DEDUCTIONS UNDER CHAPTER VI-A OF INCOME TAX ACT, 1961

Relevant Provisions

Sr. Income
No. Tax Act
Deductions based on certain investments, payments, savings, etc.
1 80C Deductions in respect of life insurance premia, deferred annuity, contributions to
provident fund,etc.
2 80CCC Deduction in respect of contribution to certain pension funds
3 80CCD Deduction in respect of contribution to pension scheme of Central Government
4 80D Deduction in respect of Medical Insurance Premium
5 80DD Deduction in respect of maintenance including medical treatment of a dependant
who is a person with disability
6 80DDB Deduction in respect of medical treatment
7 80E Deduction in respect of interest on loan taken for higher education
8 80EE Deduction in respect of interest on loan taken for residential house property
9 80EEA Deduction in respect of interest on loan taken for certain house property
10 80EEB Deduction in respect of purchase of electric vehicle
11 80G Deduction in respect of Donation to certain funds, charitable institutions, etc.
12 80GG Deduction in respect of Rent paid
13 80GGA Deduction in respect of certain donations for scientific research or rural
development
14 80GGB Deduction in respect of contributions given by companies to political parties
15 80GGC Deduction in respect of contribution given by any person to political parties
Deductions based in certain income/nature of income
16 80-IA Deduction in respect of profits and gains from industrial undertakings or
enterprise engaged in infrastructure development
17 80-IAB Deduction in respect of profit and gains by an undertaking or an enterprise
engaged in development of Special Economic Zone
18 80 IB Deduction in respect of profits and gains from certain industrial undertakings
other than infrastructure development undertakings
19 80IAC Deduction in respect of eligible Start-Up
20 80 IBA Deductions in respect of profits and gains from Housing Projects
21 80-IC Special provisions in respect of certain undertakings or enterprises in certain
special category States
22 80JJA Deduction in respect of profits and gains from the Business of collecting and
processing Bio-Degradable Waste
23 80JJAA Deduction in respect of employment of new employees
24 80LA Deduction in respect of certain incomes of Offshore Banking Units
25 80M Deduction in respect of certain inter-corporate dividends
26 80P Deduction in respect of certain income of co-operative societies
27 80PA Deduction in respect of certain income of Producer Companies
28 80QQB Deduction in respect of Royalty Income of authors of certain books other than
text books
29 80RRB Deduction in respect of royalty on patents
30 80TTA Deduction in respect of interest on deposits in Savings account
31 80TTB Deduction in respect of interest on deposits in case of senior citizens
Other Deduction
32 80U Deduction in case of person with disability

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 1

 SECTION 80C Deduction in respect of investments
Eligible assessee: An individual and HUF.
Deduction a. Premium paid on life Insurance policy taken on the life of an individual
allowed for: assessee or spouse and any child of such individual, and any member of
the Hindu Undivided Family.
Following are the ceiling limits with respect to Life Insurance Premium paid:-
Policy Issue Date
Before 31.03.2012 : 20% of sum assured
On or after 01.04.2012 till 31.03.2013: 10% of sum assured
On or after 01.04.2013
If it is on life of person suffering with disability: 15% of sum assured
On any other person: 10% of sum assured

b. Contribution made by an individual to a Recognised provident fund; an

approved superannuation fund; public provident fund.

c. Purchase of notified securities or deposit scheme of the Central

Government, Sukanya Samriddhi Account Scheme has been notified.

d. Subscription to National Savings Certificates (VIII & IX) issue.

e. Contributions made in the name of an individual or HUF for participation

in any notified Unit-Linked Insurance Plan of the LIC Mutual Fund.

f. Any contribution to effect or keep in force any notified annuity plan of

the LIC or any other insurer.

g. Any subscription, to any units of any Mutual Fund or the Unit Trust of
India under any notified plan formulated by the Central Government.

h. Any contribution to any pension fund set up by any Mutual Fund as

notified by the Central Government.

i. Tuition fees for full time education of any 2 children to any university,
college, school or other educational institution situated within India.

j. Fixed deposits for a minimum period of 5 years in any Scheduled Banks.

k. Repayment of Housing Loan – Principal element.

l. Stamp duty, registration fee and other expenses for the purpose of
transfer of such house property to the assessee.

m. Any payment made towards the cost of purchase or construction of a

new residential house property, the income of which is chargeable to
tax under the head house property.

Note: The above list is not inclusive but only covers the important modes of
investment which are eligible for deduction under section 80C.

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 2

Quantum of Qualifying amount or ₹1,50,000, whichever is lower.
deduction: It should be noted that the ceiling Limit of ₹1,50,000 is a combined limit for
section 80C, 80CCC and 80CCD(1). {Section 80CCE}

SECTION 80CCC Deduction for Contribution to Pension Fund

Eligible assessee: An individual.
Deduction is Amount paid in any annuity plan of the Life Insurance Corporation of India or
allowed for any insurer approved by the IRDAI for receiving pension.
Quantum of Amount paid or; ₹1,50,000, whichever is lower.
deduction: It should be noted that the ceiling Limit of ₹1,50,000 is a combined limit for
section 80C, 80CCC and 80CCD(1). {Section 80CCE}

Section 80CCD Deduction in respect of Contribution to Pension Scheme

of Central Government i.e. New Pension Scheme
Eligible assessee: An individual
Deduction is Contribution made to the pension scheme notified by the Central Government.
allowed for:
Quantum of For an individual employed by Central Government on or after 01.04.2004 & an
deduction: individual employed by any other employer: 10% of salary.
For Any other individual: 20% of Gross Total Income
However, the deduction cannot exceed ₹1,50,000 as it is combined ceiling limit
for section 80C, 80CCC & 80CCD(1) of the Act.
However, it should be noted that section 80CCD(1B) provides for an additional
deduction of upto ₹50,000 in respect of the whole of the amount paid or
deposited by an individual assessee under NPS in the previous year, whether or
not any deduction is allowed under section 80CCD(1).
Further, under section 80CCD(2), contribution made by the Central Government
of any other employer in the Previous Year to the said account of the employee,
is allowed as deduction in computation of total income of the assessee.
The entire employer’s contribution would be first included in the salary of the
employee as it is benefit for the employee. Then, deduction under section
80CCD(2) would be allowed to the extent of 14% of the salary, in case of
contribution made by the Central Government and; to the extent of 10% of
salary in the case of contribution made by other employer.

