your income tax.
Income Tax Deductions List – Deductions on Section 80C, 80CCC, 80CCD & 80D – FY 2021-22 (AY 2022-23)
Income tax department with a view to encourage savings and investments amongst the taxpayers have provided various deductions from the taxable income under chapter VI A deductions. 80C being the most famous, there are other deductions which are beneficial for the taxpayers to reduce their tax liability. Let us understand these deductions in detail:
Section 80 Deduction List
Section 80C Investments
Section 80CCC Insurance Premium- Section 80CCD Pension Contribution
Section 80TTA Interest on Savings Account
Section 80GG House Rent Paid
Section 80E Interest on Education Loan
Section 80EE Interest on Home Loan
Section 80D Medical Insurance
Section 80DD Disabled Dependent
Section 80DDB Medical Expenditure- Section 80U Physical Disability
Section 80G Donations
Section 80GGB Company Contribution
Section 80GGC Contribution to Political Parties
Section 80RRB Royalty of a Patent- Section 80TTB Interest Income
Frequently Asked Questions
Section 80C – Deductions on Investments
Section 80C is one of the most popular and favourite sections amongst taxpayers as it allows them to reduce taxable income by making tax-saving investments or incurring eligible expenses. It allows a maximum deduction of Rs 1.5 lakh every year from the taxpayer’s total income.
The benefit of this deduction can be availed by Individuals and HUFs. Companies, partnership firms, and LLPs cannot avail the benefit of this deduction.
Section 80C includes subsections, 80CCC, 80CCD (1), 80CCD (1b) and 80CCD (2).
It is important to note that overall limit including the subsections for claiming deduction is Rs 1.5 lakh except an additional deduction of Rs 50,000 allowed u/s 80CCD(1b)
Section 80C and its subsections
| Sections | Eligible investments for tax deductions |
|---|---|
| 80C | Payments made towards life insurance premiums, Equity Linked Saving Schemes, payments made towards the principal sum of a home loan, SSY, NSC, SCSS, and so on. |
| 80CCC | Payment made towards pension plans, and mutual funds. |
| 80CCD (1) | Payments paid to government-sponsored plans such as the National Pension System, the Atal Pension Yojana, and others. |
| 80CCD (1B) | Investments of up to Rs.50,000 in NPS. |
| 80CCD (2) | Employer’s contribution towards NPS (up to 10%, comprising basic salary and dearness allowance, if any) |
Here are some investment options that are allowed as deduction u/s 80C. They not only help you with saving taxes but also help you grow your money. A quick comparison of the options is tabulated below:
Section 80C Deductions List
| Investment options | Average Interest | Lock-in period for | Risk factor |
| ELSS funds | 12% – 15% | 3 years | High |
| NPS Scheme | 8% – 10% | Till 60 years of age | High |
| ULIP | 8% – 10% | 5 years | Medium |
| Tax saving FD | Up to 8.40% | 5 years | Low |
| PPF | 7.90% | 15 years | Low |
| Senior citizen savings scheme | 8.60% | 5years (can be extended for other 3 years) | Low |
| National Savings Certificate | 7.9% | 5 years | Low |
| Sukanya Samriddhi Yojana | 8.50% | Till girl child reaches 21 years of age (partial withdrawal allowed when she reached 18 years) | Low |
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Sometimes, you may have deductions or investments eligible for 80C but haven’t submitted proof to your employer. This may cause additional TDS deductions. You can still claim these deductions while e-filing, as long as you have the
Section 80TTA – Interest on Savings Accounts
If you are an individual or a HUF, you may claim a deduction of a maximum Rs 10,000 against interest income from your savings account with a bank, co-operative society, or post office. Do include the interest from a savings bank account in other income.
Section 80TTA deduction is not available on the interest income from fixed deposits, recurring deposits, or interest income from corporate bonds.
Section 80TTB – Interest From Deposits Held by Senior Citizens
Section 80TTB provides a deduction of up to Rs 50,000 for interest income earned on deposits held by resident senior people (age 60 or more) with a banking firm, a post office, a co-operative, a society engaged in the banking business, and so on. As a result, the maximum for TDS deduction under Section 194A for older citizens has been enhanced to Rs. 50,000. In these instances, however, no deduction under section 80TTA is permitted. It should be noted that senior citizens aged 75 and up who receive just pension and interest income are exempt from ITR filing because tax is deducted at the source by banks.
Section 80GG – Income Tax Deduction on House Rent Paid
a. Section 80GG deduction is available for rent paid when HRA is not received. The taxpayer, spouse or minor child should not own residential accommodation at the place of employment
b. The taxpayer should not have self-occupied residential property in any other place
c. The taxpayer must be living on rent and paying rent
d. The deduction is available to all individuals
Deduction available is the least of the following:
a. Rent paid minus 10% of adjusted total income
b. Rs 5,000/- per month
c. 25% of adjusted total income*
*Adjusted Gross Total Income is arrived at after adjusting the Gross Total Income for certain deductions, exempt income, long-term capital gains and income related to non-residents and foreign companies.
An online ITR e-filing software like that of Tax Babu can be extremely easy as the limits are auto-calculated. So, you do not have to worry about making complex calculations.
From FY 2016-17 available deduction has been raised to Rs 5,000 a month from Rs 2,000 per month.
Section 80E – Interest on Education Loan
A deduction is allowed to an individual for interest on loans taken for pursuing higher education. This loan may have been taken for the taxpayer, spouse or children or for a student for whom the taxpayer is a legal guardian.
80E deduction is available for a maximum of 8 years (beginning the year in which the interest starts getting repaid) or till the entire interest is repaid, whichever is earlier. There is no restriction on the amount that can be claimed.
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Section 80EEA – Interest on Home Loan For First-Time Home Owners
This is Section 80EEA, which provides taxpayers with an extra deduction for paying interest on a house loan. Whereas Section 24 exempted interest on home loans up to Rs 2 lakh, this section exempts home buyers who take out a home loan and pay interest on the loan an additional Rs 1.5 lakhs. Read in detail here.
FY 2017-18 and FY 2016-17
This deduction is available in FY 2017-18 if the loan has been taken in FY 2016-17.
The deduction under section 80EE is available only to home-owners (individuals) having only one house property on the date of sanction of the loan. The value of the property must be less than Rs 50 lakh and the home loan must be less than Rs 35 lakh. The loan taken from a financial institution must have been sanctioned between 1 April 2016 and 31 March 2017.
There is an additional deduction of Rs 50,000 available on your home loan interest on top of the deduction of Rs 2 lakh (on the interest component of home loan EMI) allowed under section 24.
FY 2013-14 and FY 2014-15
During these financial years, the deduction available under this section was a first-time house worth Rs 40 lakh or less. You can avail this only when your loan amount during this period is Rs 25 lakh or less. The loan must be sanctioned between 1 April 2013 and 31 March 2014. The aggregate deduction allowed under this section cannot exceed Rs 1 lakh and is allowed for FY 2013-14 and FY 2014-15.
Section 80D – Deduction on Medical Insurance Premium
You (as an individual or HUF) can claim a deduction of Rs.25,000 under section 80D on insurance for self, spouse and dependent children. An additional deduction for insurance of parents is available up to Rs 25,000, if they are less than 60 years of age. If the parents are aged above 60, the deduction amount is Rs 50,000, which has been increased in Budget 2018 from Rs 30,000.
In case, both taxpayer and parent(s) are 60 years or above, the maximum deduction available under this section is up to Rs.1 lakh.
Example: Rohan’s age is 65 and his father’s age is 90. In this case, the maximum deduction Rohan can claim under section 80D is Rs. 100,000.
From FY 2015-16 a cumulative additional deduction of Rs. 5,000 is allowed for preventive health check.
Section 80DD – Deduction for Medical Treatment of a Dependent with Disability
Section 80DD deduction is available to a resident individual or a HUF and is available on:
a. Expenditure incurred on medical treatment (including nursing), training and rehabilitation of handicapped dependent relative
b. Payment or deposit to specified scheme for maintenance of handicapped dependent relative.
i. Where disability is 40% or more but less than 80% – a fixed deduction of Rs 75,000.
ii. Where there is a severe disability (disability is 80% or more) – a fixed deduction of Rs 1,25,000.
To claim this deduction a certificate of disability is required from the prescribed medical authority.
From FY 2015-16 – The deduction limit of Rs 50,000 has been raised to Rs 75,000 and Rs 1,00,000 has been raised to Rs 1,25,000.
Section 80DDB – Deduction for Specified Diseases
a. For individuals and HUFs below age 60
A deduction up to Rs.40,000 is available to a resident individual or a HUF. It is available with respect to any expense incurred towards treatment of specified medical diseases or ailments for himself or any of his dependents. For an HUF, such a deduction is available with respect to medical expenses incurred towards these prescribed ailments for any of the HUF members.
b. For senior citizens and super senior citizens
In case the individual on behalf of whom such expenses are incurred is a senior citizen, the individual or HUF taxpayer can claim a deduction up to Rs 1 lakh. Until FY 2017-18, the deduction that could be claimed for a senior citizen and a super senior citizen was Rs 60,000 and Rs 80,000 respectively. This has now become a common deduction available upto Rs 1 lakh for all senior citizens (including super senior citizens) unlike earlier.
c. For reimbursement claims
Any reimbursement of medical expenses by an insurer or employer shall be reduced from the quantum of deduction the taxpayer can claim under this section.
Also, remember that you need to get a prescription for such medical treatment from the concerned specialist to claim such a deduction. Read our detailed article on Section 80DDB.
Section 80U – Deduction for Disabled Individuals
A deduction of Rs.75,000 is available to a resident individual who suffers from a physical disability (including blindness) or mental retardation. In case of severe disability, one can claim a deduction of Rs 1,25,000.
From FY 2015-16 – Section 80U deduction limit of Rs 50,000 has been raised to Rs 75,000 and Rs 1,00,000 has been raised to Rs 1,25,000.
Section 80G – Income Tax Benefits Towards Donations for Social Causes
The various donations specified in u/s 80G are eligible for deduction up to either 100% or 50% with or without restriction.
From FY 2017-18, any donations made in cash exceeding Rs 2,000 will not be allowed as a deduction. Donations above Rs 2000 should be made in any mode other than cash to qualify for an 80G deduction.
a. Donations with 100% deduction without any qualifying limit
- National Defence Fund set up by the Central Government
- Prime Minister’s National Relief Fund
- National Foundation for Communal Harmony
- An approved university/educational institution of National eminence
- Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
- Fund set up by a State Government for the medical relief to the poor
- National Illness Assistance Fund
- National Blood Transfusion Council or to any State Blood Transfusion Council
- National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
- National Sports Fund
- National Cultural Fund
- Fund for Technology Development and Application
- National Children’s Fund
- Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
- The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
- The Maharashtra Chief Minister’s Relief Fund during October 1, 1993 and October 6,1993
- Chief Minister’s Earthquake Relief Fund, Maharashtra
- Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat
- Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of earthquake in Gujarat (contribution made during January 26, 2001 and September 30, 2001) or
- Prime Minister’s Armenia Earthquake Relief Fund
- Africa (Public Contributions — India) Fund
- Swachh Bharat Kosh (applicable from financial year 2014-15)
- Clean Ganga Fund (applicable from financial year 2014-15)
- National Fund for Control of Drug Abuse (applicable from financial year 2015-16)
b. Donations with 50% deduction without any qualifying limit
- Jawaharlal Nehru Memorial Fund
- Prime Minister’s Drought Relief Fund
- Indira Gandhi Memorial Trust
- The Rajiv Gandhi Foundation
c. Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income
- Government or any approved local authority, institution or association to be utilized for the purpose of promoting family planning
- Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India
d. Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income
- Any other fund or any institution which satisfies conditions mentioned in Section 80G(5)
- Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning
- Any authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both
- Any corporation referred in Section 10(26BB) for promoting the interest of minority community
- For repairs or renovation of any notified temple, mosque, gurudwara, church or other places.
Section 80GGB – Company Donation to Political Parties
Section 80GGB deduction is allowed to an Indian company for the amount contributed by it to any political party or an electoral trust. A deduction is allowed for contributions done in any way other than cash.
Section 80GGC – Deduction on Donations By a Person to Political Parties
Deduction under section 80GGC is allowed to an individual taxpayer for any amount contributed to a political party or an electoral trust. It is not available for companies, local authorities and an artificial juridical person wholly or partly funded by the government. You can avail this deduction only if you pay in any way other than cash.
Section 80RRB – Deduction on Income via Royalty of a Patent
80RRB Deduction for any income by way of royalty for a patent, registered on or after 1 April 2003 under the Patents Act 1970, shall be available for up to Rs.3 lakh or the income received, whichever is less. The taxpayer must be an individual patentee and an Indian resident. The taxpayer must furnish a certificate in the prescribed form duly signed by the prescribed authority.
Section 80TTB – Interest Income on Deposits for Senior Citizens
A new section 80TTB has been inserted vide Budget 2018 in which deductions with respect to interest income from deposits held by senior citizens will be allowed. The limit for this deduction is Rs.50,000.
No further deduction under section 80TTA shall be allowed. In addition to section 80 TTB, section 194A of the Act will also be amended so as to increase the threshold limit for TDS on interest income payable to senior citizens. The earlier limit was Rs 10,000, which was increased to Rs 50,000 as per the latest Budget.
Section 80 Deductions Summary Table
| Section | Deduction on | Allowed Limit (maximum) FY 2022-23 |
|---|---|---|
| 80C | Investment in PPF – Employee’s share of PF contribution – NSCs – Life Insurance Premium payment – Children’s Tuition Fee – Principal Repayment of home loan – Investment in Sukanya Samridhi Account – ULIPS – ELSS – Sum paid to purchase deferred annuity – Five year deposit scheme – Senior Citizens savings scheme – Subscription to notified securities/notified deposits scheme – Contribution to notified Pension Fund set up by Mutual Fund or UTI. – Subscription to Home Loan Account scheme of the National Housing Bank – Subscription to deposit scheme of a public sector or company engaged in providing housing finance – Contribution to notified annuity Plan of LIC – Subscription to equity shares/ debentures of an approved eligible issue – Subscription to notified bonds of NABARD | Rs. 1,50,000 |
| 80CCC | For amount deposited in annuity plan of LIC or any other insurer for a pension from a fund referred to in Section 10(23AAB) | – |
| 80CCD(1) | Employee’s contribution to NPS account (maximum up to Rs 1,50,000) | – |
| 80CCD(2) | Employer’s contribution to NPS account | Maximum up to 10% of salary |
| 80CCD(1B) | Additional contribution to NPS | Rs. 50,000 |
| 80TTA(1) | Interest Income from Savings account | Maximum up to 10,000 |
| 80TTB | Exemption of interest from banks, post office, etc. Applicable only to senior citizens | Maximum up to 50,000 |
| 80GG | For rent paid when HRA is not received from employer | Least of : – Rent paid minus 10% of total income – Rs. 5000/- per month – 25% of total income |
| 80E | Interest on education loan | Interest paid for a period of 8 years |
| 80EE | Interest on home loan for first time home owners | Rs 50,000 |
| 80D | Medical Insurance – Self, spouse, children Medical Insurance – Parents more than 60 years old or (from FY 2015-16) uninsured parents more than 80 years old | – Rs. 25,000 – Rs. 50,000 |
| 80DD | Medical treatment for handicapped dependent or payment to specified scheme for maintenance of handicapped dependent – Disability is 40% or more but less than 80% – Disability is 80% or more | – Rs. 75,000 – Rs. 1,25,000 |
| 80DDB | Medical Expenditure on Self or Dependent Relative for diseases specified in Rule 11DD – For less than 60 years old – For more than 60 years old | – Lower of Rs 40,000 or the amount actually paid – Lower of Rs 1,00,000 or the amount actually paid |
| 80U | Self-suffering from disability : – An individual suffering from a physical disability (including blindness) or mental retardation. – An individual suffering from severe disability | – Rs. 75,000 – Rs. 1,25,000 |
| 80GGB | Contribution by companies to political parties | Amount contributed (not allowed if paid in cash) |
| 80GGC | Contribution by individuals to political parties | Amount contributed (not allowed if paid in cash) |
| 80RRB | Deductions on Income by way of Royalty of a Patent | Lower of Rs 3,00,000 or income received |
Frequently Asked Questions
Can I claim the 80C deductions at the time of filing the return in case I have not submitted proof to my employer?
