Category: Deduction

Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability.

• Meaning: Expenditure incurred on medical treatment (including nursing), training and rehabilitation of handicapped dependant relative or the taxpayer may have deposited in a scheme of LIC or another insurer for maintenance of the dependant.
• Eligibility: Provides deduction to an assessee, who is resident in India, being Individual or Hindu undivided family.
• Quantum of deduction: The deduction is Rs 75,000 and in case of severe disability (i.e., person with 80% or more disability) the deduction shall be Rs 1,25,000
• Conditions:
  • For claiming the deduction, the assessee shall have to furnish a copy of the certificate issued by the medical authority under the Persons with Disability (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 along with the return of income under section 139.
  • Where the condition of disability requires  reassessment,  a  fresh certificate from the medical authority shall have to be obtained after the expiry of the period mentioned in the original certificate in order to continue to claim the deduction.
  • If the dependa
  • nt, being a person with disability, predeceases the individual or the member of HUF, in whose name subscription was made, then the amount paid or deposited under the said scheme would be chargeable to tax in the hands of the assessee in the previous year in which such amount is received by the assessee.

Note :

Meaning of “Dependant”:

Deduction in respect of interest on deposits in savings account.

Section 80TTA is a deduction available to an Individual and HUF to the maximum of Rs.10,000 /- on the interest income earned from:

1. Saving bank account with a bank
2. From a savings account with a co-operative society carrying on the business of banking
3. From a savings account with a post office

The Deduction is not available on the interest income earned from fixed deposit, recurring deposits and any other time deposits.

Deduction in respect of employment of new employees

1. Eligibility:
   • An Assessee to whom Tax Audit (section 44 AB) is applicable
   • Gross total income includes any Profits or Gains derived from Business
2. Deduction allowed: 30% of additional employee cost in the previous Year.
3. Period of Deduction: Three Assessment Years including Assessment Year in which employment is provided
4. Assessee Not covered:
   • Companies formed by splitting up or reconstruction of existing business
   • Business acquired by way of Transfer from any other person or as a result of any business reorganization
5. Additional Employee : It means an employee who has been employed during the previous year and whose employment has the effect of increasing the total number of employees employed by the employer as on the last day of the preceding year, but does not include:
   • An employee who total emoluments (salary) are more than Rs.25,000 per month.
   • An employee for whom the entire contribution is paid by the Government under the Employees Pension Scheme.
   • An employee who is employed for a period of less than 240 days during the previous years. In case of apparel manufacturers, the minimum employment period is 150 days.
   • Any employee who does not participate in the recognized provident fund.
6. Additional Employee Cost: Additional employee costs means total emoluments (salary) paid or payable to additional employees employed during the previous year. Provided that in the case of an existing business, the additional employee cost shall be nil, if:
   • There is no increase in the number of employees from the total number of employees employed as on the last day of the preceding year.
   • Emoluments (salary) are paid otherwise than by an account payee cheque or account payee bank draft or by use of ECS through a bank account. Also, in the first year of business, emoluments (salary) paid or payable to the employees employed during that year will be deemed to be the additional employee cost.

Deduction in respect of contributions given by companies to political parties.

In computing the total income of an assessee, being an Indian company, there shall be deducted any sum contributed by it, in the previous year to any political party or an electoral trust.

No deduction shall be allowed under this section in respect of any sum contributed by way of cash.

Note:
The word “contribute”, with its grammatical variation, has the meaning assigned to it under section 293A of the Companies Act, 1956

*Section 239A of Companies Act, 1956 the maximum amount or the aggregate of amounts which may be so contributed by a company in any financial year shall not exceed 5% of its average net profits determined in accordance with the provisions of sections 349 and 350 during the three immediately preceding financial years.

Deduction in respect of certain donations for scientific research or rural development.

Section 80GGA allows deductions for donations made towards scientific research or rural development. This deduction is allowed to all assessees except those who have an income (or loss) from a business and/or a profession.

Mode of payment: Donations can be made in the form of a cheque or by a draft or in cash; however cash donations in excess of Rs 10,000 are not allowed as deductions. 100% of the amount that is donated or contributed is considered eligible for deductions.

Donations eligible under Sec 80GGA – Sum paid to

• A research association which undertakes scientific research, or a sum paid to a college, university or any other institution to be used for scientific research that is all approved by the prescribed authority under Sec 35(1)(ii)
• A research association which undertakes research in social science or statistical research, or sum paid to a college, university or any other institution to be used for the same purpose,  and these must all be approved by the prescribed authority under section 35(1)(iii)
• An approved association or institution which undertakes any program of rural development and is approved under Sec 35CCA
• An approved association or institution which undertakes training of person(s) for implementing programs of rural development
• A public sector company, local authority or an approved association or institution which carries out projects or schemes approved under Sec 35AC.
• Notified Rural Development Fund
• Notified Fund for Afforestation
• Notified National Poverty Eradication Fund

If a deduction has been allowed under Sec 80GGA, such expenses shall not be deductible under any other provision of the income tax act.