Here, Salary =
Basic Salary + Dearness Allowance {As per Terms of employment/Forming part
of retirement benefits}

Past Year Questions:

1. For the year ended 31st March, 2022, Paresh received a salary of ₹2,80,000. His
contribution to employees recognised provident fund account is ₹59,000 and
matching contribution has been made by the employer.

Taxable Income of Paresh will be …………………………

{December, 2014, 1 Mark MCQ}

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 3

 Solution:

Computation of Total Income of Mr.Paresh for the Assessment Year 2022-23

(Relevant to the Previous Year 2021-22)

PARTICULARS Amount (₹) Amount (₹)

A. Income from Salaries
Basic Salaries 2,80,000
Add: Employer’s Contribution
to RPF 59,000
Less: Exemption {12% of
₹2,80,000} (33,600) 25,400
Gross Taxable Salary 3,05,400
Less: Standard Deduction u/s
16(ia) (50,000)
Therefore, Net Taxable
Salaries/Gross Total Income 2,55,400
Less: Deduction under
section 80C {Employees’
contribution to RPF} (59,000)
Therefore, Total Income 1,96,400

2. Deduction under section 80C can be claimed for fixed deposit made in any
scheduled bank, if the minimum period of deposit is ………………….

{June 2016, 1 Mark MCQ}

Solution:

5 Years

3. Mr.Mithun acquired a house property for ₹8,00,000 and paid stamp duty and
registration fee of ₹80,000. He borrowed housing loan and repaid principal of
₹60,000 and interest of ₹20,000.
The amount eligible for deduction under section 80C would be …………………

{December 2017, 1 Mark MCQ}

Solution:

₹1,40,000 as amount paid by an assessee towards payment of stamp duty as well as

registration fees of house property are allowed as deduction. Further, amount
repaid towards housing loan (principal) is also allowed as deduction under section
80C. {Therefore, ₹80,000 + ₹60,000.}

Note: Interest on housing loan will be considered for deduction under section 24(b)
of Income Tax Act while computing Income from House Property.

4. Mr.Bhaskar, a person with disability referred to in section 80U is employed in bank.

He paid ₹50,000 as premium on life insurance policy taken on himself and whose
sum assured is ₹4,00,000.

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 4

 The amount of premium eligible for deduction under section 80C would be:

{December 2017, 4 Marks}

Solution:

Amount paid i.e. ₹50,000 or; 15% of sum assured i.e.₹4,00,000 * 15% = ₹60,000,
whichever is lower.

Hence allowed eligible for deduction under section 80C shall be ₹50,000.

5. Deduction under section 80C from the Gross Total Income of an amount equal to
the eligible investment made subject to maximum of ₹1,50,000 is allowed to the
assessee who is ……………………

{June 2018, 1 Mark MCQ}

Solution:

An individual and a HUF

6. Which of the following cannot claim deduction for the loan taken to purchase a
house property?

A. Karta, in respect of property purchased by HUF.

B. An individual, in respect of property purchased by him.
C. Partner, in respect of property purchased by the firm.
D. Spouse of an individual in respect of property purchased jointly by the
individual and his/her spouse.

(June 2015, 1 Mark MCQ)

Solution:

Partner, in respect of property purchased by the firm.

Section 80D: Deduction in respect of medical insurance premium

Eligible Assessee: Individual/HUF
Deduction is medical insurance premium paid to effect or to keep in force an insurance on
allowed for the health of self, spouse and dependent children or;
Any contributions made to the Central Government Health Scheme (CGHS) or;
Such other health scheme as may be notified by the Central Government.
Contributory Health Service scheme of the department of space has been
notified by the Central Government.
Further, in case of HUF, deduction is allowed in respect of premium paid to
insure the health of any member of the family.
Apart from this, deduction is also allowed with respect to expenditure on
preventive health check-up.
Mode of By any mode, including cash in respect of any sum paid on account of preventive
payment: health check-up. While by any mode other than cash in all other cases.

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 5

Ceiling Limit for For assessee himself, his spouse and dependent children: ₹25,000/₹50,000
deduction: ADDITIONAL LIMIT for parents, whether dependent or not: ₹25,000/₹50,000
Note: If any one or more of insured is a Senior Citizen, then limit shall be
₹50,000.
Note: For deduction with respect to preventive health check-up, the overall
limit is ₹5,000 i.e. towards preventive health check-up of assessee, his spouse,
dependent children as well as parents. Further, this limit is not a limit over and
above the said limits, but within the said limits for the assessee.
As a welfare measure towards senior citizen, being resident in India, who are
unable to get health insurance coverage, deduction of upto ₹50,000 would be
allowed in respect of any payment made on account of medical expenditure in
respect of such person(s), if no payment has been made to keep in force an
insurance on the health of such person(s).

Past Year Question:

Timir (aged 51 years) subscribed to health insurance for him, wife and son and paid premium
of ₹28,000. He also incurred medical expenditure for his parents during the year amounting
to ₹32,000.
He can claim deduction of these expenses as per section 80D of the Income Tax Act, 1961 of
…………………….