I have made an 80C investment on 30 April 2021. For which year can I claim this investment as a deduction?
I have availed a loan from my employer for pursuing higher education. Can I claim the interest paid on such a loan as a deduction under Section 80E?
Is there any restriction or maximum limit up to which I can claim a deduction under Section 80E?
Can a company or a firm take benefit of Section 80C?
I have been paying life insurance premiums to a private insurance company. Can I claim an 80C deduction for the premium paid?
In which year can I claim a deduction of the stamp duty paid for the purchase of a house property
Can a company claim a deduction for donations made under Section 80G
I am paying medical insurance premiums for a medical policy taken in my name, my wife and my children’s. I am also paying the premium on a medical policy taken in the name of my parents who are above 60 years. Can I claim a deduction for both premiums paid?
Is my FD interest exempt under Section 80TTB?
What do you mean by 80C deduction under chapter VI A?
How to calculate deduction u/s 80c?
For section 80C- The amount of eligible investment or expenditure as specified is fully allowed for deduction subject to the limit of Rs 1.5 lakh.
The limit of Rs 1.5 lakh deduction of Section 80C includes 80CCC (contribution towards pension plan) and 80CCD (1), 80CCD (1b) and 80CCD (2).
Section 80CCCD (1) is a contribution towards the National pension scheme by the employee or self-employed and is limited to 10% of salary (basisc + DA) or 20% of gross total income for self employed.
Section 80CCD (1b) provides additional deduction of Rs 50,000 for contributions towards NPS , Atal pension Yojana etc. This deduction is over and above Rs 1.5 lakh. Hence total of deduction including 80C and 80CCD (1b) can be maximum Rs 2 lakh for a single year.
Section 80CCD (2) is deduction allowed to salaried for contributions made by their employer for NPS , this is also allowed at 10 % of salary (basic +DA) . However it is important to note that there is no upper limit in 80CCD (2)
Hence for investment in 80C only , the limit is Rs 1.5 Lakh. For investment together in 80C, 80CCD (1) and 80CCD (1b), one may invest upto Rs 2 lakh in total. Whereas, a salaried employee can avail more deduction without restriction of limit of Rs 2 lakh under section 80CCD (2) if the employer contributes towards NPS account subject to 10% of salary.
Further please note that per Budget 2020, any contribution towards EPF, NPS and superannuation will be added to the salary as “perquisites” and taxable under salaries in the hands of employees.
Can you claim HRA under section 80?
What is 80GG in income tax? What is rent paid under 80GG ?
How to calculate 80GG? How to claim 80GG?
80GG deduction will be allowed as lowest of below mentioned :
- Rs 5,000 per month
- 25% of the adjusted total Income (excluding long-term capital gains, short-term capital gains under section 111A and Income under Section 115A or 115D and deductions under 80C to 80U. Also, income is before making a deduction under section 80GG).
- Actual rent less 10% of Income
Who can claim deduction in 80GG?
What is section 80CCD ?
What is section 80CCD (1b)?
What is section 80CCD (1) ?
What is section 80CCD (2)?
What is section 80TTB?
What is rebate u/s 87A?
A rebate under section 87A is one of the income tax provisions that help low income earning taxpayers reduce their income tax liability. Taxpayers earning an income below a certain limit have the benefit of paying marginally lower taxes. A Taxpayer can claim the benefit of rebate under section 87A for FY 2020-21 and 2021-22 only if the following conditions are satisfied:
- You are a resident individual
- Your total income after reducing the deductions under chapter VI-A (Section 80C, 80D and so on) does not exceed Rs 5 lakh in an FY
The tax rebate is limited to Rs 12,500. This means, if your total tax payable is less than Rs 12,500, then you will not have to pay any tax. Do note that the rebate will be applied to the total tax before adding the health and education cess of 4%.
Who is eligible for rebate u/s 87a?
A Taxpayer can claim the benefit of rebate under section 87A for FY 2020-21 and 2021-22 only if the following conditions are satisfied:
- You are a resident individual which means HUF and firms cannot claim this rebate.
- Your total income after reducing the deductions under chapter VI-A (Section 80C, 80D and so on) does not exceed Rs 5 lakh in an FY
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Special Allowance in India – Taxation & Calculation
Allowance is a fixed quantity of money given by employers to their employees to meet certain special requirements. This amount is given besides the salary. These allowances may attract exemption in certain cases. Otherwise, they are considered as a part of the total income of employees and are taxable. Read through to know how special allowance is different.
What is a special allowance?
Certain allowances are exempted under Section 10(14) of the Income Tax Act, 1961. Section 10(14) says that:
- Any special allowance/benefit, not a perquisite, as per the meaning specified in clause (2) of Section 17, is granted for the employees to meet certain expenses wholly. These expenses must be incurred while performing the duties of an office or employment of profit.
- Any allowance granted to the employee either to meet personal expenses at the office/employment for profit performed by him or to compensate him for the high cost of living.
In these cases, the allowance provided is exempted from taxes.
How is the special allowance taxed?
Certain categories of taxes are fully exempted such as allowances given to judges at the Supreme Court and the High Courts. Allowances such as house rent allowance are partially exempted as per Section 10(13A). Other allowances such as city compensatory allowance are fully taxable.
Special allowance categories and the corresponding exemptions
- Transport Allowance: In the case of handicapped employees, an exemption up to Rs.3,200 is provided.
- Tribal Area Allowance: A special allowance is provided to the residents of hilly, scheduled, and agency areas such as Uttar Pradesh, Karnataka, Madhya Pradesh, Tamil Nadu, Odisha, Assam, and Tripura. You can get an exemption of up to Rs.200 per month.
- Outstation Allowance: This is an allowance provided by roadways, railways, and airways in place of the daily allowance. The exemption applicable is 70% of the allowance or Rs.10,000, whichever is lower.
- Hostel Allowance: An exemption of up to Rs.300 per month per child for two children.
- Island Duty Allowance: This allowance is provided to the members of the armed forces who are assigned duties in islands such as Lakshadweep and Andaman & Nicobar. A maximum exemption of up to Rs.3,250 is given per month.
- Children’s Education Allowance: A maximum exemption of up to Rs.100 per month per child for two children.
- Uniform Allowance: You can get an allowance for the expenses incurred in purchasing and maintaining the uniform to be worn to the employment of profit/office.
- Academic/Research Allowance: Academic/research allowance is given to encourage research/training in research institutions.
- Travelling Allowance: The allowance is applicable to supplement the cost of travel when you are out on a tour or on the transfer of duty to another city.
- Daily Allowance: Daily allowance includes charges incurred on a daily basis when on a tour.
- Helper Allowance: If you have hired an assistant to fulfil the duties of your employment, the expenditures incurred can get an allowance.
Special allowance categories and the corresponding exemptions
Many people may think that a special allowance is a part of variable income. However, you must know that a special allowance is considered as part of the gross salary. In addition, the allocation of a special allowance depends on the company’s policies. Therefore, if company A provides a special allowance to all its employees, it does not mean that company B also must provide a special allowance to all employees in the same ratio.
To know the total amount you have received under the special allowance component of the salary, you must sum up the figures provided under each eligible allowance head from the above list that is applicable to you. Refer your salary slip to know more about the allocation towards special allowances.
Illustration
Consider the scenario in which Ms V is an employee at company A. When she checks her salary slip, she realises that a conveyance allowance of Rs.1,600 per month. This allowance is provided on the expenses incurred to travel from the place of residence to the place of work.
In another case, Mr C is a medical practitioner working in the public sector. He was deployed for duty at a medical camp in the rural side of Bidar, Karnataka. This place is inhabited by tribes. Now, Mr C gets an additional component in the salary – tribal area allowance.
DEDUCTIONS*
[AY 2023-24]
| Section | Nature of deduction | Who can claim | |
| (1) | (2) | (3) | |
| Against ‘salaries’ | |||
| 16(ia) | Standard Deduction [Rs. 50,000 or the amount of salary, whichever is lower] | Individual – Salaried Employee & Pensioners | |
| 16(ii) | Entertainment allowance [actual or at the rate of 1/5th of salary, whichever is less] [limited to Rs. 5,000] | Government employees | |
| 16(iii) | Employment tax | Salaried assessees | |
| Against ‘income from house properties’ | |||
| 23(1), first proviso | Taxes levied by local authority and borne by owner if paid in relevant previous year | All assessees | |
| 24(a) | Standard deduction [30% of the annual value (gross annual value less municipal taxes)] | All assessees | |
| 24(b) | Interest on borrowed capital (Rs. 30,000/Rs. 2,00,000, subject to specified conditions) | All assessees | |
| 25A(2) | Standard deduction of 30 per cent of arrears of rent or unrealised rent received | All assessees | |
Against ‘profits and gains of business or profession’ A. Deductible items | |||
| 30 | Rent, rates, taxes, repairs (excluding capital expenditure) and insurance for premises | All assessees | |
| 31 | Repairs (excluding capital expenditure) and insurance of machinery, plant and furniture | All assessees | |
| 32(1)(i) | Depreciation1 in respect of following assets shall be allowed at prescribed percentage on actual cost of an asset (i.e., Straight Line Method): i. Tangible Assets (buildings, machinery, plant or furniture); ii. Intangible Assets (know-how, patents, copyrights, trademarks, licenses, franchises, or any other business or commercial rights of similar nature). However, if asset is acquired and put to use for less than 180 days during the previous year, the deduction shall be restricted to 50% of depreciation computed above. Note: Taxpayers engaged in business of generation or generation and distribution of power have the option to claim depreciation on written down value basis also | Taxpayer engaged in business of generation or generation and distribution of power. | |
| 32(1)(ii) | Depreciation1 in respect of following assets shall be allowed at prescribed percentage on written down value of each block of asset (as per WDV method): i. Tangible Assets (buildings, machinery, plant or furniture); ii. Intangible Assets (know-how, patents, copyrights, trademarks, licenses, franchises, or any other business or commercial rights of similar nature not being goodwill of business or profession). However, if asset is acquired and put to use for less than 180 days during the previous year, the deduction shall be restricted to 50% of depreciation computed above. | All assessees engaged in business or profession | |
| 32(1)(iia) | Additional depreciation shall be allowed at 20% of actual cost of new plant and machinery [other than ships, aircraft, office appliances, second hand plant or machinery, etc.] (Subject to certain conditions). However, if an asset is acquired and put to use for less than 180 days during the previous year, 50% of additional depreciation shall be allowed in year of acquisition and balance 50% would be allowed in the next year. | All taxpayers engaged in: a) manufacture or production of any article or thing; or b) generation, transmission or distribution of power (if taxpayer is not claiming depreciation on straight line basis ). | |
| Proviso to Section 32(1)(iia) | Additional depreciation shall be allowed at 35% of actual cost of new plant and machinery [other than ships, aircraft, office appliances, second hand plant or machinery, etc.] (Subject to certain conditions). However, if an asset is acquired and put to use for less than 180 days during the previous year, 50% of additional depreciation shall be allowed in year of acquisition and balance 50% would be allowed in the next year. Note: 1. Manufacturing unit should be set-up on or after April 1, 2015. 2. New plant and machinery should be acquired and installed on or after April 1, 2015 but before April 1, 2020. | All taxpayers setting-up an undertaking or enterprise for production or manufacture of any article or thing in any notified backward area in the state of Andhra Pradesh, Bihar, Telangana or West Bengal. | |
| 32AC | Investment allowance shall be allowed at 15% of actual cost of new asset acquired and installed by a company engaged in business or manufacturing or production of any article or thing (Subject to certain conditions) Note: Deduction shall be available if actual cost of new plant and machinery acquired and installed by the company during the previous year exceeds Rs. 25/100 Crores, as the case may be | Company engaged in business of manufacturing or production of any article or thing. | |
| 32AD | Investment allowance shall be allowed at 15% of actual cost of investment made in new plant and machinery (other than ships, aircraft, vehicle, office appliances, second hand plant or machinery, etc.) if manufacturing unit is set-up in notified backward area in the State of Andhra Pradesh, Bihar, Telangana or West Bengal (subject to certain conditions). Note: 1. New asset should be acquired and installed on or after April 1, 2015 but before April 1, 2020. 2. Manufacturing unit should be set-up on or after April 1, 2015. 3. Deduction shall be allowed under section 32AD in addition to deduction under section 32AC if assessee fulfils the specified conditions. | All taxpayers who acquire new plant and machinery for purpose of setting-up manufacturing unit in notified backward areas in the State of Andhra Pradesh, Bihar, Telangana or West Bengal | |
| 33A | Development allowance – 50 per cent of actual cost of planting (subject to certain conditions and limits) (planting should have been completed before 1-4-1990) | Assessee engaged in business of growing and manufacturing tea in India | |
| 33AB | Tea/Coffee/Rubber Development Account – Amount deposited in account with National Bank (Special Account) or in Deposit Account of Tea Board, Coffee Board or Rubber Board in accordance with approved scheme or 40% of profits of business, whichever is less (subject to certain conditions) | Assessees engaged in business of growing and manufacturing tea/Coffee/Rubber in India | |
| 33ABA | Amount deposited in Special Account with SBI/Site Restoration Account or 20 per cent of profits, whichever is less (subject to certain conditions) | Assessee carrying on business of prospecting for, or extraction or production of, petroleum or natural gas or both in India | |
| 35(1)(i) | Revenue expenditure on scientific research pertaining to business of assessee is allowed as deduction (Subject to certain conditions). Note: Expenditure on scientific research incurred within 3 years before commencement of business (in the nature of purchase of materials and salary of employees other than perquisite) is allowed as deduction in the year of commencement of business to the extent certified by prescribed authority. | All assessee | |
| 35(1)(ii) | 100% of contribution made to approved research association, university, college or other institution to be used for scientific research shall be allowed as deduction (Subject to certain conditions) | All assessee | |
| 35(1)(iia) | 100% of contribution made to an approved company registered in India to be used for the purpose of scientific research is allowed as deduction (Subject to certain conditions) | All assessee | |
| 35(1)(iii) | 100% of contribution made to approved research association, university, college or other institution with objects of undertaking statistical research or research in social sciences shall be allowed as deduction (Subject to certain conditions) | All assessee | |
| 35(1)(iv) read with 35(2) | Capital expenditure incurred during the year on scientific research relating to the business carried on by the assessee is allowed as deduction (Subject to certain conditions) Capital expenditure incurred within 3 years before commencement of business is allowed as deduction in the year of commencement of business. Note: i. Capital expenditure excludes land and any interest in land; ii. No depreciation shall be allowed on such assets. | All assessee | |
| 35(2AA) | 100% of payment made to a National Laboratory or University or an Indian Institute of Technology or a specified person is allowed as deduction (Subject to certain conditions). The payment should be made with the specified direction that the sum shall be used in a scientific research undertaken under an approved programme. | All assessee | |
| 35(2AB) | 100% of any expenditure incurred by a company on scientific research (including capital expenditure other than on land and building) on in-house scientific research and development facilities as approved by the prescribed authorities shall be allowed as deduction (Subject to certain conditions). Note: Company should enter into an agreement with the prescribed authority for co-operation in such research and development and fulfils such conditions with regard to maintenance of accounts and audit thereof and furnishing of reports in such manner as may be prescribed; | Company engaged in business of bio-technology or in any business of manufacturing or production of eligible articles or things | |
| 35A | Expenditure incurred before 1-4-1998 on acquisition of patent rights or copyrights [equal to appropriate fraction of expenditure on acquisition to be deducted in fourteen equal annual instalments beginning with previous year in which such expenditure has been incurred] (subject to certain conditions) | All assessees | |
| 35AB | Lump sum payment made in any previous year relevant to assessment year commencing on or before 1-4-1998, for acquisition of technical know-how [consideration for acquisition to be deducted in six equal annual instalments (3 equal annual instalments where know-how is developed in certain laboratories, universities and institutions)] (subject to certain conditions) | All assessees | |
| 35ABA | Capital expenditure incurred and actually paid for acquiring any right to use spectrum for telecommunication services shall be allowed as deduction over the useful life of the spectrum in equal instalments | All Assessee engaged in telecommunication services | |
| 35ABB | Expenditure incurred for obtaining licence to operate telecommunication services either before commencement of such business or thereafter at any time during any previous year | All assessees | |
| 35AD | Capital expenditure incurred, wholly and exclusively, for the purpose of any specified business [setting up and operating a cold chain facility; setting up and operating a warehousing facility for storage of agricultural produce; laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network; building and operating, anywhere in India, a hotel of two-star or above category as classified by the Central Government; building and operating, anywhere in India, a hospital with at least one hundred beds for patients; developing and building a notified housing project under a scheme for slum redevelopment or rehabilitation framed by the Government, as the case may be, in accordance with prescribed guidelines; developing and building a notified housing project under a scheme for affordable housing framed by the Government, as the case may be, in accordance with prescribed guidelines; production of fertilizer in India; setting up and operating an inland container depot or a container freight station which is approved/notified under the Customs Act, 1962; bee-keeping and production of honey and beeswax; and setting up and operating a warehousing facility for storage of sugar. Lying and operating a slurry pipeline for the transportation of iron ore; setting-up and operating a notified semi-conductor wafer fabrication manufacturing unit; developing or maintaining and operating or developing, maintaining and operating a new infrastructure facility4, carried on by the assessee during the previous year in which such expenditure is incurred (subject to certain conditions) Note: No deduction of any capital expenditure above Rs 10,000 shall be allowed where such expenditure is incurred otherwise than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed. | All assessees Note: Such deduction is available to Indian company in case of following business, namely;- i) Business of laying and operating a cross-country natural gas or crude or petroleum oil pipeline network. ii) Developing or maintaining and operating or developing, maintaining and operating a new infrastructure facility. | |
| 35CCA | Payment to associations/institutions for carrying out rural development programmes (subject to certain conditions) | All assessees | |
| 35CCB | Expenditure incurred before 1-4-2002 by way of payment to approved associations/institutions for carrying out approved programmes of conservation of natural resources or afforestation (subject to certain conditions) | All assessees | |
| 35CCC | 100% of expenditure on notified agricultural extension project (subject to certain conditions) | All assessees | |
| 35CCD | 100% of expenditure on notified skill development project (subject to certain conditions) | A company | |
| 35D | Amortisation of certain preliminary expenses [deductible in 5 equal annual instalments] (subject to certain conditions) | Indian companies and resident non-corporate assessees | |