{June 2019, 1 Mark MCQ}

Solution:

Computation of Deduction under section 80D for Mr.Timir for the Assessment Year 2022-
23 (Relevant to Previous Year 2021-22)

PARTICULARS Amount (₹)

a. Premium paid for assessee himself, his wife and son
(Allowed to the extent of ₹25,000 as neither 25,000
assessee nor spouse is senior citizen.)
b. Premium paid towards parents
(Allowed as deduction to the extent of ₹50,000,
parents being senior citizen.) 32,000
c. Total Deduction under section 80D 57,000

Question for practice:

Mr.Kedar (33 years) took a medical insurance policy for him by paying premium of ₹13,000,
further for medical insurance premium of his spouse he paid ₹10,000 and ₹4,000 for his son.
His & his spouse’s insurance premium was paid by way of account payee cheque while that
of his son was paid in cash. Further, he spent ₹3,000 in cash on preventive health check-up
of his spouse. For his father aged 63 years, he paid mediclaim of ₹26,000 by credit card while
he spent ₹30,000 on medical treatment of his mother during the financial year 2021-22. She

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 6

 is not having health insurance policy. Further, ₹4,000 were spent on his father’s preventive
health check-up. Compute deduction allowable under section 80D for the assessment year
2022-23.

Solution:

Computation of deduction under section 80D for Mr.Kedar for the Assessment Year 2022-
23 (Relevant to Previous Year 2021-22)

PARTICULARS Amount (₹) Amount (₹)

1. Medical Insurance Premium paid towards
policy/amount paid towards preventive health
check-up of self, spouse and children.
- For him paid by Account Payee Cheque. 13,000
- For his spouse paid by Account Payee Cheque 10,000
- For his son (Not allowed as paid in cash) -
- Towards preventive health check-up of
spouse, allowed even if paid in cash. {Amount
paid ₹3,000, restricted to ₹2,000, being within
the overall limit of ₹25,000.} 2,000 25,000
2. Medical Insurance Premium paid towards policy/
amount paid towards preventive health check-up
of parents.
- Mediclaim for father, paid by credit card. 26,000
- Amount spent towards actual medical
treatment of his mother. 30,000
- Amount paid towards preventive health
check-up {Amount paid ₹4,000, but restricted
to overall limit of ₹5,000. Therefore, amount
considered = ₹5,000 - ₹2,000} 3,000
Total 59,000
Restricted to ₹50,000 being the additional
limit for parents where either of the parent is
senior citizen. 50,000
3. Therefore, Total Deduction under section 80D 75,000

Section 80DD: Deduction in respect of maintenance including medical

treatment of a dependent disabled
Eligible Assessee: Resident Individual/ Resident HUF.
Deduction is any amount incurred for medical treatment, training and rehabilitation of
allowed for: dependent being a person with disability or;
Any amount paid or deposited under a scheme framed in this behalf by the Life
Insurance Corporation or any other insurer.(The scheme should provide for
payment of annuity or a lump sum amount for the benefit of a dependent, being
a person with disability in the event of death of individual or member of HUF, in
whose name subscription was made and the assessee must nominate either the
dependent, being a person with disability or any other person or a trust to
receive the payment on his behalf, for the benefit of the dependent, being a
person with disability.

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 7

 Deduction is also available to assessee incurring expenditure on maintenance
including medical treatment of persons suffering from autism, cerebral palsy
and multiple disabilities.
Quantum of ₹75,000 and; in case of severe disability (i.e. person with 80% or more disability)
deduction: the deduction shall be ₹1,25,000.
It should be noted that here it is a flat deduction of aforesaid mentioned
amount, irrespective of amount spent.
Meaning of In case of an individual assessee: - the spouse, children, parents, brother or
“Dependent”: sister of the individual who is wholly or mainly dependent on such individual and
not claimed deduction under section 80U in the computation of his income.
In case of a HUF assessee: - a member of the HUF, wholly or mainly dependent
on such HUF and not claimed deduction under section 80U in the computation
of his income.
Condition: Assessee has to furnish copy of the certificate issued by the medical authority
under the Persons with Disabilities (Equal Opportunities, Protection of Rights
and full participation) Act, 1995 along with the return of Income under section
139.

Past Year Questions:

1. Rajan paid ₹25,000 to LIC of India for the maintenance of his disabled son and
incurred ₹15,000 for treatment of his handicapped wife who is working in State
Bank of India.
The deduction allowable to him under section 80D is……………………………..

(June 2016, 1 Mark MCQ}

Solution:

Since, wife of Rajan is not dependent on him (as she is working in State Bank of
India), no deduction under section 80DD would be allowed with respect to amount
incurred for her treatment.
Amount of deduction allowed on maintenance of his disabled son shall be ₹75,000
irrespective of the fact that amount spent for his maintenance is only ₹25,000 (As
deduction under section 80DD is of flat amount of ₹75,000.)

Note: In case, it is assumed that son of Rajan is severely disabled, then the
deduction shall be of ₹1,25,000.

2. Raghu’s father is dependent on him and suffering with 90% disability. Raghu has
incurred an amount of ₹72,500 in maintenance and medical treatment of his father.
The deduction he can claim in his income tax return for the AY 2022-23 is –

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 8

 Solution:

Since the disability of dependent is 80% or more, he is severely disabled and

therefore, deduction allowed under section 80DD shall be ₹1,25,000.

Section 80DDB: Deduction in respect of Medical Treatment

Eligible assessee: Resident individual/ Resident HUF.
Deduction is Expenditure on medical treatment of assessee himself or a dependent. It is also
available for: available to the Hindu Undivided Family for such expenditure incurred on any
member of its family.
Meaning of In case of an individual assessee: - the spouse, children, parents, brother or
“Dependent”: sister of the individual who is wholly or mainly dependent on such individual for
his support and maintenance.
In case of a HUF assessee: - a member of the HUF, wholly or mainly dependent
on such HUF for his support and maintenance.
Quantum of Any amount actually paid for the medical treatment of such disease or ailment
deduction: as may be specified in the rules made in this behalf by the board for himself or
a dependent, in case assessee is an individual, or for any member of a HUF, in
case the assessee is HUF will qualify for deduction.
However, the amount of deduction cannot exceed ₹40,000. Further, if the
amount is incurred for treatment of a senior citizen, such limit shall be
₹1,00,000.
Therefore, deduction shall be lower of: Amount spent on medical treatment
and the ceiling limit of ₹40,000/₹1,00,000 as the case may be.
It should be noted that deduction under this section shall be reduced by
amount received, if any, under insurance from an insurer, or reimbursed by an
employer, for the medical treatment of the assessee or the dependent.
Condition: No such deduction shall be allowed unless the assessee obtains the prescription
for such medical treatment from a neurologist, an oncologist, a urologist, a
haematologist, an immunologist or such other specialist, as may be prescribed.

Past Year Question:

The maximum possible amount of deduction under section 80DDB for senior citizen
is …………………….

(December 2014, 1 Mark MCQ)

Solution:

₹1,00,000

Section 80E: Deduction in respect of interest on loan taken for higher

education
Eligible Assessee: Individual assessee.
Deduction is Interest paid during the previous year towards loan taken for the purpose of
allowed for higher education.
The loan could be for higher education of assessee or for the purpose of higher

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 9

 education of his or her relative.
The loan should have been taken from any financial institution or approved
charitable institution. Here, “financial institution” means a Banking company to
which the Banking Regulation Act, 1949 applies, or; any other financial
institution which the Central Government may, by notification in official gazette,
specify in this behalf. Further, “approved charitable institution” means an
institution established for charitable purposes and approved by the prescribed
authority or an institution referred to in section 80G(2)(a).
Meaning of Spouse and children of the individual or a student for whom the individual is the
“relative” legal guardian.
Meaning “Higher Any course of study pursued after passing the Senior Secondary Examination or
Education” its equivalent from any school, board or university recognised by the Central
Government or State Government or Local Authority or by any other authority
authorised by the Central Government, State Government or Local authority to
do so. In short interest on loan taken for pursuing any course after class XII or its
equivalent will qualify for deduction under section 80E.
Ceiling Limit There is no financial ceiling limit for deduction under section 80E.
Period of It is allowed from the Previous Year in which the repayment of loan starts. It will
deduction: be allowed for maximum for 8 years including the P.Y. in which the repayment
starts. Therefore, deduction is allowed for the P.Y. in which the repayment of
loan has started and the subsequent consecutive 7 years OR; until the interest is
paid in full by the assessee, whichever is earlier.

Past Year Questions:

1. Sahil works in a technology company. On 1st January, 2020, he took a loan of ₹2,40,000
from his company for the education of his daughter. During the year 2021-22, he paid an
interest of ₹46,000 towards the said loan and repaid principal component of ₹10,000.

The deduction that he can claim under section 80E would be –

{June 2015, 1 Mark MCQ}

Solution:

No deduction would be allowed in this case under section 80E as the loan is not taken
from either financial institution or from approved charitable institution.

Therefore, NIL is the answer.

2. Raghunath repaid during previous year 2021-22 education loan of ₹60,000 and interest
on education loan of ₹18,000 taken from Punjab National Bank for his son to pursue MS
in India. The loan was taken in Financial Year 2014-15 and the payment commenced from
financial year 2015-16.
The amount eligible for deduction under section 80E for the assessment year 2022-23 is
…………………..

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 10

 {June 2017, 1 Mark MCQ}

Solution:

Here, all the conditions to claim deduction under section 80E are satisfied as the
educational loan is from financial institution. Further Previous Year 2022-23 is within the
8 years from the P.Y. in which the repayment of loan started.
Therefore, allowable deduction shall be to the extent of interest paid on educational loan
i.e. ₹18,000.

3. Mr.Rath borrowed loan of ₹10,00,000 for higher education in India in the year 2010-11.
He completed the course study in 2013-14. He started repayment of the loan from April,
2015. He paid interest of ₹41,000 and principal of ₹1,20,000 during the financial year
2021-22.
The amount eligible for deduction under section 80E would be:

Solution:

Here, all the conditions to claim deduction under section 80E are satisfied as the
educational loan is from financial institution. Further Previous Year 2022-23 is within the
8 years from the P.Y. in which the repayment of loan started.
Therefore, allowable deduction shall be to the extent of interest paid on educational loan
i.e. ₹41,000.

Section 80EE: Deduction of interest on loan borrowed for

acquisition of house property by individual
Eligible Assessee: Individual
Deduction is Interest payable on loan taken for acquisition of house property from any
allowed for financial institution.
Conditions: - Value of house should not exceed ₹50,00,000.
- Loan should be sanctioned during the P.Y.2016-17.
- Loan sanctioned should not exceed ₹35,00,000.
- The assessee should not own any residential house on the date of
sanction of loan.
Quantum of The maximum deduction allowable is ₹50,000. The deduction of upto ₹50,000
deduction: under section 80EE is over and above the deduction of upto ₹2,00,000
available under section 24 for interest paid in respect of loan borrowed for
acquisition of a self-occupied property.
Meaning of A banking company to which a Banking Regulation Act applies; or any bank or
“Financial banking institution referred to in section 51 of the Banking Regulation Act,
Institution” 1949 or; a housing finance company.
“Housing Finance Company” means a public company formed or registered in
India with the main object of carrying on the business of providing long term
finance for construction or purchase of houses in India for residential
purposes.
The benefit of this deduction will continue till the time repayment of loan
continues.
Question for practice:

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 11

 Mr.Vinay took Housing Loan of ₹35,00,000 from State Bank of India, carrying rate of interest
@7% p.a. on 1.04.2017. The said loan was sanctioned on 28.03.2017. The cost of the house
is ₹45,00,000. The interest for Financial Year 2021-22 is ₹2, 31,000.This is the first property
of the Mr.Vinay.