| 35DD | Amortisation of expenditure incurred after 31-3-1999 in case of amalgamation or demerger in the hands of an Indian company (one-fifth of such expenditure for 5 successive previous years) (subject to certain conditions) | Indian Company | |
| 35DDA | Amortisation of expenditure incurred under voluntary retirement scheme in 5 equal annual instalments starting with the year when the expenditure is incurred | All assessees | |
| 35E | Expenditure on prospecting, etc., for certain minerals [deductible in ten equal annual instalments] (subject to certain conditions) | Indian companies and resident non-corporate assessees engaged in prospecting, etc., for minerals | |
| 36(1)(i) | Insurance premium covering risk of damage or destruction of stocks/stores | All assessees | |
| 36(1)(ia) | Insurance premium covering life of cattle owned by a member of co-operative society engaged in supplying milk to federal milk co-operative society | Federal milk co-operative societies | |
| 36(1)(ib) | Medical insurance premium paid by any mode other than cash, to insure employee’s health under (a) scheme framed by GIC of India and approved by Central Government; or (b) scheme framed by any other insurer and approved by IRDA | All assessees as employers | |
| 36(1)(ii) | Bonus or commission paid to employees | All assessees | |
| 36(1)(iii) | Interest on borrowed capital2 | All assessees | |
| 36(1)(iiia) | Pro rata amount of discount on a zero coupon bond based on life of such bond and calculated in prescribed manner | All assessees | |
| 36(1)(iv) | Contributions to recognised provident fund and approved superannuation fund [subject to certain limits and conditions] | All assessees as employers | |
| 36(1)(iva) | Any sum paid by assessee-employer by way of contribution towards a pension scheme, as referred to in section 80CCD, on account of an employee to the extent it does not exceed 10 per cent of the employee’s salary in the previous year. | All assessees as emloyers | |
| 36(1)(v) | Contributions to approved gratuity fund [subject to certain limits and conditions] | All assessees as employers | |
| 36(1)(va) | Contributions to any provident fund or superannuation fund or any fund set up under Employees’ State Insurance Act, 1948 or any other fund for welfare of such employees, received from employees if the same are credited to the employee’s account in relevant fund or funds before due date | All assessees as employers | |
| 36(1)(vi) | Allowance in respect of animals which have died or become permanently useless [subject to certain conditions] | All assessees | |
| 36(1)(vii) | Bad debts which have been written off as irrecoverable [subject to limitation in the case of banks and financial institutions] | All assessees | |
| 36(1)(viia) | Provision for bad and doubtful debts | ||
| ■ up to 8.5 per cent of total income before making any deduction under this clause and Chapter VI-A, and up to 10 per cent of aggregate average advances made by its rural branches | Certain scheduled banks, non-scheduled banks (but other than foreign banks) and co-operative bank (other than primary agricultural credit society or primary co-operative agricultural and rural development bank) | ||
| ■ up to 5 per cent (10% in case of Public Financial Institutions, State Financial Corporations and State Industrial Investment Corporations in any of the two consecutive assessment years 2003-04 and 2004-05 – subject to certain conditions) of total income before making any deduction under this clause and Chapter VI-A | Foreign banks/Public financial institutions/State financial corporations/State industrial investment corporations. Non-Banking Financial Company | ||
| 36(1)(viii) | Amounts transferred to special reserve [subject to certain conditions and maxi-mum of 20 per cent of profits derived from eligible business] | Specified entities, namely, financial corporations/financial corporation which is a public sector company/banking company/co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank/housing finance company/any other financial corporation including a public company | |
| 36(1)(ix) | Expenditure for promoting family planning amongst employees (deductible in 5 equal annual instalments in case of capital expenditure) | Companies | |
| 36(1)(xi) | Expenditure incurred wholly and exclusively by the assessee on or after the 1st April, 1999 but before the 1st April, 2000 in respect of a non-Y2K compliant system, owned by the assessee and used for the purposes of his business or profession, so as to make such system Y2K compliant computer system | All assessees | |
| 36(1)(xii) | Any expenditure (not being in the nature of capital expenditure) incurred by a notified corporation or body corporate, by whatever name called, constituted or established by a Central, State or Provincial Act, for the objects and purposes authorised by the Act under which such corporation or body corporate was constituted or established | Notified corporation or body corporate, by whatever name called, constituted or established by a Central, State or Provincial Act | |
| 36(1)(xiii) | Any banking cash transaction tax paid during the previous year on taxable banking transaction entered into by the assesse | All assessees | |
| 36(1)(xiv) | Contribution to notified credit guarantee trust fund for small industries | Public financial institution | |
| 36(1)(xv) | Securities Transaction Tax paid if corresponding income is included as income under the head ‘Profits and gains of business or profession’ | All assessees | |
| 36(1)(xvi) | Amount equal to commodities transaction tax paid by an assessee in respect of taxable commodities transactions entered into in the course of his business during the previous year, if the income arising from such transactions is included in the income computed under the head “Profits and gains of business or profession” | All assessees | |
| 36(1)(xvii) | Amount of expenditure incurred by a co-operative society for purchase of sugarcane shall be allowed as deduction to the extent of lower of following: a) Actual purchase price of sugarcane; or b) Price of sugarcane fixed or approved by the Government | Co-operative society engaged in business of manufacturing sugar | |
| 36(1)(xviii) | Marked to market loss or other expected loss as computed in accordance with the ICDS notified under section 145(2) | All Assessees | |
| 37(1) | Any other expenditure [not being personal or capital expenditure and expenditure mentioned in sections 30 to 36] laid out wholly and exclusively for purposes of business or profession | All assessees | |
| B. Non-deductible items | |||
| 37(2B) | Advertisement in souvenir, brochure, tract, pamphlet, etc., of political party | All assessees | |
| 40(a)(i) | Interest, royalty, fees for technical services or other chargeable sum payable outside India, or in India to a non-resident or foreign company, on which tax has not been deducted or after deduction, has not been paid on or before the due date of filing of return under section 139(1). Where in respect of any such sum, tax has been deducted in any subsequent year or, has been deducted in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid6 However, where deductor has failed to deduct the tax and he is not deemed to be an assessee in default under first proviso to section 201(1), then it shall be deemed that the deductor has deducted and paid the tax on the date on which the payee has furnished his return of Income. | All assessees | |
| 40(a)(ia) | Any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139. | All assessees | |
| However, where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. However, where deductor has failed to deduct the tax and he is not deemed to be an assessee in default under first proviso to section 201(1), then it shall be deemed that the deductor has deducted and paid the tax on the date on which the payee has furnished his return of Income. | |||
| 40(a)(ib) | Any sum paid or payable to a non-resident which is subject to a deduction of Equalisation levy would attract disallowance if such sum was paid without deduction of such levy or if it was deducted but not deposited with the Central Government till the due date of filing of return. | All assessees | |
| However, where in respect of any such sum, Equalisation levy is deducted or deposited in subsequent year, as the case may be, the expenditure so disallowed shall be allowed as deduction in that year. | |||
| 40(a)(ii) | Rate or tax levied on the profits or gains of any business or profession | All assessees | |
| 40(a)(iib) | Amount paid by way of royalty, licence fee, service fee, privilege fee, service charge or any other fee or charge, by whatever name called, which is levied exclusively on, or any amount which is appropriated, whether directly or indirectly, from a State Government undertaking by the State Government | State Govt. undertakings | |
| 40(a)(iii) | Salaries payable outside India, or in India to a non-resident, on which tax has not been paid/deducted at source | All assessees as employers | |
| 40(a)(iv) | Payments to provident fund/other funds for employees’ benefit for which no effective arrangements are made to secure that tax is deducted at source on payments made from such funds which are chargeable to tax as ‘salaries’ | All assessees as employers | |
| 40(a)(v) | Tax actually paid by an employer referred to in section 10(10CC) | All assessees as employers | |
| 40(b) | Interest, salary, bonus, commission or remuneration paid to partners (subject to certain conditions and limits) | Firms | |
| 40(ba) | Interest, salary, bonus, commission or remuneration paid to members (subject to certain conditions and limits) | Association of persons or body of individuals (except a company or a co-operative society, society registered under Societies Registration Act, etc.) | |
| 40A(2) | Expenditure involving payment to relative/director/partner/substantially interested person, etc., which, in the opinion of the Assessing Officer, is excessive or unreasonable | All assessees | |
| 40A(3) | 100% of payments exceeding Rs. 10,000 (Rs. 35,000 in case of payment made for plying, hiring or leasing goods carriages) made to a person in a day otherwise than by account payee cheque/bank draft or use of electronic clearing system through a bank account or through such other electric mode as may be prescribed. (subject to certain conditions) | All assessees | |
| 40A(7) | Any provision for payment of gratuity to employees, other than a provision made for purposes of contribution to approved gratuity fund or for payment of gratuity that has become payable during the year (subject to specified conditions) | All assessees as employers | |
| 40A(9) | Any sum paid for setting up or formation of, or as contribution to, any fund, trust, company, AOP, BOI, Society or other institution, other than recognised provident fund/approved superannuation fund/pension scheme referred to in section 80CCD/approved gratuity fund | All assessees as employers | |
| 40(A)(13) | No deduction shall be allowed in respect of marked to market loss or other unexpected loss except as allowable under section 36(1)(xviii) | All assessee | |
| C. Other deductible items | |||
| 42(1) | In case of mineral oil concerns allowances specified in agreement entered into by Central Government with any person (subject to certain conditions and terms of agreement) | Assessees engaged in prospecting for or extraction or production of mineral oils | |
| 42(2) | In case of mineral oil concerns expenditure incurred remaining unallowed as reduced by proceeds of transfer | Assessee whose business consists of prospecting for or extraction or production of petroleum and natural gas and who transfers any interest in such business | |
| 43B | Any sum which is actually paid, relating to (i) tax/duty/cess/fee levied under any law, (ii) contribution to provident fund/superannuation fund/gratuity fund/any fund for employees’ welfare, (iii) bonus/commission to employees, (iv) interest on loan/borrowing from any public financial institution, State Financial Corporation or State Industrial Investment Corporation (v)interest payments to scheduled banks/Co-operative banks (other than a primary agricultural and development bank)/primary co-operative agricultural and rural development bank on loans or advances, (vi) interest on loan or borrowings from a deposit taking non-banking financial company or systemically important non-deposit taking non-banking financial company and (vii) sum payable by employers by way of leave encashment to employees. (viii) sum payable to the Indian Railways for the use of railway assets. Deduction will not be allowed in year in which liability to pay is incurred unless actual payment is made in that year or before the due date of furnishing of return of income for that year | All assessees | |
| 44A | Expenditure in excess of subscription, etc., received from members (subject to certain conditions and limits) | Trade, professional or similar association | |
| 44C | Head office expenditure (subject to certain conditions and limits) | Non-resident | |
| Against ‘capital gains’ | |||
| 48(i) | Expenditure incurred wholly and exclusively in connection with transfer of capital asset | All assessees | |
| 48(ii) | Cost of acquisition of capital asset and of any improvement thereto (indexed cost of acquisition and indexed cost of improvement, in case of long-term capital assets) | All assessees | |
| 54 | Long-term capital gains on sale of residential house and land appurtenant thereto invested in purchase/construction of another residential house (subject to certain conditions and limits) | Individual/HUF | |
| 54B | Capital gains on transfer of land used for agricultural purposes, by an individual or his parents or a HUF, invested in other land for agricultural purposes (subject to certain conditions and limits) | Individual/HUF | |
| 54D | Capital gains on compulsory acquisition of land or building forming part of an industrial undertaking invested in purchase/construction of other land/building for shifting/re-establishing said undertaking or setting up new industrial undertaking (subject to certain conditions and limits) | Any assessee | |
| 54EE | Long-term capital gain invested in long-term specified assets being units of such fund as may be notified by Central Government to finance start-ups | All assesses | |
| 54F | Net consideration on transfer of long-term capital asset other than residential house invested in residential house (subject to certain conditions and limits) | Individual/HUF | |
| 54G | Capital gain on transfer of machinery, plant, land or building used for the purposes of the business of an industrial undertaking situate in an urban area (transfer being effected for shifting the undertaking to a non-urban area) invested in new machinery, plant, building or land, in the said non-urban area, expenses on shifting, etc. (subject to certain conditions and limits) | Any assessee | |
| 54GA | Exemption of capital gains on transfer of assets in cases of shifting of industrial undertaking from urban area to any Special Economic Zone (subject to certain conditions and limits) | All assessees | |
| 54GB | Exemption in respect of capital gain arising from the transfer of a long-term capital asset, being a residential property (a house or a plot of land), owned by the eligible assessee, and such assessee before the due date of furnishing of return of income under sub-section (1) of section 139 utilises the net consideration for subscription in the equity shares of an eligible company and such company has, within one year from the date of subscription in equity shares by the assessee, utilised this amount for purchase of specified new asset (subject to certain conditions and limits). | Individual/HUF | |
| W.e.f. April 1, 2017, eligible start-up is also included in definition of eligible company. | |||
Against ‘income from other sources’ A. Deductible items | |||
| 57(i) | Any reasonable sum paid by way of commission or remuneration for purpose of realising dividend | All assessees | |
| 57(i) | Any reasonable sum paid by way of commission or remuneration for the purpose of realising interest on securities | All assessees | |
| 57(ia) | Contributions to any provident fund or superannuation fund or any fund set up under Employees’ State Insurance Act, 1948 or any other fund for welfare of employees, if the same are credited to employees’ accounts in relevant funds before due date | All assessees | |
| 57(ii) | Repairs, insurance, and depreciation of building, plant and machinery and furniture | Assessees engaged in business of letting out of machinery, plant and furniture and buildings on hire | |
| 57(iia) | In case of family pension, 331/3 per cent of such pension or Rs. 15,000, whichever is less | Assessees in receipt of family pension on death of employee being member of assessee’s family | |
| 57(iii) | Any other expenditure (not being capital expenditure) expended wholly and exclusively for earning such income | All assessees | |
| 57(iv) | In case of interest received on compensation or on enhanced compensation referred to in section 145A(2), a deduction of 50 per cent of such income (subject to certain conditions) | All assessees | |
| B. Non-deductible items | |||
| 58(1)(a)(i) | Personal expenses | All assessees | |
| 58(1)(a)(ii) | Interest chargeable to tax which is payable outside India on which tax has not been paid or deducted at source | All assessees | |
| 58(1)(a)(iii) | ‘Salaries’ payable outside India on which no tax is paid or deducted at source | All assessees | |
| 58(1A) | Disallowance due to TDS default (Covered by section 40(a)(ia) and 40(a)(iia)) | All assessees | |
| 58(2) | Expenditure of the nature specified in section 40A | All assessees | |
| 58(4) | Expenditure in connection with winnings from lotteries, crossword puzzles, races, games, gambling or betting | All assessees | |
| For certain payments | |||
| 80C | ■ Life insurance premium for policy : – in case of individual, on life of assessee, assessee’s spouse and any child of assessee – in case of HUF, on life of any member of the HUF ■ Sum paid under a contract for a deferred annuity : – in case of individual, on life of the individual, individual’s spouse and any child of the individual (however, contract should not contain an option to receive cash payment in lieu of annuity) – in case of HUF, on life of any member of the HUF ■ Sum deducted from salary payable to Government servant for securing deferred annuity or making provision for his wife/children [qualifying amount limited to 20% of salary] ■ Contributions by an individual made under Employees’ Provident Fund Scheme ■ Contribution to Public Provident Fund Account in the name of: – in case of individual, such individual or his spouse or any child of such individual – in case of HUF, any member of HUF ■ Contribution by an employee to a recognised provident fund ■ Contribution by an employee to an approved superannuation fund ■ Subscription to any notified security or notified deposit scheme of the Central Government. For this purpose, Sukanya Samriddhi Account Scheme has been notified vide Notification No. 9/2015, dated 21.01.2015. Any sum deposited during the year in Sukanya Samriddhi Account by an individual would be eligible for deduction. ■ Amount can be deposited by an individual or in the name of girl child of an individual or in the name of the girl child for whom such an individual is the legal guardian. ■ Subscription to notified savings certificates [National Savings Certificates (VIII Issue)] ■ Contribution for participation in unit-linked Insurance Plan of UTI : – in case of an individual, in the name of the individual, his spouse or any child of such individual – in case of a HUF, in the name of any member thereof ■ Contribution to notified unit-linked insurance plan of LIC Mutual Fund [Dhanaraksha 1989] – in the case of an individual, in the name of the individual, his spouse or any child of such individual – in the case of a HUF, in the name of any member thereof ■ Subscription to notified deposit scheme or notified pension fund set up by National Housing Bank [Home Loan Account Scheme/National Housing Banks (Tax Saving) Term Deposit Scheme, 2008] ■ Tuition fees (excluding development fees, donations, etc.) paid by an individual to any university, college, school or other educational institution situated in India, for full time education of any 2 of his/her children ■ Certain payments for purchase/construction of residential house property ■ Subscription to notified schemes of (a) public sector companies engaged in providing long-term finance for purchase/construction of houses in India for residential purposes/(b) authority constituted under any law for satisfying need for housing accommodation or for planning, development or improvement of cities, towns and villages, or for both ■ Sum paid towards notified annuity plan of LIC (New Jeevan Dhara/New Jeevan Dhara-I/New Jeevan Akshay/New Jeevan Akshay-I/New Jeevan Akshay-II/Jeewan Akshay-III plan of LIC) or other insurer ■ Subscription to any units of any notified [u/s 10(23D)] Mutual Fund or the UTI (Equity Linked Saving Scheme, 2005) ■ Contribution by an individual to any pension fund set up by any mutual fund which is referred to in section 10(23D) or by the UTI (UTI Retirement Benefit Pension Fund) ■ Subscription to equity shares or debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions ■ Subscription to any units of any approved mutual fund referred to in section 10(23D), provided amount of subscription to such units is subscribed only in ‘eligible issue of capital’ referred to above. ■ Term deposits for a fixed period of not less than 5 years with a scheduled bank, and which is in accordance with a scheme framed and notified. ■ Subscription to notified bonds issued by the NABARD. ■ Deposit in an account under the Senior Citizen Savings Scheme Rules, 2004 (subject to certain conditions) ■ 5-year term deposit in an account under the Post Office Time Deposit Rules, 1981 (subject to certain conditions) ■ Contribution to specified account of the pension scheme referred to in 80CCD, in case of central Government employee. | Individual/HUF | |
Notes:
1. Deduction is limited to whole of the amount paid or deposited subject to a maximum of Rs. 1,50,00012. This maximum limit of Rs. 1,50,00012 is the aggregate of the deduction that may be claimed under sections 80C, 80CCC and 80CCD.