Compute deduction allowed under section 80EE for the Assessment Year 2022-23.

Solution:

Total Interest for the for the Previous Year 2021-22 is ₹2,31,000

Deduction Allowed under section 24(b) of Income Tax Act = ₹2,00,000

{₹2,31,000 or ₹2,00,000, whichever is lower as ceiling limit for deduction under section 24(b)
for self-occupied property is ₹2,00,000}

Therefore, Deduction under section 80EE for the P.Y. 2021-22 = ₹31,000

{₹31,000 or ₹50,000, whichever is lower.}

Section 80EEA: Deduction with respect to interest payable on loan

taken for acquisition of residential house property
Eligible Assessee: Individual
Deduction is Interest on loan taken for acquisition of residential house property from any
allowed for financial institution.
Conditions - Stamp Duty value of house is not exceeding ₹45,00,000.
- Loan should be sanctioned by a Financial Institution during the
period between 1st April, 2019 to 31st March, 2021.
- The individual should not be eligible to claim deduction under
section 80EE.
- The individual should not own any residential house as on date of
sanction of loan.
Quantum of Amount of interest paid on loan or; ₹1,50,000, whichever is lower. This
deduction: deduction of section 80EEA is over and above deduction under section 24(b).
Meaning of A banking company to which a Banking Regulation Act applies; or any bank or
“Financial banking institution referred to in section 51 of the Banking Regulation Act, 1949
Institution” or; a housing finance company.
“Housing Finance Company” means a public company formed or registered in
India with the main object of carrying on the business of providing long term
finance for construction or purchase of houses in India for residential purposes.

Question for practice:

Mr.Sarthak took a housing loan of ₹40,00,000 from LIC Housing Finance Ltd., carrying rate of
interest of 8% p.a. which was sanctioned on 01.04.2019. This was purchasing a house
property of which the cost was ₹48,00,000. However, the Stamp Duty Value of this house
was ₹44,00,000. An interest of ₹3,00,000 is paid during the Financial Year 2021-22 on the
said loan. This is the first house purchase by Mr.Sarthak.

Compute the deduction allowable under section 80EEA for the Assessment Year 20022-23.

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 12

 Solution:

Total Interest on Housing Loan for the Previous Year 2021-22 = ₹3,60,000.

Interest allowable as deduction under section 24(b) of Income Tax Act = ₹2,00,000.

Interest Allowable as deduction under section 80EEA of Income Tax Act = ₹1,50,000

{₹1,60,000 or; ceiling limit of ₹1,50,000, whichever is lower.}

Section 80EEB: Deduction in respect of interest payable on loan

taken for purchase of electric vehicle
Eligible assessee: An individual
Deduction is Interest payable on loan taken for purchase of an electric vehicle from any
allowed for financial institution.
Conditions: - The assessee should be an individual.
- Loan should be taken for purchase of an electric vehicle.
- Loan should be sanctioned during the period between 01.04.2019
to 31.03.2023.
- Loan should be sanctioned by a financial institution.{Bank,
Specified NBFC}
Quantum of Amount of interest payable or; ₹1,50,000, whichever is lower.
deduction:
Interest allowed as deduction under section 80EEB would not be allowed as
deduction under any other provision of the Act for the same or any other
assessment year.
The benefit of deduction under this section would be available from A.Y.2020-
21 and subsequent assessment years till the repayment of loan continues.

Question for practice:

Mr.Vivek, an employee in a Private Limited Company purchased an electric vehicle for

₹10,00,000 on 8th September, 2021. For this, he took a loan of ₹6,00,000 from specified
Non-Banking Financial Company on the said date. Interest payable for the P.Y.2021-22
amounts to ₹30,000.

Compute deduction allowed under section 80EEB for the Assessment Year 2022-23.

Solution:

Deduction allowed under section 80EEB shall be ₹30,000 or; ₹1,50,000 (being ceiling
limit), whichever is lower.
Therefore, deduction under section 80EEB for the Assessment Year 2022-23 shall be
₹30,000.

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 13

 Section 80G: Deduction in respect of donations to certain funds,
charitable institutions, etc.
Eligible assessee Any assessee.
Deduction is Amount donated.
allowed for
Categories of
Donation:
I Donations qualifying for 100% deduction, without any
qualifying limit
(1) The national defence fund
(2) Prime Minister’s National relief fund or the Prime Minister’s
Citizen Assistance and Relief in Emergency Situations Fund (PM
CARES FUND) [Amendment vide Finance Act, 2020]
(3) Prime Minister’s Earthquake relief fund.
(4) Africa fund.
(5) National Trust for welfare of persons with autism, cerebral
palsy, mental retardation and multiple Disabilities
(6) National cultural fund set up by the Central Government
(7) The Chief Minister’s relief fund or the lieutenant Governor’s
relief fund.
(8) National Illness Assistance fund.
(9) The Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996.
(10) The Army/Air force Central welfare fund or the Indian Naval
Benevolent fund.
(11) Any fund set up by a State Government to provide medical relief
to poors.
(12) The National/State Blood transfusion Council.
(13) Zila Saksharta Samiti constituted in any district.
(14) Any fund set up by the State Government of Gujarat, exclusively
for providing relief to the victims of earthquake in Gujarat.
(15) Maharashtra Chief Minister’s Earthquake Relief Fund.
(16) University/Educational Institute of National Eminence approved
by the prescribed authority.
(17) National foundation for communal harmony.
(18) Fund for technology development and application, set up by the
Central Government.
(19) National sports fund set up by the Central Government.
(20) National Children’s Fund.
(21) the Swachh Bharat Kosh, set up by the Central Government,
other than the sum spent by the assessee in pursuance of
Corporate Social Responsibility under sub-section (5) of section
135 of
the Companies Act, 2013 (18 of 2013);
(22) the Clean Ganga Fund, set up by the Central Government,
whereas such assessee is a resident and such sum is other than
the sum spent by the assessee in pursuance of Corporate Social
Responsibility under sub-section (5) of section 135 of the
Companies Act, 2013
(23) the National Fund for Control of Drug Abuse constituted under
section 7A of the Narcotic Drugs

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 14

 and Psychotropic Substances Act, 1985 (61 of 1985);

II Donations qualifying for 50% deduction, without any

qualifying limit
(1) Jawaharlal Nehru Memorial Fund.
(2) Indira Gandhi Memorial Trust.
(3) Rajiv Gandhi Foundation
(4) Prime Minister’s Drought Relief Fund.
III Donations qualifying for 100% deduction, subject to qualifying
limit
(1) Any sum to Government or any approved local authority,
institution or association to be utilized for promoting family
planning.
(2) Any sum paid by the assessee, being a company, in the previous
year as donation to Indian Olympic Association or to any other
association established in India and notified by the Central
Government for:
i. Development of infrastructure for sports and games
or
ii. Sponsorship of sports and games in India.
IV Donations qualifying for 50% deduction, subject to qualifying
limit
(1) Donation to Government or any approved Local Authority,
Institution or Association to be utilized for any Charitable
purpose other than promoting family planning.
(2) Any other Fund or Institution, which satisfies the conditions of
Section 80G(5).
(3) Notified Temple, Mosque, Gurudwara, Church or any other
place notified by the Central Government to be of historic, as
chorological or artistic importance, for renovation or repair of
such place.
(4) Any corporation established by the Central or State
Government specified under Section 10(26BB) for promoting
interests of the members of a minority community.
(5) Any authority constituted in India by or under any law for
satisfying the need for housing accommodation or for the
purpose of planning development or improvement of cities,
towns and villages or for both.
Qualifying limit: - The eligible donations referred to in III and IV should be aggregated and the
sum total should be limited to 10% of the adjusted gross total income. This
would be the maximum permissible deduction.
The donations qualifying for 100% deduction would be first adjusted from the
maximum permissible deduction and thereafter 50% deduction of the balance
would be allowed.
Following are the steps for computing the qualifying Limit: -

Step 1: Compute Adjusted Total Income i.e. Gross Total Income as reduced by
the following:
(i) Deductions under chapter VI-A, except section 80G
(ii) Short Term Capital Gains taxable under section 111A

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 15

 (iii) Long Term Capital Gains taxable under section 112 &
section 112A
(iv) Any income on which income tax is not payable

Step 2: Calculate 10% of Adjusted Total Income

Step 3: Calculate the actual donation, which is subject to qualifying limit (Total
of category III and IV donations)

Step 4: Lower of step 2 or step 3 is the maximum permissible deduction.

Step 5: The said deduction is adjusted first against donations qualifying for
100% deduction (i.e. category III donations). Thereafter, 50% of the balance
qualifies for deduction under section 80G.
Donations in Kind shall not qualify for deduction.
No deduction shall be allowed in respect of donation of any sum exceeding
₹2,000 unless such sum is paid by any mode other than cash.

Past Year Questions:

1. Deduction in respect of donations to National Defence Fund is allowed under section

………………………

(June 2015, 1 Mark MCQ}

Solution:

Section 80G

2. Deduction under section 80G on account of donation is allowed to ……………….

(June 2017, 1 Mark MCQ)

Solution:

Any assessee

3. Mr.Ganesh gave donation by way of cheque of ₹40,000 and by cash ₹5,000 to an

approved charitable trust having recognition under section 80G. His gross total
income for the assessment year 2022-23 is ₹5,00,000.
The quantum of deduction under section 80G would be………………….

Solution:

Donation amount exceeding ₹2,000 paid in cash would not be eligible for deduction
under section 80G.

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 16

 Therefore, Donation amount qualifying for deduction in this case shall be ₹40,000.
Amount allowed as deduction shall be lower of the following 2:-
a. 50% of the amount donated i.e. ₹40,000 * 50% = ₹20,000
Or;
b. 50% of {10% of Adjusted Total Income}
i.e. 50% of {10% of ₹5,00,000} = ₹25,000

Hence, amount allowed as deduction shall be ₹20,000.

4. Nargis during the previous year 1st April, 2021 to 31st March, 2022 had donated the
amount of ₹50,000 each in Africa Fund, National Children Fund, National Illness
Assistance Fund and further amount of ₹30,000 in Rajiv Gandhi Foundation.
The amount of deduction eligible to be claimed by her as per section …………………in
Assessment Year 2022-23 shall be of ……………………..

(December 2018, 1 Mark MCQ)

Solution:-

Computation of deduction eligible under section 80G of Income Tax Act

PARTICULARS Amount (₹)
a. Amount Donated in Africa Fund {Eligible for deduction of
100% without qualifying limit} 50,000
b. Amount Donated in National Children Fund {Eligible for
deduction of 100% without qualifying limit} 50,000
c. Amount Donated in National Illness Assistance Fund
{Eligible for deduction of 100% without qualifying limit} 50,000
d. Amount donated in Rajiv Gandhi Foundation
{Eligible for deduction of 50% without qualifying limit}
(₹30,000 * 50%) 15,000
Therefore, Total Deduction under section 80G 1,65,000

5. 100% deduction in respect of donations as per section 80G without any qualifying
amount or limit is available in case of:
A. Prime Minister Drought Relief Fund
B. Jawaharlal Nehru Memorial Fund
C. Payment to local authority for promotion of family planning
D. Africa Fund