2. The sums paid or deposited need not be out of income chargeable to tax of the previous year. Amount may be paid or deposited any time during the previous year, but the deduction shall be available on so much of the aggregate of sums as do not exceed the total income chargeable to tax during the previous year.
3. Life Insurance premium is part of gross qualifying amount for the purpose of deduction under section 80C. Payment of premium which is in excess of 10 per cent (if policy is issued on or after 1-4-2013, 15% in case of insurance on life of person with disability referred to in section 80U or suffering from disease or ailment specified in section 80DDB/rule 11DD) of actual capital sum assured shall not be included in gross qualifying amount. The value of any premiums agreed to be returned or of any benefit by way of bonus or otherwise, over and above the sum actually assured, which is to be or may be received under the policy by any person, shall not be taken into account for the purpose of calculating the actual capital sum assured.
The limit of 10 per cent will be applicable only in the case of policies issued on or after 1-4-2012. In respect of policies issued prior to 1-4-2012, the old limit of 20 per cent of actual sum assured will be applicable.
With effect from 1-4-2013, ‘actual capital sum assured’ in relation to a life insurance policy shall mean the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account—
(i) the value of any premium agreed to be returned; or
(ii) any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person.
4. Where, in any previous year, an assessee—
(i) terminates his contract of insurance, by notice to that effect or where the contract ceases to be in force by reason of failure to pay any premium, by not reviving contract of insurance,—
(a) in case of any single premium policy, within two years after the date of commencement of insurance; or
(b) in any other case, before premiums have been paid for two years; or
(ii) terminates his participation in any unit-linked insurance plan (ULIP), by notice to that effect or where he ceases to participate by reason of failure to pay any contribution, by not reviving his participation, before contributions in respect of such participation have been paid for five years; or
(iii) transfers the house property before the expiry of five years from the end of the financial year in which possession of such property is obtained by him, or receives back, whether by way of refund or otherwise, any sum specified in that clause,
then,—
(a) no deduction shall be allowed to the assessee with reference to any of such sums, paid in such previous year; and
(b) the aggregate amount of the deductions of income so allowed in respect of the previous year or years preceding such previous year, shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to such previous year.
If any equity shares or debentures, with reference to the cost of which a deduction is allowed, are sold or otherwise transferred by the assessee to any person at any time within a period of three years from the date of their acquisition, the aggregate amount of the deductions of income so allowed in respect of such equity shares or debentures in the previous year or years preceding the previous year in which such sale or transfer has taken place shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to such previous year.
A person shall be treated as having acquired any shares or debentures on the date on which his name is entered in relation to those shares or debentures in the register of members or of debenture-holders, as the case may be, of the public company.
5. If any amount, including interest accrued thereon, is withdrawn by the assessee from his deposit account made under (a) Senior Citizen Saving Scheme or (b) Post Office Time Deposit Rules, before the expiry of the period of five years from the date of its deposit, the amount so withdrawn shall be deemed to be the income of the assessee of the previous year in which the amount is withdrawn and shall be liable to tax in the assessment year relevant to such previous year.
The amount liable to tax shall not include the following amounts, namely:—
(i) any amount of interest, relating to deposits referred to above, which has been included in the total income of the assessee of the previous year or years preceding such previous year; and
(ii) any amount received by the nominee or legal heir of the assessee, on the death of such assessee, other than interest, if any, accrued thereon, which was not included in the total income of the assessee for the previous year or years preceding such previous year.
| Section | Nature of deduction | Who can claim |
| (1) | (2) | (3) |
| 80CCC | Contributions to certain pension funds of LIC or any other insurer (up to Rs. 1,50,000) (subject to certain conditions) | Individual |
| 80CCD | Contribution to pension scheme notified by Central Government up to 10% of salary (subject to certain conditions and limits) Contribution made by employer shall also be allowed as deduction under 80CCD(2) while computing total income of the employee. However, amount of deduction could not exceed 14% of salary where contribution is made by central/state government and 10% of salary, where contribution is made by any other employee. | Individual |
| 80CCF | Amount up to Rs. 20,000, paid or deposited, during the previous years relevant to assessment year 2011-12 or 2012-13, as subscription to notified long-term infrastructure bonds | Individual/HUF |
| 80D | Amount paid (in any mode other than cash) by an individual or HUF to LIC or other insurer to effect or keep in force an insurance on the health of specified person. An individual can also make payment to the Central Government health scheme and/or on account of preventive health check-up (subject to limit) | Individual/HUF |
■ specified person means: – In case of Individual – self, spouse, dependent children or parents – In case of HUF – Any member thereof ■ Deduction for preventive health check-up shall not exceed in aggregate Rs. 5,000. ■ Payment on account of preventive health check-up may be made in cash. | ||
| 80DD | Deduction of Rs. 75,000 (Rs. 1,25,000 in case of severe disability) to a resident individual/HUF where (a) any expenditure has been incurred for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability [as defined under Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995] (w.e.f. assessment year 2005-06 including autism, cerebral palsy and multiple disability as referred to in National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities Act, 1999), or (b) any amount is paid or deposited under an approved scheme framed in this behalf by the LIC or any other insurer or the Administrator or the specified company for the maintenance of a dependent, being a person with disability (subject to certain conditions) | Resident Individual/HUF |
| 80DDB | Expenses actually paid for medical treatment of specified diseases and ailments subject to certain conditions | Resident Individual/HUF |
| 80E | Amount paid out of income chargeable to tax by way of payment of interest on loan taken from financial institution/approved charitable institution for pursuing higher education (subject to certain conditions) (maximum period : 8 years) | Individual |
| 80EE | Interest payable on loan taken by an individual from any financial institution for the purpose of acquisition of a residential house property subject to certain condition. (Maximum deduction 50,000) | Individual |
| 80EEA | Interest payable on loan taken by an individual, who is not eligible to claim deduction under 80EE, from any financial institution for the purpose of acquisition of a residential house property subject to certain condition. (Maximum deduction 1,50,000) | Individual |
| 80EEB | Interest payable on loan taken by an individual from any financial institution for the purpose of purchase of an electric vehicle subject to certain condition. (Maximum deduction 1,50,000) | Individual |
| 80G | Donations to certain approved funds, trusts, charitable institutions/donations for renovation or repairs of notified temples, etc. [amount of deduction is 50 per cent of net qualifying amount]. 100 per cent of qualifying donations to National Defence Fund, Prime Minister’s National Relief Fund, Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND) Prime Minister’s Armenia Earthquake Relief Fund, Africa (Public Contributions – India) Fund, National Children’s Fund (from 1-4-2014), Government or approved association for promoting family planning, universities and approved educational institutions of national eminence, National Foundation for Communal Harmony, Chief Minister’s Earthquake Relief Fund (Maharashtra), Zila Saksharta Samitis, National or State Blood Transfusion Council, Fund set up by State Government to provide medical relief to the poor, Army Central Welfare Fund, Indian Naval Benevolent Fund and Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, National Illness Assistance Fund, Chief Minister’s Relief Fund or the Lt. Governor’s Relief Fund in respect of any State or Union Territory, National Sports Fund, National Cultural Fund, Fund for Technology Development and Application, Indian Olympic Association, etc., fund set up by State Government of Gujarat exclusively for providing relief to victims of earthquake in Gujarat, National Trust for Welfare of Persons with Autism, Cerebral palsy, Mental retardation and Multiple Disabilities, and sums paid between 26-1-2001 and 30-9-2001 to any eligible trust, institution or fund for providing relief to Gujarat earthquake victims, the Swachh Bharat Kosh and the Clean Ganga Fund (from assessment year 2015-16) and National Fund for Control of Drug Abuse (from assessment year 2016-17) [subject to certain conditions and limits] | All assessees |
| 80GG | Rent paid in excess of 10% of total income for furnished/unfurnished residential accommodation (subject to maximum of Rs. 5,000 p.m. or 25% of total income, whichever is less) (subject to certain conditions) | Individuals not receiving any house rent allowance |
| 80GGA | Certain donations for scientific, social or statistical research or rural development programme or for carrying out an eligible project or scheme or National Urban Poverty Eradication Fund (subject to certain conditions) | All assessees not having any income chargeable under the head ‘Profits and gains of business or profession’ |
| 80GGB | Sum contributed to any political party/electoral trust | Indian company |
| 80GGC | Sum contributed to any political party/electoral trust | All assessees, other than local authority and artificial juridical person wholly or partly funded by Government |
| For certain incomes | ||
| 80-IA | Profits and gains from industrial undertakings engaged in infrastructure facility, telecommunication services, industrial park, development of Special Economic Zone, power undertakings, etc. (subject to certain conditions and limits) | All assessees |
| No deduction under this section shall be available to an enterprise which starts the development or operation and maintenance of the infrastructure facility on or after the 1st day of April, 2017. | ||
| 80-IAB | Profits and gains derived by undertaking/enterprise from business of developing a Special Economic Zone notified on or after 1-4-2005 (subject to certain conditions and limits) | Assessee being Developer of SEZ |
| No deduction under this section shall be available to an assessee, being a developer, where the development of Special Economic Zone begins on or after the 1st day of April, 2017. | ||
| 80-IAC | Profit and gains derived by an eligible start-up from specified business on or after 1-4-2017 (subject to certain conditions)27 | Company and LLP |
| 80-IB | Profits and gains from industrial undertakings, cold storage plant, hotel, scientific research & development, mineral oil concern, housing projects, cold chain facility, multiplex theatres, convention centres, ships, etc. (subject to certain conditions and limits) | All assessees No deduction shall be available to an enterprise which commence the business activity on or after 1-4-2017. |
| 80-IBA | Profits and gains derived by assessee from the business of developing and building affordable housing projects. (subject to certain conditions) | All assessees |
| 80-IC | Profits and gains derived by an undertaking or an enterprise in special category States (Himachal Pradesh, Uttaranchal, Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura) (subject to certain limits, time limits and conditions), (a) which has begun or begins to manufacture or produce any article or thing, not being any article or thing specified in the Thirteenth Schedule, or which manufactures or produces any article or thing, not being any article or thing specified in the Thirteenth Schedule and undertakes substantial expansion during the specified period. (b) which has begun or begins to manufacture or produce any article or thing specified in the Fourteenth Schedule or commences any operation specified in that Schedule, or which manufactures or produces any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule and undertakes substantial expansion during the specified period | All assessees |
| 80-ID | Profits and gains from business of hotels and convention centres in specified areas (subject to certain conditions). | All assessees |
| 80-IE | Deduction in respect of certain undertakings in North Eastern States. | All assessees |
| 80JJA | Entire income from business of collecting and processing or treating of bio-degradable waste for generating power, or producing bio-fertilizers, bio-pesticides or other biological agents or for producing bio-gas, making pellets or briquettes for fuel or organic manure (for 5 consecutive assessment years) | All assessees |
| 80JJAA | Deduction of 30% of additional employee cost in respect of employment of new employees. | Assessee to whom section 44AB applies |
| Additional employee cost means total emoluments paid or payable to additional employees employed during the previous year. | ||
| Deduction shall be allowed for first three Assessment Years including the Assessment Year relevant to previous year in which such employment is provided. | ||
| (Subject to certain other condition) | ||
| 80LA | Certain incomes of Scheduled banks/banks incorporated outside India having Offshore Banking Units in a Special Economic Zone/Units of International Financial Services Centre (subject to certain conditions and limits) | Scheduled Banks/banks incorporated outside India/Units of International Financial Services Centre |
| 80M | Inter-corporate dividend shall be allowed to be reduced from total income of company receiving the dividend if same is further distributed to shareholders one month prior to the due date of filing of return. | Domestic Company |
| 80P | Specified incomes [subject to varying limits specified in sub-section (2)] | Co-operative societies |
| 80QQB | Royalty income of author of certain specified category of books (up to Rs. 3,00,000) (subject to certain conditions) | Resident Individual – Author |
| 80RRB | Royalty on patents up to Rs. 3,00,000 in the case of a resident individual who is a patentee and is in receipt of income by way of royalty in respect of a patent registered on or after 1-4-2003 (subject to certain conditions). | Resident individuals |
| 80TTA | Interest on deposits in savings bank accounts (up to Rs. 10,000 per year) | Individuals/HUFs (except Senior Citizen) |
| 80TTB | Interest on deposit in saving account or fixed deposit (upto Rs. 50,000 per year) | Senior citizen |
| 80U | Deduction of Rs. 75,000 to a resident individual who, at any time during the previous year, is certified by the medical authority to be a person with disability [as defined under Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995] [w.e.f. assessment year 2005-06 including autism, cerebral palsy, and multiple disabilities as defined under National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities Act, 1999] [in the case of a person with severe disability, allowable deduction is Rs. 1,25,000] (subject to certain conditions). | Resident individuals |
| Rebates | ||
| 87A | Tax rebate in case of individual resident in India, whose total income does not exceed Rs. 5,00,000 quantum of rebate shall be an amount equal to hundred per cent of such income-tax or an amount of Rs. 12,500, whichever is less. | Resident Individual |
1. Provisions of section 32 shall apply whether or not the assessee has claimed depreciation.
2. If sum is borrowed for acquiring a capital asset, interest thereon pertaining to the period before asset is first put to use shall not be allowed as deduction.