(June 2019, 1 Mark MCQ)

Solution:

Africa Fund

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 17

 Section 80GG: Deduction in respect of Rent paid
Eligible assessee: Individual
Conditions: - Assessee should not be receiving any House Rent Allowance
exempt under section 10(13A)
- The accommodation should be occupied by the assessee for the
purpose of his own residence.
- The assessee or his spouse or his minor child or a HUF of which
he is a member should not own any accommodation at the place
where he ordinarily resides or perform duties of his office or
employment or carries on his business or profession.
- Assessee should file a declaration in the prescribed form,
confirming the details of rent paid and fulfilment of other
conditions, with the return of income.
Quantum of Least of the following three:-
deduction: -
1. Rent Paid (-) 10% of adjusted total income
2. 25% of the adjusted total income
3. ₹5,000 per month.
Here, Adjusted Total Income means Gross Total Income (-) All deductions of
chapter VI-A except deduction under section 80GG.

Past Year Questions:

1. Bharat, engaged in business claimed that he paid ₹10,000 per month by cheque as rent
for his residence. He does not own any residential building. His total Income before
deduction under section 80GG is ₹3,40,000.
The amount he can claim as deduction under section 80GG is………………

(June 2016, 1 Mark MCQ)

Solution:

As per section 80GG of the Income Tax Act, the amount of deduction shall be least of
the following three:-

1. Rent Paid (-) 10% of Adjusted Total Income

(₹10,000 * 12) (-) (10% of ₹3,40,000)
₹1,20,000 (-) ₹34,000
= ₹86,000

2. 25% of Adjusted Total Income

i.e. 25% of ₹3,40,000
= ₹85,000

3. ₹5,000 per month * 12 months

= ₹60,000

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 18

 Therefore, allowable deduction shall be ₹60,000.

2. Deduction available under section 80GG in respect of rent paid cannot be more than…..

(December 2016, 1 Mark MCQ)

Solution:

₹5,000 per month

3. Shravan engaged in business paid monthly rent of ₹5,000 by cheque for his residence
during the Previous Year 2021-22. His adjusted total Income is ₹3,40,000.
The amount eligible for deduction under section 80GG is ………………………..

(June 2017, 1 Mark MCQ)

Solution:

As per section 80GG of the Income Tax Act, the amount of deduction for A.Y. 2022-23
(Relevant to Previous Year 2021-22) shall be least of the following three:-

1. Rent Paid (-) 10% of Adjusted Total Income

(₹5,000 * 12) (-) (10% of ₹3,40,000)
₹60,000 (-) ₹34,000
= ₹26,000

2. 25% of Adjusted Total Income

i.e. 25% of ₹3,40,000
= ₹85,000

3. ₹5,000 per month * 12 months

= ₹60,000

Therefore, allowable deduction shall be ₹26,000.

4. Pankaj, fulfilling all the prescribed conditions for claiming deduction under section 80GG
having adjusted total income of ₹1,84,000 before providing such deduction and was
paying rent in respect of residential accommodation occupied by him at Delhi @ ₹4,800
per month. He is entitled to claim the deduction for the house rent so paid in the
assessment year 2022-23 while computing his taxable income of an amount of
…………………………..

(December 2020, 1 Mark MCQ)

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 19

 Solution:

Deduction under section 80GG with respect to rent paid for the Assessment Year
2022-23 (Relevant to Previous Year 2021-22):

Least of the following:-

1. Rent paid less 10% of adjusted total income
(₹4,800 p.m. * 12) (-) 10% of ₹1,84,000
₹57,600 (-) ₹18,400
= ₹39,200

2. 25% of Adjusted Total Income

= 25% of ₹1,84,000
= ₹46,000

3. ₹5,000 per month * 12 months

= ₹60,000

Therefore, deduction under section 80GG shall be ₹39,200

Section 80GGA: Deduction in Respect of Certain Donations

for Scientific Research or Rural Development
Eligible assessee Any assessee (other than an assessee whose gross total income includes
income chargeable under the head “profits and gains of business or
profession”)
Deduction is allowed a. Sums paid to a research association which has, as its object
for the undertaking of scientific research, or to a university,
college or other institution to be used for scientific
research where such association, university, college or
institution has been approved by the prescribed authority
for the purpose of Section 35(1)(ii).
b. any sum paid by the assessee in the previous year to a
research association which has as its object the
undertaking of research in social science or statistical
research or to a University or college or other institution to
be used for social science or statistical research where
such association or university, college or institution is for
the time being approved by the prescribed authority for
the purpose of Section 35(1)(iii).
c. Sums paid to an approved association or institution which
has as its object the undertaking of any programme of
rural development, to be used for the purposes of carrying
out any programme of rural development approved for the
purposes of Section 35CCA provided the assessee furnishes
the certificate referred to in Section 35CCA(2).
d. any sum paid by the assessee in the previous year to a
public sector company or a local authority or an
association or institution approved by the National

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 20

 Committee for carrying out any eligible project or scheme,
provided the assessee furnishes a certificate referred to in
Section 35AC(2)(a).
No deduction shall be allowed under this section in respect of any sum
exceeding two thousand rupees unless such sum is paid by any mode other
than cash.

Section 80GGB: Deduction in respect of contributions given

by Companies to Political Parties or an Electoral Trust
Eligible assessee: Indian Company
Quantum of Deduction is allowed to the extent of 100% of any sum contributed in the
deduction: previous year to any political party or to an electoral trust.
The contribution should be in mode other than cash.

Past Year Question:

1. Contribution made or given other than by way of cash by an Indian Company in the
previous year to any political party or to an electoral trust shall be allowed as
deduction while computing its total income under section 80GGB of Income Tax
Act, 1961 of an amount maximum upto:

(December 2018, 1 Mark MCQ)

Solution:

No monetary ceiling limit.