3. W.e.f. assessment year 2016-17, bad-debts shall be allowed as deduction even if they are not written-off from books of accounts. Such deduction shall be allowed if amount of debt or part thereof has been taken into account in computing income on the basis of Income Computation and Disclosure Standards notified under section 145(2) without recording the same in the accounts.
4. With effect from assessment year 2018-19 business of developing or maintaining and operating or developing, maintaining and operating a new infrastructure facility, has been included.
♦ Section 35AD was amended by Finance (No. 2) Act, 2014 with effect from assessment year 2015-16 :
With a view to ensure that the capital asset on which investment linked deduction has been claimed is used for the purposes of the specified business, sub-section (7A) has been inserted in section 35AD to provide that any asset in respect of which a deduction is claimed and allowed under section 10AA, shall be used only for the specified business for a period of 8 years beginning with the previous year in which such asset is acquired or constructed. Moreover, if such asset is used for any purpose other than the specified business, the total amount of deduction so claimed and allowed in any previous year in respect of such asset (as reduced by the amount of depreciation allowable in accordance with the provisions of section 32 as if no deduction had been allowed under section 10AA), shall be deemed to be income of the assessee chargeable under the head “Profits and gains of business or profession” of the previous year in which the asset is so used. However, this provision will not apply to a company which has become a sick industrial company under section 17(1) of the Sick Industrial Companies (Special Provisions) Act within the time period of 8 years as stated above.
♦ Where any deduction under section 35AD has been availed of by the assessee on account of capital expenditure incurred for the purposes of specified business in any assessment year, no deduction under section 10AA shall be available to the assessee in the same or any other assessment year in respect of such specified business.
5. With effect from assessment year 2015-16 a new Explanation 2 has been inserted in section 37(1) to clarify that expenditure incurred by the assessee on Corporate Social Responsibility activities in accordance with section 135 of the Companies Act, 2013 will not be considered as expenditure incurred by the assessee for the purposes of the business or profession.
Further, with effect from assessment year 2022-23, a new Explanation 3 has been inserted in section 37(1) to clarify that expenditure incurred to provide perquisite, in whatever form to any person, irrespective of whether the recipient is engaged in any business or profession, where the acceptance of such benefit or perquisite is a violation of any rule, law or regulation, which governs the recipient, shall be deemed to have not been incurred for business or profession and accordingly, the deduction for the same shall not be available. Furthermore, the expenditure, whether constituting an offence as per the prevailing laws in India or outside India, or prohibited by any law in force – whether in India or outside India, shall not be eligible for deduction under section 37(1) .
6. Following chart explains amendments made in section 40(a)(i) with effect from the assessment year 2015-16 :
| TDS default pertaining to any sum (other than salary) payable outside India or payable to a non-resident which is taxable in the hands of recipient in India | Law applicable up to the assessment year 2014-15 | Law applicable from the assessment year 2015-16 | |
| 1. Tax is deductible but it is not deducted | Expenditure is not deductible. If, however, TDS is deposited in a subsequent year, it will be deducted in that year | No amendment. The law which is applicable for the assessment year 2014-15 will apply for assessment year 2015-16 onwards | |
| 2. Tax is deductible (and it is so deducted during April 1 and February 28/29 of the financial year) but it is not deposited up to March 31 of the financial year | Expenditure is not deductible. If, however, TDS is deposited in a subsequent year, it will be deducted in that year | Disallowance provisions will not be applicable if TDS is deposited up to the due date of submission of return of income under section 139(1). If TDS is deposited after this date, expenditure will be deductible in the year in which TDS is deposited. | |
| 3. Tax is deductible (and it is so deducted during the month of March) but it is not deposited up to April 30 falling immediately after the end of the financial year | Expenditure is not deductible. If, however, TDS is deposited in a subsequent year, it will be deducted in that year | Disallowance provisions will not be applicable if TDS is deposited up to the due date of submission of return of income under section 139(1). If TDS is deposited after this date, expenditure will be deductible in the year in which TDS is deposited. |
Following chart explains amendments made in section 40(a)(i) with effect from the assessment year 2020-21 :
| TDS default pertaining to any sum (other than salary) payable outside India or payable to a non-resident which is taxable in the hands of recipient in India | Law applicable up to the assessment year 2019-20 | Law applicable from the assessment year 2020-21 | |
| Tax is deductible but not deducted, but Payee has furnished his return of income after taking into account said income and paid tax thereon | Expenditure is not deductible. If, however, TDS is deposited in a subsequent year, it will be deducted in that year | Were deductor has failed to deduct the tax and payee has furnished his return of income after considering such income and paid tax thereon, deductor shall not deemed to be an assessee in default, then it shall be deemed that the assessee has deducted and paid the tax on the date on which the payee has furnished his return of Income. Accordingly expenditure shall be allowable as deduction. |
7. Following amendments have been made in section 40(a)(ia) with effect from the assessment year 2015-16 :
• Coverage of disallowance extended – Before amendment, disallowance provisions of section 40(a)(ia), covered TDS default under sections 193, 194A, 194C, 194D, 194H, 194-I and 194J. After amendment, disallowance under section 40(a)(ia), will cover any amount payable to a resident which is subject to TDS.
• Only 30 per cent expenditure to be disallowed – In case of TDS default, 30 per cent of expenditure (not 100 per cent) will be disallowed.
8 One residential house in India with effect from assessment year 2015-16. With effect from Assessment Year 2020-21, a taxpayer has an option to make investment in two residential house properties in India. This option can be exercised by the taxpayer only once in his lifetime provided the amount of long-term capital gain does not exceed Rs. 2 crores.
9. With effect from assessment year 2015-16 limit of Rs. 50 lakhs applies to total amount invested during financial year in which original asset is transferred and in subsequent financial year.
10. One residential house in India with effect from assessment year 2015-16.
11. See Bank Term Deposits Scheme, 2006.
12. with effect from assessment year 2015-16.
13. Where deduction is claimed under this section, deduction in relation to same amount cannot be claimed under section 80C.
14 section 80CCE provides that the aggregate amount of deductions under section 80C, section 80CCC and section 80CCD(1) shall not, in any case, exceed Rs. 1,50,000
With effect from assessment year 2015-16, amended sub-section (1) has clarified that a non-government employee can claim deduction under section 80CCD even if his date of joining is prior to January 1, 2004.
15 With effect from the assessment year 2012-13 section 80CCE is amended so as to provide that contribution made by the Central Government or any other employer to a pension scheme under sub-section (2) of section 80CCD shall not be included in the limit of deduction of Rs. 1,50,000 provided under section 80CCE.
With effect from assessment year 2016-17, sub-section (1A) of section 80CCD which laid down maximum deduction limit of Rs. 1,00,000 (under sub-section (1)) has been deleted.
Further, a new sub-section (1B) is inserted to provide for additional deduction to the extent of Rs. 50,000. The additional deduction is not subject to ceiling limit of Rs. 1,50,000 as provided under section 80CCE.
However, it is to be noted that addition deduction of Rs. 50,000 shall not be allowed in respect of contribution which is considered for deduction under section 80CCD(1), i.e., within limit of 10% of salary/gross total income
Any payment from NPS to an employee because of closure or his opting out of the pension scheme is chargeable to tax. However, with effect from the assessment year 2017-18, the whole amount received by the nominee from NPS on death of the assessee shall be exempt from tax.
16. Rajiv Gandhi Equity Savings Scheme, 2012/2013.
With effect from assessment year 2014-15 (a) investment in listed units of an equity oriented fund is also permitted; (b) deduction shall be allowed for three consecutive assessment years, beginning with the assessment year relevant to previous year in which the listed equity shares or listed units of equity oriented fund were first acquired and (c) gross total income of the assessee for relevant assessment year shall not exceed twelve lakh rupees.
17. Section 80D is amended by the Finance Act, 2018. From assessment year 2019-20 onwards the deduction under Section 80D will be available as per the limit specified below:
| Individual | HUF | |
| For self, spouse and dependent children : Rs. 25,000 (Rs. 50,000 if person insured is a senior citizen*); | Premium up to Rs. 25,000 (Rs. 50,000 if member insured is a senior citizen) paid to insure any member of the family. | |
| For parents of the assessee : (Additional) Rs. 25,000 (Rs. 50,000 if person insured is a senior citizen) | NA | |
| Medical expenditure if no amount is paid in respect of health insurance-Rs.50,000 (only in case of senior citizen) | Medical expenditure if no amount is paid in respect of health insurance-Rs.50,000 (only in case of senior citizen) | |
| Aggregate amount of deduction cannot exceed Rs.1,00,000 in any case | Aggregate amount of deduction cannot exceed Rs.50,000 in any case. |
*‘Senior citizen’ means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.
18. Maximum deduction is Rs. 40,000 (Rs. 1,00,000 where expenditure is incurred for a senior citizen [w.e.f assessment year 2019-20])
With effect from assessment year 2016-17, the taxpayer shall be required to obtain a prescription from a specialist doctor (not necessarily from a doctor working in a Government hospital) for availing this deduction.
19. Scope of ‘higher education’ is enlarged with effect from assessment year 2010-11 to cover any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, Board or university recognised by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so.
With effect from 1-4-2010 the scope of expression ‘relative’ has also been enlarged to cover the student for whom the taxpayer is the legal guardian.
20. Donation of any sums paid by the assessee, being a company, in the previous year as donations to the Indian Olympic Association or to any other association or institution established in India, as the Central Government may, having regard to the prescribed guidelines, by notification in the Official Gazette, specify in this behalf for—
(i) the development of infrastructure for sports and games; or
(ii) the sponsorship of sports and games,
in India;
is eligible for the purpose of deduction under section 80G [this is in consequence of omission of section 10(23)].
21. Donation made to an authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both is also eligible for the purpose of deduction under section 80G from the assessment year 2003-04 [this is in consequence of omission of section 10(20A)].
22. With effect from 1-4-2013 no deduction shall be allowed in respect of donation of any sum exceeding two thousand rupees unless such sum is paid by any mode other than cash.
23. With effect from 1-4-2013 no deduction shall be allowed under this section in respect of any sum exceeding ten thousand rupees unless such sum is paid by any mode other than cash.
24 With effect from 1-4-2014 deduction will not be allowed if sum is contributed in cash.
25 Time limits stated under section 80-IA(4)(iv) have been extended from 31-3-2014 to 31-3-2017.
26. 100% deduction shall be allowed from the AY beginning on or after the 1st day of April, 2021.
27. With effect from Assessment Year 2018-19:
i. ‘Eligible business’ means a business carried out by an eligible start up engaged in innovation, development or improvement of products or processes or services or a scalable business model with a high potential of employment generation or wealth creation.
ii. “Eligible start-up” means a company or a limited liability partnership engaged in eligible business which fulfils the following conditions, namely:
a. it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2023
b. the total turnover of its business does not exceed 100 crore rupees in the previous years in which deduction is claimed; and
c. it holds a certificate of eligible business from the Inter-Ministerial Board of Certification as notified in the Official Gazette by the Central Government
[As amended by Finance Act, 2022]
List of benefits available to Salaried Persons*
[AY 2023-24]
S. N. | Section | Particulars | Benefits |
A. | Allowances | ||
1. | House Rent Allowance (Sec. 10(13A) & Rule 2A) | Least of the following is exempt: a) Actual HRA Received b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras) c) Rent paid minus 10% of salary * Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission Note: i. Fully Taxable, if HRA is received by an employee who is living in his own house or if he does not pay any rent ii. It is mandatory for employee to report PAN of the landlord to the employer if rent paid is more than Rs. 1,00,000 [Circular No. 08 /2013 dated 10th October, 2013]. | |
2. | Children Education Allowance | Up to Rs. 100 per month per child up to a maximum of 2 children is exempt | |
3. | Hostel Expenditure Allowance | Up to Rs. 300 per month per child up to a maximum of 2 children is exempt | |
4. | Transport Allowance granted to an employee to meet expenditure for the purpose of commuting between place of residence and place of duty | Rs. 3,200 per month granted to an employee, who is blind or deaf and dumb or orthopedically handicapped with disability of lower extremities | |
5. | Transport Allowance to an employee working in any transport business to meet his personal expenditure during his duty performed in the course of running of such transport from one place to another place provided employee is not in receipt of daily allowance. | Amount of exemption shall be lower of following: a) 70% of such allowance; or b) Rs. 10,000 per month. | |
6. | Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office | Exempt to the extent of expenditure incurred | |
7. | Any Allowance granted to meet the cost of travel on tour or on transfer | Exempt to the extent of expenditure incurred | |
8. | Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty | Exempt to the extent of expenditure incurred | |
9. | Helper/Assistant Allowance | Exempt to the extent of expenditure incurred | |
10. | Research Allowance granted for encouraging the academic research and other professional pursuits | Exempt to the extent of expenditure incurred | |
11. | Uniform Allowance | Exempt to the extent of expenditure incurred | |
12. | Foreign allowances or perquisites paid or allowed by Government to its employees (an Indian citizen) posted outside India | Fully Exempt | |
13. | – | Allowances to Judges of High Court/Supreme Court (Subject to certain conditions) | Fully Exempt. |
14. | Following allowances and perquisites given to serving Chairman/Member of UPSC is exempt from tax: a) Value of rent free official residence b) Value of conveyance facilities including transport allowance c) Sumptuary allowance d) Leave travel concession | Fully Exempt | |
15. | – | Allowances paid by the UNO to its employees | Fully Exempt |
16. | Allowances to Retired Chairman/Members of UPSC (Subject to certain conditions) | Exempt subject to maximum of Rs.14,000 per month for defraying services of an orderly and for secretarial assistant on contract basis. The value of residential telephone free of cost and the number of free calls to the extent of 1500 per month shall be exempt. | |
17. | Special compensatory Allowance (Hilly Areas) (Subject to certain conditions and locations) | Amount exempt from tax varies from Rs. 300 per month to Rs. 7,000 per month. | |
18. | Border area allowances, Remote Locality allowance or Disturbed Area allowance or Difficult Area Allowance (Subject to certain conditions and locations) | Amount exempt from tax varies from Rs. 200 per month to Rs. 1,300 per month. | |
19. | Tribal area allowance given in (a) Madhya Pradesh (b) Tamil Nadu (c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Odisha | Rs. 200 per month | |
20. | Compensatory Field Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations) | Rs. 2,600 per month | |
21. | Compensatory Modified Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations) | Rs. 1,000 per month | |
22. | Counter Insurgency Allowance granted to members of Armed Forces operating in areas away from their permanent locations. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations) | Rs. 3,900 per month | |
23. | Underground Allowance is granted to employees working in uncongenial, unnatural climate in underground mines | Up to Rs. 800 per month | |
24. | High Altitude Allowance is granted to armed forces operating in high altitude areas (Subject to certain conditions and locations) | a) Up to Rs. 1,060 per month (for altitude of 9,000 to 15,000 feet) b) Up to Rs. 1,600 per month (for altitude above 15,000 feet) | |
25. | Highly active field area allowance granted to members of armed forces (Subject to certain conditions and locations) | Up to Rs. 4,200 per month | |
26. | Island Duty Allowance granted to members of armed forces in Andaman and Nicobar and Lakshadweep group of Island (Subject to certain conditions and locations) | Up to Rs. 3,250 per month | |
B. | Perquisites | ||
1. | read with | Rent free unfurnished accommodation provided to Central and State Government employees | License Fees determined in accordance with rules framed by Government for allotment of houses shall be deemed to be the taxable value of perquisites. |
2. | read with | Unfurnished rent free accommodation provided to other employees | Taxable value of perquisites A. If House Property is owned by the employer: i. 15% of salary, if population of city where accommodation is provided exceeds 25 lakhs as per 2001 census ii. 10% of salary, if population of city where accommodation is provided exceeds 10 lakhs but does not exceed 25 lakhs as per 2001 census iii. 7.5% of salary, if accommodation is provided in any other city B. If House Property is taken on lease or rent by the employer, the perquisite value shall be : i. Lease rent paid or payable by the employer or 15% of the salary, whichever is lower *Salary includes: a) Basic Pay b) Dearness Allowance (only to the extent it forms part of retirement benefit salary) c) Bonus d) Commission e) All other allowances (only taxable portion) f) Any monetary payment which is chargeable to tax But does not include i. Value of any perquisite [under section 17(2)] ii. Employer’s contribution to PF iii. Benefits received at the time of retirement like gratuity, pension etc. Note: 1) Rent free accommodation is not chargeable to tax if provided to an employee working at mining site or an on-shore oil exploration site, etc.,— (i) which is being of temporary nature (subject to conditions) (ii) which is located in remote area. 2) Rent free accommodation if provided to High Court or Supreme Court Judges, Union Ministers, Leader of Opposition in Parliament, an official in Parliament and Serving Chairman and members of UPSC is Tax Free Perquisites. 3) The value so determined shall be reduced by the amount of rent, if any, paid by the employee. 4) If employee is transferred and retain property at both the places, the taxable value of perquisites for initial period of 90 days shall be determined with reference to only one accommodation (at the option of the assessee). The other one will be tax free. However after 90 days, taxable value of perquisites shall be charged with reference to both the accommodations. |
3. | read with | Rent free furnished accommodation | Taxable value of perquisites a) Find out taxable value of perquisite assuming accommodation to be provided to the employee is unfurnished b) Add: 10% of original cost of furniture and fixtures (if these are owned by the employer) or actual higher charges paid or payable (if these are taken on rent by the employer). Note: The value so determined shall be reduced by the amount of rent, if any, paid by the employee |
4. | read with | A furnished accommodation in a Hotel | Taxable value of perquisites Value of perquisite shall be lower of following: a) Actual charges paid or payable by the employer to such hotel b) 24% of salary Note: Hotel accommodation will not be chargeable to tax if : a) It is provided for a total period not exceeding in aggregate 15 days in the financial year; and b) Such accommodation in hotel is provided on employee’s transfer from one place to another place. |
| 5. | 17(2)(iv) | Any sum paid by employer in respect of any obligation of an employee | Fully Taxable |
| 5A. | 17(2)(vii) | Contribution made to the account of the assessee by the employer–– (a) in a recognised provident fund; (b) in the scheme referred to in section 80CCD(1); and (c) in an approved superannuation fund | To the extent it exceeds Rs. 7,50,000 |
| 5B. | 17(2)(iv) | Any annual accretion by way of interest, dividend or any other amount of similar nature during the previous year to the balance at the credit of the fund or scheme | To the extent it relates to the employer’s contribution which is included in total income |
5C. | read with Rule 3(2) | Motor Car / Other Conveyance | Taxable value of perquisites (See Note 1 below) |
6. | read with Rule 3(3) | Services of a domestic servant including sweeper, gardener, watchmen or personal attendant (Taxable in case of specified employee only [See Note 4]) | Taxable value of perquisite shall be salary paid or payable by the employer for such services less any amount recovered from the employee. |
7. | read with Rule 3(4) | Supply of gas, electricity or water for household purposes | Taxable value of perquisites: 1. Manufacturing cost per unit incurred by the employer., if provided from resources owned by the employer; 2. Amount paid by the employer, if purchased by the employer from outside agency Note: i. Any amount recovered from the employee shall be deducted from the taxable value of perquisite. ii. Taxable in case of specified employees only [See note 4] |
8. | read with Rule 3(5) | Education Facilities | Taxable value of perquisites (See Note 2 below) |
9. | read with Rule 3(6) | Transport facilities provided by the employer engaged in carriage of passenger or goods (except Airlines or Railways) (Taxable in case of specified employee only [See Note 4]) | Value at which services are offered by the employer to the public less amount recovered from the employee shall be a taxable perquisite |
10. | Amount payable by the employer to effect an insurance on life of employee or to effect a contract for an annuity | Fully Taxable | |
11. | 17(2)(vi) read with Rule 3(8)/3(9) | ESOP/ Sweat Equity Shares | Taxable value of perquisites Fair Market value of shares or securities on the date of exercise of option by the assessee less amount recovered from the employee in respect of such shares shall be the taxable value of perquisites. Fair Market Value shall be determined as follows: a) In case of listed Shares: Average of opening and closing price as on date of exercise of option (Subject to certain conditions and circumstances) b) In case of unlisted shares/ security other than equity shares: Value determined by a Merchant Banker as on date of exercise of option or an earlier date, not being a date which is more than 180 days earlier than the date of exercise of the option. Note: The Finance Act, 2020 has deferred the taxation of perquisite in case of start-ups from date of allotment to the earliest of the following three dates: 1. Expiry of 48 months from the end of the relevant assessment year; 2. Sale of such shares by the employees; 3. Date on which employee ceases to be employee of the start-up. The eligible start-up shall accordingly, be required to deposit tax with the government within 14 days of the happening of any of the above events (whichever is earlier). However, 17(2)(vi) has not been amended, thus the income shall be computed in the year in which shares are allotted but tax shall be paid in subsequent year. |
12. | Employer’s contribution towards: a) recognised provided fund b) NPS (Section 80CCD(1)) c) Approved Superannuation fund | Taxable in the hands of employee to the extent such contribution exceed Rs.7,50,000 | |
13. | 17(2)(viii) read with Rule 3(7)(i) | Interest free loan or Loan at concessional rate of interest | Interest free loan or loan at concessional rate of interest given by an employer to the employee (or any member of his household) is a perquisite chargeable to tax in the hands of all employees on following basis: 1. Find out the ‘maximum outstanding monthly balance’ (i.e. the aggregate outstanding balance for each loan as on the last day of each month); 2. Find out rate of interest charged by the SBI as on the first day of relevant previous year in respect of loan for the same purpose advanced by it; 3. Calculate interest for each month of the previous year on the outstanding amount (mentioned in point 1) at the rate of interest (given in point 2) 4. Interest actually recovered, if any, from employee 5. The balance amount (point 3-point 4) is taxable value of perquisite Nothing is taxable if: a) Loan in aggregate does not exceed Rs 20,000 b) Loan is provided for treatment of specified diseases ( Rule 3A) like neurological diseases, Cancer, AIDS, Chronic renal failure, Hemophilia (specified diseases). However, exemption is not applicable to so much of the loan as has been reimbursed to the employee under any medical insurance scheme. |
14. | 17(2)(viii) read with Rule 3(7)(ii) | Facility of travelling, touring and accommodation availed of by the employee or any member of his household for any holiday | a) Perquisite value taxable in the hands of employee shall be expenditure incurred by the employer less amount recovered from employee. b) Where such facility is maintained by the employer, and is not available uniformly to all employees, the value of benefit shall be taken to be the value at which such facilities are offered by other agencies to the public less amount recovered from employee. |
15. | 17(2)(viii) read with Rule 3(7)(iii) | Free food and beverages provided to the employee | 1) Fully Taxable: Free meals in excess of Rs. 50 per meal less amount paid by the employee shall be a taxable perquisite 2) Exempt from tax: Following free meals shall be exempt from tax a) Food and non-alcoholic beverages provided during working hours in remote area or in an offshore installation; b) Tea, Coffee or Non-Alcoholic beverages and Snacks during working hours are tax free perquisites; c) Food in office premises or through non-transferable paid vouchers usable only at eating joints provided by an employer is not taxable, if cost to the employer is Rs. 50(or less) per meal. |
16. | 17(2)(viii) read with Rule 3(7)(iv) | Gift or Voucher or Coupon on ceremonial occasions or otherwise provided to the employee | a) Gifts in cash or convertible into money (like gift cheque) are fully taxable b) Gift in kind up to Rs.5,000 in aggregate per annum would be exempt, beyond which it would be taxable. |
17. | 17(2)(viii) read with Rule 3(7)(v) | Credit Card | a) Expenditure incurred by the employer in respect of credit card used by the employee or any member of his household less amount recovered from the employee is a taxable perquisite b) Expenses incurred for official purposes shall not be a taxable perquisite provided complete details in respect of such expenditure are maintained by the employer |
18. | 17(2)(viii) read with Rule 3(7)(vi) | Free Recreation/ Club Facilities | a) Expenditure incurred by the employer towards annual or periodical fee etc. (excluding initial fee to acquire corporate membership) less amount recovered from the employee is a taxable perquisite b) Expenses incurred on club facilities for the official purposes are exempt from tax. c) Use of health club, sports and similar facilities provided uniformly to all employees shall be exempt from tax. |
19. | 17(2)(viii) read with Rule 3(7)(vii) | Use of movable assets of the employer by the employee is a taxable perquisite | Taxable value of perquisites a) Use of Laptops and Computers: Nil b) Movable asset other than Laptops, computers and Motor Car*: 10% of original cost of the asset (if asset is owned by the employer) or actual higher charges incurred by the employer (if asset is taken on rent) less amount recovered from employee. *See Note 1 for computation of perquisite value in case of use of the Motor Car |
20. | 17(2)(viii) read with Rule 3(7)(viii) | Transfer of movable assets by an employer to its employee | Taxable value of perquisites a) Computers, Laptop and Electronics items: Actual cost of asset less depreciation at 50% (using reducing balance method) for each completed year of usage by employer less amount recovered from the employee b) Motor Car: Actual cost of asset less depreciation at 20% (using reducing balance method) for each completed year of usage by employer less amount recovered from the employee c) Other movable assets: Actual cost of asset less depreciation at 10% (on SLM basis) for each completed year of usage by employer less amount recovered from the employee. |
21. | 17(2)(viii) read with Rule 3(7)(ix) | Any other benefit or amenity extended by employer to employee | Taxable value of perquisite shall be computed on the basis of cost to the employer (under an arm’s length transaction) less amount recovered from the employee. However expenses on telephones including a mobile phone incurred by the employer on behalf of employee shall not be treated as taxable perquisite. |
22. | Tax paid by the employer on perquisites (not provided for by way of monetary payments) given to employee | Fully exempt | |
23. | Leave Travel Concession or Assistance (LTC/LTA), extended by an employer to an employee for going anywhere in India along with his family* *Family includes spouse, children and dependent brother/sister/parents. However, family doesn’t include more than 2 children of an Individual born on or after 01-10-1998. | The exemption shall be limited to fare for going anywhere in India along with family twice in a block of four years: i. Exemption limit where journey is performed by Air – Air fare of economy class in the National Carrier by the shortest route or the amount spent, whichever is less ii. Exemption limit where journey is performed by Rail – Air-conditioned first class rail fare by the shortest route or the amount spent, whichever is less iii. Exemption limit if places of origin of journey and destination are connected by rail but the journey is performed by any other mode of transport – Air-conditioned first class rail fare by the shortest route or the amount spent, whichever is less iv. Exemption limit where the places of origin of journey and destination are not connected by rail: a. Where a recognized public transport system exists – First Class or deluxe class fare by the shortest route or the amount spent, whichever is less b. Where no recognized public transport system exists – Air conditioned first class rail fare by shortest route or the amount spent, whichever is less Notes: i. Two journeys in a block of 4 calendar years is exempt ii. Taxable only in case of Specified Employees [See note 4] | |
24. | Proviso to section 17(2) | Medical facilities in India | 1) Expense incurred or reimbursed by the employer for the medical treatment of the employee or his family (spouse and children, dependent – parents, brothers and sisters) in any of the following hospital is not chargeable to tax in the hands of the employee: a) Hospital maintained by the employer. b) Hospital maintained by the Government or Local Authority or any other hospital approved by Central Government c) Hospital approved by the Chief Commissioner having regard to the prescribed guidelines for treatment of the prescribed diseases. 2) Medical insurance premium paid or reimbursed by the employer is not chargeable to tax. |
25. | Proviso to section 17(2) | Medical facilities outside India | Any expenditure incurred or reimbursed by the employer for medical treatment of the employee or his family member outside India is exempt to the extent of following (subject to certain condition): a) Expenses on medical treatment – exempt to the extent permitted by RBI. b) Expenses on stay abroad for patient and one attendant – exempt to the extent permitted by RBI. c) Cost on travel of the employee or any family or one attendant – exempt, if Gross Total Income (before including the travel expenditure) of the employee, does not exceed Rs. 2,00,000. |
26. | Proviso to section 17(2) | Medical facility or reimbursement for COVID-19 treatment | Any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family in respect of any illness relating to Covid-19, shall not be taxable as perquisite in the hands of the employee. However, this benefit shall be allowed subject to certain conditions as may be notified by the Government in this behalf. [applicable w.e.f. Assessment Year 2020-21] |
C. | Deduction from salary | ||
| 1. | 16(ia) | Standard Deduction | Rs. 50,000 or the amount of salary, whichever is lower |
2. | Entertainment Allowance received by the Government employees (Fully taxable in case of other employees) | Least of the following is deductible : a) Rs 5,000 b) 1/5th of salary (excluding any allowance, benefits or other perquisite) c) Actual entertainment allowance received | |
3. | Employment Tax/Professional Tax. | Amount actually paid during the year is deductible. However, if professional tax is paid by the employer on behalf of its employee than it is first included in the salary of the employee as a perquisite and then same amount is allowed as deduction. | |
D. | Retirement Benefits | ||
a) Leave Encashment | |||
1. | Encashment of unutilized earned leave at the time of retirement of Government employees | Fully Exempt | |
2. | Encashment of unutilized earned leave at the time of retirement of other employees (not being a Government employee) | Least of the following shall be exempt from tax: a) Amount actually received b) Unutilized earned leave* X Average monthly salary c) 10 months Average Salary** d) Rs. 3,00,000 *While computing unutilized earned leave, earned leave entitlements cannot exceed 30 days for each year of service rendered to the current employer **Average salary = Average Salary*** of last 10 months immediately preceding the retirement ***Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission | |
b) Retrenchment Compensation | |||
1. | Retrenchment Compensation received by a workman under the Industrial Dispute Act, 1947(Subject to certain conditions). | Least of the following shall be exempt from tax: a) an amount calculated as per section 25F(b) of the Industrial Disputes Act, 1947; b) Rs. 5,00,000; or c) Amount actually received Note: i. Relief under Section 89(1) is available ii. 15 days average pay for each completed year of continuous service or any part thereof in excess of 6 months is to be adopted under section 25F(b) of the Industrial Disputes Act, 1947. | |
c) Gratuity | |||
1. | Gratuity received by Government Employees (Other than employees of statutory corporations) | Fully Exempt | |
2. | Death -cum-Retirement Gratuity received by other employees who are covered under Gratuity Act, 1972 (other than Government employee) (Subject to certain conditions). | Least of following amount is exempt from tax: 1. (*15/26) X Last drawn salary** X completed year of service or part thereof in excess of 6 months. 2. Rs. 20,00,000 3. Gratuity actually received. *7 days in case of employee of seasonal establishment. ** Salary = Last drawn salary including DA but excluding any bonus, commission, HRA, overtime and any other allowance, benefits or perquisite | |
3. | Death -cum-Retirement Gratuity received by other employees who are not covered under Gratuity Act, 1972 (other than Government employee) (Subject to certain conditions). | Least of following amount is exempt from tax: 1. Half month’s Average Salary* X Completed years of service 2. Rs. 20,00,000 3. Gratuity actually received. *Average salary = Average Salary of last 10 months immediately preceding the month of retirement ** Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission | |
d) Pension | |||
1. | – | Pension received from United Nation Organization by the employee of his family members | Fully Exempt |
2. | Commuted Pension received by an employee Central Government, State Government, Local Authority Employees and Statutory Corporation | Fully Exempt | |
3. | Commuted Pension received by other employees who also receive gratuity | 1/3 of full value of commuted pension will be exempt from tax | |
4. | Commuted Pension received by other employees who do not receive any gratuity | 1/2 of full value of commuted pension will be exempt from tax | |
5. | Family Pension received by the family members of Armed Forces | Fully Exempt | |
6. | Family pension received by family members in any other case | 33.33% of Family Pension subject to maximum of Rs. 15,000 shall be exempt from tax | |
e) Voluntary Retirement | |||
1. | Amount received on Voluntary Retirement or Voluntary Separation (Subject to certain conditions) | Least of the following is exempt from tax: 1) Actual amount received as per the guidelines i.e. least of the following a) 3 months salary for each completed year of services b) Salary at the time of retirement X No. of months of services left for retirement; or 2) Rs. 5,00,000 | |
f) Provident Fund | |||
1. | – | Employee’s Provident Fund | For taxability of contribution made to various employee’s provident fund and interest arising thereon see Note 3. |
g) National Pension System (NPS) | |||
| 1. | 10(12A)/10(12B) | National Pension System | Any payment from the National Pension System Trust to an assessee on closure of his account or on his opting out of the pension scheme referred to in section 80CCD, to the extent it does not exceed 60% of the total amount payable to him at the time of such closure or his opting out of the scheme. Note: Partial withdrawal from the NPS shall be exempt to the extent of 25% of amount of contributions made by the employee. |
E. | Arrear of Salary and relief under section 89(1) | ||
1. | Arrear of salary and advance salary | Taxable in the year of receipt. However relief under section 89 is available | |
2. | Relief under Section 89 | If an individual receives any portion of his salary in arrears or in advance or receives profits in lieu of salary, he can claim relief as per provisions of section 89 read with rule 21A | |
3. | Relief under Section 89A | Relief from taxation in income from retirement benefit account maintained in a notified country in accordance with rule 21AAA | |
F. | Other Benefits | ||
1. | – | Lump-sum payment made gratuitously or by way of compensation or otherwise to widow or other legal heirs of an employee who dies while still in active service [Circular No. 573, dated 21-08-1990] | Fully Exempt in the hands of widow or other legal heirs of employee |
2. | – | Ex-gratia payment to a person (or legal heirs) by Central or State Government, Local Authority or Public Sector Undertaking consequent upon injury to the person or death of family member while on duty [Circular No. 776, dated 08-06-1999] | Fully Exempt in the hands of individual or legal heirs |
3. | – | Salary received from United Nation Organization [Circular No. 293, dated 10-02-1981] | Fully Exempt |
4. | Salary received by foreign national as an officials of an embassy, high commission, legation, consulate or trade representation of a foreign state | Fully Exempt if corresponding official in that foreign country enjoys a similar exemption | |
5. | Remuneration received by non-resident foreign citizen as an employee of a foreign enterprise for services rendered in India, if: a) Foreign enterprise is not engaged in any trade or business in India b) His stay in India does not exceed in aggregate a period of 90 days in such previous year c) Such remuneration is not liable to deducted from the income of employer chargeable under this Act | Fully exempt | |
6. | Salary received by a non-resident foreign national for services rendered in connection with his employment on a foreign ship if his total stay in India does not exceed 90 days in the previous year. | Fully exempt | |
7. | – | Salary and allowances received by a teacher /professor from SAARC member state (Subject to certain conditions). | Fully Exempt |
Notes:
1. Motor Car (taxable only in case of specified employees [See note 4]) except when car owned by the employee is used by him or members of his household wholly for personal purposes and for which reimbursement is made by the employer)
S. No. | Circumstances | Engine Capacity upto 1600 cc (value of perquisite ) | Engine Capacity above 1600 cc (value of perquisite) |
1 | Motor Car is owned or hired by the employer | ||
1.1 | Where maintenances and running expenses including remuneration of the chauffeur are met or reimbursed by the employer. | ||
1.1-A | If car is used wholly and exclusively in the performance of official duties. | Fully exempt subject to maintenance of specified documents | Fully exempt subject to maintenance of specified documents |
1.1-B | If car is used exclusively for the personal purposes of the employee or any member of his household. | Actual amount of expenditure incurred by the employer on the running and maintenance of motor car including remuneration paid by the employer to the chauffeur and increased by the amount representing normal wear and tear of the motor car at 10% p.a. of the cost of vehicle less any amount charged from the employee for such use is taxable | |
1.1-C | The motor car is used partly in the performance of duties and partly for personal purposes of the employee or any member of his household. | Rs. 1,800 per month (plus Rs. 900 per month, if chauffeur is also provided to run the motor car) | Rs. 2,400 per month (plus Rs. 900 per month, if chauffeur is also provided to run the motor car) |
Nothing is deductible in respect of any amount recovered from the employee. | |||
1.2 | Where maintenances and running expenses are met by the employee. | ||
1.2-A | If car is used wholly and exclusively in the performance of official duties. | Not a perquisite, hence, not taxable | Not a perquisite, hence, not taxable |
1.2-B | If car is used exclusively for the personal purposes of the employee or any member of his household | Expenditure incurred by the employer (i.e. hire charges, if car is on rent or normal wear and tear at 10% of actual cost of the car) plus salary of chauffeur if paid or payable by the employer minus amount recovered from the employee. | |
1.2-C | The motor car is used partly in the performance of duties and partly for personal purposes of the employee or any member of his household | Rs. 600 per month (plus Rs. 900 per month, if chauffeur is also provided to run the motor car) | Rs. 900 per month (plus Rs. 900 per month, if chauffeur is also provided to run the motor car) |
Nothing is deductible in respect of any amount recovered from the employee. | |||
2 | Motor Car is owned by the employee | ||
2.1 | Where maintenances and running expenses including remuneration of the chauffeur are met or reimbursed by the employer. | ||
2.1-A | The reimbursement is for the use of the vehicle wholly and exclusively for official purposes | Fully exempt subject to maintenance of specified documents | Fully exempt subject to maintenance of specified documents |
2.1-B | The reimbursement is for the use of the vehicle exclusively for the personal purposes of the employee or any member of his household | Actual expenditure incurred by the employer minus amount recovered from the employee | |
2.1-C | The reimbursement is for the use of the vehicle partly for official purposes and partly for personal purposes of the employee or any member of his household. | Actual expenditure incurred by the employer minus Rs. 1800 per month and Rs. 900 per month if chauffer is also provided minus amount recovered from employee. | Actual expenditure incurred by the employer minus Rs. 2400 per month and Rs. 900 per month if chauffer is also provided minus amount recovered from employee. |
3 | Where the employee owns any other automotive conveyance and actual running and maintenance charges are met or reimbursed by the employer | ||
3.1 | Reimbursement for the use of the vehicle wholly and exclusively for official purposes; | Fully exempt subject to maintenance of specified documents | Fully exempt subject to maintenance of specified documents |
3.2 | Reimbursement for the use of vehicle partly for official purposes and partly for personal purposes of the employee. | Actual expenditure incurred by the employer minus Rs. 900 per month minus amount recovered from employee | Not Applicable |
2. Educational Facilities
Taxable only in the hands of specified employees [See note 4]
Facility extended to | Value of perquisite | |
Provided in the school owned by the employer | Provided in any other school | |
Children | Cost of such education in similar school less Rs. 1,000 per month per child (irrespective of numbers of children) less amount recovered from employee | Amount incurred less amount recovered from employee (an exemption of Rs. 1,000 per month per child is allowed) |
Other family member | Cost of such education in similar school less amount recovered from employee | Cost of such education incurred |
2.1 Other Educational Facilities
Particulars | Taxable Value of Perquisites |
Reimbursement of school fees of children or family member of employees | Fully taxable |
Free educational facilities/ training of employees | Fully exempt |
3. Employees Provident Fund
Tax treatment in respect of contributions made to and payment from various provident funds are summarized in the table given below:
Particulars | Statutory provident fund | Recognized provident fund | Unrecognized provident fund | Public provident fund | |
Employers contribution to provident fund | Fully Exempt | Exempt only to the extent of 12% of salary* | Fully Exempt | – | |
Deduction under section 80C on employees contribution | Available | Available | Not Available | Available | |
Interest credited to provident fund | Fully Exempt | Exempt only to the extent rate of interest does not exceed 9.5% | Fully Exempt | Fully Exempt | |
Payment received at the time of retirement or termination of service | Fully Exempt | Fully Exempt (Subject to certain conditions and circumstances) | Fully Taxable (except employee’s contribution) | Fully Exempt |
* Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits) + turnover based commission
Payment from recognized provident fund shall be exempt in the hands of employees in following circumstances:
a) If employee has rendered continue service with his employer (including previous employer, when PF account is transferred to current employer) for a period of 5 years or more
b) If employee has been terminated because of certain reasons which are beyond his control (ill health, discontinuation of business of employer, etc.)
Note:
No exemption shall be available for the interest income accrued during the previous year in the recognised and statutory provident fund to the extent it relates to the contribution made by the employees over Rs. 2,50,000 in the previous year.
However, if an employee is contributing to the fund but there is no contribution to such fund by the employer, then the interest income accrued during the previous year shall be taxable to the extent it relates to the contribution made by the employee to that fund in excess of Rs. 5,00,000 in a financial year.
4. Specified Employee
The following employees are deemed as specified employees:
1) A director-employee
2) An employee who has substantial interest (i.e. beneficial owner of equity shares carrying 20% or more voting power) in the employer-company
3) An employee whose monetary income* under the salary exceeds Rs. 50,000
*Monetary Income means Income chargeable under the salary but excluding perquisite value of all non-monetary perquisites
[As amended by Finance Act, 2022]
वेतनभोगी व्यक्तियों के लिए निर्धारण वर्ष 2022-23
वेतनभोगी व्यक्तियों के लिए निर्धारण वर्ष 2022-23 के लिए लागू विवरणी एवं प्रारूप
.svg){kind=small} | अस्वीकरण:इस पेज की सामग्री केवल अवलोकन और सामान्य मार्गदर्शन देने के लिए है और संपूर्ण नहीं है। सम्पूर्ण ब्यौरा और दिशानिर्देशों के लिए कृपया आयकर अधिनियम, नियम और अधिसूचनाएं देखें। |
| 1. आई.टी.आर.-1 (सहज) – व्यक्ति के लिए लागू | ||||||
|---|---|---|---|---|---|---|
यह विवरणी निवासी ( साधारणतया निवासी नहीं के अलावा) उस व्यक्ति के लिए लागू होता है, जिसकी कुल आय निम्नलिखित स्रोतों से ₹ 50 लाख तक है।
|
| 2. ITR-2- व्यक्ति और एच.यू.एफ. के लिए लागू | ||
|---|---|---|
यह विवरणी व्यक्ति और हिन्दु अविभाजित परिवार (एच.यू.एफ.) के लिए लागू है।
|
| 3 आई.टी.आर..-3 – व्यक्ति और एच.यू.एफ. के लिए लागू | ||
|---|---|---|
यह विवरणी व्यक्ति और हिन्दु अविभाजित परिवार (एच.यू.एफ.) के लिए लागू है।
|
| 4. आई.टी.आर.-4 (सुगम) – व्यक्ति, एच.यू.एफ. एवं फर्म (एल.एल.पी. के अलावा) के लिए लागू | ||||||
|---|---|---|---|---|---|---|
यह विवरणी एक व्यक्ति या हिंदू अविभाजित परिवार (एच.यू.एफ.) के लिए प्रयोज्य होता है, जो सामान्य रूप से निवासी या फर्म (एल.एल.पी. के अलावा) के अलावा निवासी है, जो एक निवासी है जिसकी कुल आय ₹ 50 लाख तक है और कारोबार या व्यवसाय से आय है जिसकी संगणना अनुमानित आधार पर (धारा 44AD / 44ADA / 44AE के तहत) और निम्नलिखित स्रोतों में से किसी आय से की जाती है:
|
लागू होने वाले फॉर्म
| 1. फॉर्म 12BB – कर की कटौती के लिए कर्मचारी द्वारा किए गये दावों की विशिष्टियां (धारा 192 के तहत) | ||||
|---|---|---|---|---|
|
| 2. फ़ॉर्म 16 – वेतन के स्रोत पर कर कटौती का प्रमाण पत्र (आयकर अधिनियम, 1961 की धारा 203 के तहत) | ||||
|---|---|---|---|---|
|
| 3. फॉर्म 16A – वेतन के अलावा अन्य आय पर टी.डी.एस. के लिए आयकर अधिनियम, 1961 की धारा 203 के तहत प्रमाणपत्र | ||||
|---|---|---|---|---|
|
| 4. फॉर्म 67- भारत के बाहर किसी देश या निर्दिष्ट क्षेत्र से आय का विवरण और विदेशी टैक्स क्रेडिट | ||||
|---|---|---|---|---|
|
| 5. फॉर्म 26AS – वार्षिक सूचना विवरण | ||||
|---|---|---|---|---|
|
| 6. फ़ॉर्म 15G – कर कटौती के बिना कुछ प्राप्तियों का दावा करते हुए, निवासी करदाता द्वारा घोषणा (कंपनी या फ़र्म नहीं होने के नाते) | ||||
|---|---|---|---|---|
|
| 7. फ़ॉर्म 15H – एक निवासी व्यक्ति (जो साठ वर्ष या उससे अधिक उम्र का है) द्वारा कर की कटौती के बिना कुछ प्राप्तियों का दावा करने की घोषणा | ||||
|---|---|---|---|---|
|
| 8. फ़ॉर्म 10E – वेतन का भुगतान बकाया या अग्रिम के रूप में किया जाने पर, धारा 89(1) के तहत राहत का दावा करने के लिए आय का ब्यौरा प्रस्तुत करने हेतु फ़ॉर्म | ||||
|---|---|---|---|---|
|
निर्धारण वर्ष 2022-23 के लिए कर स्लैब
व्यक्ति और एच.यू.एफ., विद्यमान कर व्यवस्था या निम्न दर वाली नई कर व्यवस्था का विकल्प चुन सकते हैं (आयकर अधिनियम की धारा 115 BAC के तहत)
नए कर व्यवस्था में रियायती दरों का विकल्प चुनने वाले करदाताओं को वर्तमान कर व्यवस्था में उपलब्ध (80C, 80D, ,80TTB, HRA) जैसी कुछ छूट और कटौती की अनुमति नहीं दी जाएगी।
 | व्यक्ति ( निवासी या अनिवासी ) के लिए, पूर्व वर्ष के दौरान किसी भी समय 60 वर्ष से कम आयु के लिए:
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 | पूर्व वर्ष के दौरान किसी भी समय व्यक्तिगत (निवासी या अनिवासी), 60 वर्ष या उससे अधिक लेकिन 80 वर्ष से कम आयु के लिए:
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 | व्यक्ति ( निवासी या अनिवासी ) के लिए पूर्व वर्ष के दौरान किसी भी समय 80 वर्ष या उससे अधिक की आयु:
| ||||||||||||||||||||||||||||||||||||
| ध्यान दें: 1. अधिभार और स्वास्थ्य एवं शिक्षा उपकर के दर दोनों ही कर व्यवस्थाओं के अंतर्गत समान हैं 2. धारा 87-A के तहत छूट निवासी व्यक्ति जिसकी कुल आय ₹5,00,000 से अधिक नहीं है, वह भी आयकर के 100% या ₹ 12,500, जो भी कम हो, की छूट के लिए पात्र है। यह छूट दोनों कर व्यवस्थाओं में उपलब्ध है |
अधिभार, सीमांत राहत और स्वास्थ्य एवं शिक्षा उपकर
 |
|
निवेश / भुगतान / आय जिस पर मुझे कर लाभ मिल सकता है
अनुभाग 24(b) – आवास ऋण और आवास सुधार ऋण पर भुगतान करे गये ब्याज की गृह सम्पत्ति से आय से कटौती। स्व – अधिकृत सम्पत्ति के मामले में, आवास ऋण पर भुगतान की गई ब्याज की कटौती की ऊपरी सीमा ₹ 2 लाख है। हालांकि, यह कटौती नई कर व्यवस्था को चुनने वाले व्यक्ति के लिए उपलब्ध नहीं है।
धारा 24(b) के तहत स्वीकार्य ऋण पर ब्याज नीचे तालिकाबद्ध है:
| सम्पत्ति की प्रकृति | ऋण कब लिया गया था | ऋण लेने का प्रयोजन | स्वीकार्य (अधिकतम सीमा) |
| स्व-व्यस्त | 1/04/1999 को या उसके बाद | गृह संपत्ति का निर्माण या खरीद | ₹ 2,00,000 |
| 1/04/1999 को या उसके बाद | गृह संपत्ति की मरम्मत के लिए | ₹ 30,000 | |
| 1/04/1999 से पहले | गृह संपत्ति का निर्माण या खरीद | ₹ 30,000 | |
| 1/04/1999 से पहले | गृह संपत्ति की मरम्मत के लिए | ₹ 30,000 | |
| किराए पर दिया | किसी भी समय | गृह संपत्ति का निर्माण या खरीद | बिना किसी सीमा के वास्तविक मूल्य |
आयकर अधिनियम के अध्याय VIA के अंतर्गत निर्दिष्ट कर कटौती
ये कटौती उस करदाता के लिए उपलब्ध नहीं होंगी जो नई कर व्यवस्था के तहत धारा 115 BAC के तहत विकल्प चुनेगा , सिवाय धारा 80CCD (2) के तहत कटौती, जो कि नई कर व्यवस्था में लागू होगी
| 80C, 80CCC, 80CCD (1) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
किए गए भुगतान के लिए कटौती
|
| ||||||||
| 80CCD(1B) | ||||
|---|---|---|---|---|
| केंद्र सरकार की पेंशन योजना में किए गए भुगतान के लिए कटौती, धारा 80CCD (1) के तहत दावा की गई कटौती के अलावा |
| |||
| 80CCD(2) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
केंद्रीय सरकार की पेंशन योजना में नियोक्ता द्वारा किए गए योगदान की कटौती
|
| 80D | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
स्वास्थ्य बीमा प्रीमियम और निवारक स्वास्थ्य की जांच-पड़ताल करने के लिए किए गए भुगतान के लिए कटौती
वरिष्ठ नागरिक पर उपगत चिकित्सा सम्बन्धी व्यय के लिए कटौती, यदि स्वास्थ्य बीमा कवरेज पर किसी प्रीमियम का भुगतान नहीं किया गया है
|
| 8DD | |||||
|---|---|---|---|---|---|
आश्रित विकलांग के रखरखाव या चिकित्सा उपचार के लिए किए गए भुगतान या संबंधित अनुमोदित योजना के तहत किए गए किसी भी राशि के भुगतान/डिपॉज़िट में कटौती |
| ||||
| 80DDB | ||||
|---|---|---|---|---|
निर्दिष्ट बीमारियों के लिए स्वयं या आश्रित के चिकित्सा उपचार के लिए किए गए भुगतान हेतु कटौती |
| |||
| 80E | |||
|---|---|---|---|
| स्वयं या रिश्तेदार की उच्च शिक्षा के लिए ऋण पर किए गए ब्याज भुगतान के लिए कटौती |
| ||
| 80EE | |||
|---|---|---|---|
| आवासीय गृह सम्पत्ति के अर्जन के लिए लिए गए ऋण पर किए गए ब्याज भुगतान के लिए कटौती जहां ऋण 1 अप्रैल 2016 से 31 मार्च 2017 के बीच स्वीकृत किया गया है |
| ||
| 80EEA | |||
|---|---|---|---|
| पहली बार आवासीय गृह संपत्ति के अधिग्रहण हेतु लिए गए ऋण पर किए गए ब्याज भुगतान हेतु केवल व्यक्तियों के लिए उपलब्ध कटौती, जहां ऋण 1 अप्रैल 2019 से 31 मार्च 2022 के बीच स्वीकृत किया गया है और कटौती का दावा धारा 80EE के तहत नहीं किया जाना चाहिए था |
| ||
| 80EEB | |||
|---|---|---|---|
| जहां 1 अप्रैल 2019 से 31 मार्च 2023 के बीच ऋण स्वीकृत किया गया है, वहां इलेक्ट्रिक वाहन की खरीद के लिए ऋण पर किए गए ब्याज भुगतान के लिए कटौती |
| ||
| 80G | ||||||||||||
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निर्धारित फ़ंड्स, धर्मार्थ संस्थानों आदि को किए गए दान के लिए कटौती। दान नीचे दी गई श्रेणियों के अंतर्गत कटौती के पात्र है
टिप्पणी :₹ 2000/- से अधिक नकदी में दिए गए दान के संबंध में इस अनुभाग के अंतर्गत किसी कटौती की अनुमति नहीं दी जाएगी |
| 80GG | |||
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घर के लिए भुगतान किए गए किराए की कटौती और केवल उन लोगों के लिए लागू जो स्व-नियोजित हैं या जिनके लिए एच.आर.ए. वेतन का हिस्सा नहीं है निम्नलिखित में से सबसे कम को कटौती के रूप में अनुमति
ध्यान दें: इस कटौती का दावा करने के लिए फ़ॉर्म 10BA भरा जाना है। |
| 80GGA | |||||||
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वैज्ञानिक अनुसंधान या ग्रामीण विकास के लिए किए गए दान के लिए कटौती
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| 80जी.जी.सी. | ||||
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राजनीतिक दल या चुनावी ट्रस्ट को किए गए दान के लिए कटौती |
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| 80टी.टी.ए. | ||||
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गैर-वरिष्ठ नागरिकों द्वारा बचत बैंक खातों पर प्राप्त ब्याज पर कटौती |
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| 80टी.टी.बी. | ||||
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निवासी वरिष्ठ नागरिकों द्वारा किए गए डिपॉज़िट पर प्राप्त ब्याज पर कटौती |
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| 80यू. | ||||
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विकलांगता वाले निवासी व्यक्तिगत करदाता के लिए कटौतियां |
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Income Tax Rebate Under Section 87A
Updated on: May 2nd, 2023
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11 min read
Tax Rebate Under Section 87A: Find out Who can claim Income Tax Rebate u/s 87A for FY 2023-24 (AY 2024-25) and FY 2022-23 (AY 2023-24).
A tax rebate on an income of Rs 7 lakh has been introduced in the new tax regime (applicable for FY 2023-24).
Rebate under Section 87A helps taxpayers reduce their income tax liability. You can claim the said rebate if your total income, i.e. after Chapter VIA deductions, does not exceed Rs 5 lakh in a financial year. Your income tax liability becomes nil after claiming the rebate under Section 87A.
Let’s understand the rebate available under section 87A in detail:
Rebate u/s 87A for FY 2021-22, 2022-23, and 2023-24 (AY 2022-23, 2023-24, and 2024-25)
Under both the old and new income tax regimes, the amount of the refund under Section 87A for FY 2021-22 2022-23 [(AY (2022-23) (2023-24)] has remained unchanged. A resident individual with taxable income up to Rs 5,00,000 will be eligible for a tax rebate of Rs 12,500, or the amount of tax payable (whichever is lower). Under the new income tax regime, the amount of the rebate under Section 87A for FY 2023-24 (AY 2024-25) has been modified. A resident individual with taxable income up to Rs 7,00,000 will receive a Rs 25,000 tax relief. The former tax regime remains the same, i.e. 12,500 for income up to Rs 5,00,000.
How much is the rebate allowed u/s 87A?
If an individual’s total taxable income is up to Rs.7 lakh, they will be eligible for the following tax breaks under the new tax regime for the fiscal year 2023-24:
- Rs.25,000 or the applicable tax (whichever is lower).
- It is the same as earlier Rs.12,500 under the prior tax structure.
Steps to claim a tax rebate under section 87A
- Calculate your gross total income for the financial year
- Reduce your tax deductions for tax savings, investments, etc.
- Arrive at your total income after reducing the tax deductions.
- Declare your gross income and tax deductions in ITR.
- Claim a tax rebate under section 87A if your total income does not exceed Rs 5 lakh.
- The maximum rebate under section 87A for the AY 2022-23 is Rs 12,500.
See the example below for rebate calculation under Section 87A.
For individuals below 60 years of age for AY 2022-23
| Source of income (FY 2021-22) | Income (Rs) |
| Gross total income | 6,50,000 |
| Less: Deduction* under section 80C | 1,50,000 |
| Total income | 5,00,000 |
| Income-tax (@ 5% from Rs 2.5 to 5 lakh) | 12,500 |
| Less: Rebate u/s 87A | 12,500 |
| Tax payable | Nil |
*You can claim a deduction for tax-saving under Section 80C for eligible investments and expenditures, Section 80D for medical insurance, 80CCD for contribution to NPS, 80G for donations and other deductions to arrive at your total income.
Things to remember while availing rebate under Section 87A
- The rebate can be applied to the total tax before adding a health and education cess of 4%
- Only resident individuals are eligible to avail rebate under this section.
- Senior citizens above 60 years and below 80 years of age can avail a rebate under Section 87A
- Super senior citizens above 80 years of age are not eligible to claim rebates under Section 87A
- The amount of rebate will be lower than the limit specified under Section 87A or total income tax payable (before cess)
- Section 87A rebate is available under the old and the new tax regime
Rebate against various tax liabilities
Section 87A rebate can be claimed against tax liabilities on:
- Normal income which is taxed at the slab rate
- Long-term capital gains under Section 112 of the Income Tax Act. (Section 112 applies for long-term capital gains on the sale of any capital assets other than listed equity shares as well as equity-oriented schemes of mutual funds)
- Short-term capital gains on listed equity shares and equity-oriented schemes of mutual funds under Section 111A of the Act, on which tax is payable at a flat rate of 15%.
Note: Rebate under Section 87A cannot be adjusted against tax on long-term capital gains on equity shares and equity-oriented mutual funds (Section 112A).
Eligibility to claim rebate u/s 87A for FY 2020-21 and FY 2019-20
You can claim the benefit of rebate under section 87A for FY 2021-22, and FY 2020-21, subject to the following conditions are satisfied:
- You are a resident individual
- Your total income after reducing the deductions under Chapter VI-A (Section 80C, 80D and so on) does not exceed Rs 5 lakh in a FY
The tax rebate is limited to Rs 12,500. If your total tax payable is less than Rs 12,500, you will not have to pay any tax.
Note that the rebate will be applied to the total tax before adding the health and education cess of 4%.
Here are a few calculations of Section 87A rebate for resident individuals (below 60 years of age) earning various levels of income:
| Total Income (Rs) | Tax payable before cess (Rs) | Rebate u/s 87A (Rs) | Tax Payable + 4% Cess (Rs) |
| 2,70,000 | 1,000 | 1,000 | 0 |
| 3,60,000 | 3,000 | 3,000 | 0 |
| 4,90,000 | 12,000 | 12,000 | 0 |
| 12,00,000 | 1,72,500 | 0 | 1,79,400 |
Example 1
Mr Ram (age 62 years and resident) is a retired person earning a monthly pension of Rs 5,000. He invested in equity-oriented funds in December 2013 and sold the same in June 2021.
Taxable LTCG amounted to Rs 4,70,000. Apart from pension income and gain on equity-oriented funds, he does not have any other income. What will be his tax liability for the year 2021-22?
Mr Ram is above 60 years, but below 80 years, the basic exemption limit is Rs 3 lakh. Further, he can adjust the basic exemption limit against LTCG on equity-oriented funds. However, the adjustment should be made against normal income, i.e. other than LTCG on equity-oriented funds. In this case, he has a pension income of Rs 60,000 (Rs 5,000 × 12) and LTCG on equity-oriented funds of Rs 4.7 lakh.
Thus, after adjusting the basic exemption limit with the pension income, adjust the balance limit of Rs 2.4 lakh against LTCG.
The balance of Rs 2.4 lakh (Rs 3 lakh – Rs 60,000) will be adjusted against LTCG. Hence, after adjustment with LTCG on equity-oriented funds, the balance LTCG left is Rs 2.3 lakh (Rs 4.7 lakh – Rs 2.4 lakh).
LTCG on equity-oriented funds is taxable at 10% on the LTCG above Rs 1 lakh, hence 10% tax is levied on Rs 1.3 lakh (Rs 2.3 lakh – Rs 1 lakh). A tax of Rs 13,000 is payable.
Rebate under Section 87A will not be adjusted against tax on LTCG of equity-oriented funds (Section 112A).
Hence, Mr Ram would be liable to pay a tax of Rs 13,000 plus health & education cess @ 4%.
Eligibility to claim rebate u/s 87A for FY 2018-19 and FY 2017-18
For FY 2017-18 or FY 2018-19, the eligibility criteria to claim tax rebate under Section 87A were:
- You are a resident individual
- Your total income after deductions under Chapter VI-A (Section 80C, 80D, 80E and so on) is less than Rs 3.5 lakh
The amount of the tax rebate was limited to Rs 2,500. So, if your tax payable did not exceed Rs 2,500, then you would have to pay tax.
Note that the tax rebate will be applied to the total tax before adding the health and education cess of 4% (FY 2018-19) or education cess of 3% (FY 2017-18).
Here are a few examples of Section 87A rebates for resident individuals for FY 2017-18 and FY 2018-19:
| Total Income (Rs) | Tax payable before cess (Rs) | Rebate u/s 87A (Rs) | Tax Payable + 4% Cess (Rs) |
| 2,65,000 | 750 | 750 | 0 |
| 2,70,000 | 1,000 | 1,000 | 0 |
| 3,00,000 | 2,500 | 2,500 | 0 |
| 3,50,000 | 5,000 | 2,500 | 2,500+cess** |
**Tax payable for FY 2017-18 will be Rs 2,575 i.e. Rs 2,500 + 3% cess and
tax payable for FY 2018-19 will be Rs 2,600 i.e. Rs 2,500 + 4% cess
Rebate limit under Section 87A for all the financial years
| Financial Year | Limit on total taxable Income | Amount of rebate allowed u/s 87A |
| 2021-22 | Rs. 5,00,000 | Rs. 12,500 |
| 2020-21 | Rs. 5,00,000 | Rs. 12,500 |
| 2019-20 | Rs. 5,00,000 | Rs. 12,500 |
| 2018-19 | Rs. 3,50,000 | Rs. 2,500 |
| 2017-18 | Rs. 3,50,000 | Rs. 2,500 |
| 2016-17 | Rs. 5,00,000 | Rs. 5,000 |
| 2015-16 | Rs. 5,00,000 | Rs. 2,000 |
| 2014-15 | Rs. 5,00,000 | Rs. 2,000 |
| 2013-14 | Rs. 5,00,000 | Rs. 2,000 |
Frequently Asked Questions
Can NRIs claim a rebate under Section 87A?
No, this rebate is only allowed for resident individuals. Therefore, taxpayers qualifying as non-residents are not eligible for a rebate under 87A.
Can anyone claim this rebate?
This rebate is only allowed to individuals. HUFs or firms, or companies cannot claim this rebate.
How can I claim Section 87A rebate in Tax Babu Software?
Tax Babu e-filing software automatically gives the rebate while e-filing if you are eligible.
How to claim rebate u/s 87A?
Only resident individuals can claim tax rebate u/s 87A, which means HUF and firms cannot claim this rebate. This rebate can be claimed while filing an ITR return. If you are paying self-assessment tax and your income is less than Rs 5 lakh after claiming deductions under Chapter VI-A, you can claim a full tax rebate up to Rs 12,500.
If your income is subject to TDS, but your total income after Chapter VI-A deductions is less than Rs 5 lakh, you can claim rebate u/s 87A while filing a return, and you will receive a refund of TDS paid up to Rs 12,500.
How to calculate rebate u/s 87a?
Section 87A provides a tax rebate to individual taxpayers if their total income is less than Rs 5 lakh after claiming deductions. Hence, firstly determine taxable income after deductions to check the eligibility of the rebate.
- Calculate your gross total income and reduce deductions under Section 80C to 80U. If the same is below Rs 5 lakh, you are eligible for a tax rebate, i.e. full tax up to Rs 12500 will be deducted as per section 87A.
- If taxable income is more than Rs 5 lakh, then no rebate can be claimed.
Is surcharge included while calculating Rebate u/s 87A?
Rebate u/s 87A is available to those who have taxable income below INR 5 Lakhs and Surcharge is levied if taxable income is above INR 50 Lakhs. So a person availing this section will never attract a levy of surcharge.
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