Section 80 GGC : Deduction in respect of contributions given

by any person to Political Parties or an ElectoralTrust
Eligible assessee: Any person except local authority and every artificial juridical person wholly
or partly funded by the Government.
Quantum of Deduction is allowed to the extent of 100% with respect to any sum
deduction: contributed to a political party or an electoral trust.
The contribution should be in mode other than cash.

Past Year Question:

Under the Income Tax Act, 1961, which of the following can claim deduction for any
sum contributed during the previous year to a political party or electoral trust?

A. Local Authority
B. Individual
C. Artificial Juridical Person wholly or partly funded by Government.
D. None of the above

{June 2015, 1 Mark MCQ}

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 21

 Solution:

Deduction of section 80GGC can be claimed by any person except Local Authority and
Artificial Juridical Person wholly or partly funded by Government.
Therefore, in given case, only individual can claim deduction under section 80GGC with
respect to sum contributed to political party.

Section 80-IA: Deduction in respect of profits and gains from industrial

undertakings or enterprise engaged in infrastructure development
Eligible assessee: Any assessee engaged in business of Infrastructure facility,
Telecommunication services, Industrial Park and generation and distribution
of power.
Quantum & Period First five assessment years - 100% of such profits
of deduction: Next five assessment years –
In case of companies: 30% of such profits.
In case of other assessee: 25% of such profits.
The assessee, at his option, can claim deduction in any ten consecutive
assessment years out of fifteen years beginning from the year in which it
begins operations.
If the assessee is engaged in infrastructure facility can claim deduction in any
ten consecutive assessment years out of twenty years instead of out of
fifteen years.

PAST YEAR QUESTION:

ABC Limited fulfilled all the conditions of operating different infrastructure facilities for
claiming deduction under section 80-IA. Find which are being not covered under
infrastructure facility out of the following:

A. Developing of toll road

B. Operating and maintaining of highway project
C. Operating and maintaining of an airport
D. Developing of industrial park

(December 2019, 1 Mark MCQ)

Solution:

Developing of industrial park

Section 80-IB: Deduction in respect of profits and gains from

certain industrial undertakings other than infrastructure
development undertakings
Eligible assessee This section provides deduction to an assessee whose gross total income
and deduction for includes profits and gains derived from the following business:

a. Business of an industrial undertaking

b. Operation of ship
c. Hotels
d. Scientific research

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 22

 e. Production of mineral oil
f. Developing and building housing projects
g. Cold chain facility for agricultural produce
h. Multiplex Theatres
i. Convention Centre
j. Hospital in Rural area
k. Hospital anywhere in India
Deduction is allowed to the extent of different percentages depending on the
nature of business under this section.

Section 80-IC: Special provisions in respect of certain undertakings or

enterprises in certain special category states
Eligible assessee & This section provides deduction from profits and gains to an assessee whose
deduction for gross total income includes any profits and gains derived by an undertaking or
an enterprise from any business referred herein.
This section applies to any undertaking or enterprise which has begun or
begins to manufacture or produce any article or thing and undertakes
substantial expansion in any specified areas in state of Sikkim or Himachal
Pradesh or Uttaranchal or in any of the north eastern states
Quantum of Here deduction shall be 100% of such profits and gains for ten assessment
deduction: years commencing with the initial assessment year for the undertakings in
Sikkim and North eastern states mentioned above and 100% of such profits
and gains for five assessment years commencing with the initial assessment
year and thereafter, 25% (or 30% where the assessee is a company) of the
profits and gains for undertakings in state of Himachal Pradesh or Uttaranchal.

Section 80-IAB: Deduction in respect of profit and gains by an

undertaking or an enterprise engaged in development of Special
Economic Zone
Section 80IAB provides a deduction to an assessee which develops Special
Economic Zone (SEZ), notified on or after 1.4.2005 under the Special Economic
Zones Act, 2005(and development of SEZ should begin before 1st April, 2017)
equal to 100% of the profit and gains derived from such business for 10
consecutive assessment years, out of 15 years beginning from the year in
which a SEZ has been notified by the central government, at option of the
assessee. Such assesse would not be eligible to claim deduction u/s 80-IA.

Section 80-IAC: Deduction in respect of eligible Start-Up

Eligible assessee It provides a deduction to an assessee, being an eligible start-up, whose gross
and deduction for: total income includes any profits and gains derived from eligible Business.
Quantum of Deduction is allowed equal to 100% of the profit and gains derived from such
deduction: business for 3 consecutive assessment years, at the option of the assessee out
of ten years beginning from the year in which the eligible start-up is
incorporated.
The Eligible Start-up should not be formed by splitting up, or the
reconstruction, of a business already in existence and should not formed by
the transfer to a new business of machinery or plant previously used for any
purpose.
However any machinery or plant being previously used for any purpose may
be transferred to a new business and the total value of the machinery or plant
or part so transferred does not exceed twenty per cent of the total value of

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 23

 the machinery or plant used in the new business
Meaning of A business carried out by an eligible start-up engaged in innovation,
“eligible business” development or improvement of products or processes or services or a
scalable business model with a high potential of employment generation or
wealth creation.
Meaning of A company or a limited liability partnership (LLP) engaged in eligible business
“eligible start-up” which fulfils the following conditions: –

(a) It is incorporated on or after the 1st day of April, 2016 but

before the 1st day of April, 2021.
(b) The total turnover of its business does not exceed Hundred
crore rupees in any of the previous years beginning from the
year in which it is incorporated.
(c) It holds a certificate of eligible business from the Inter-
Ministerial Board of Certification.

Section 80-IBA: Deductions in respect of profits and gains from

Housing Projects
Eligible assessee This section provides deduction to an assessee whose gross total income
and deduction for: includes any profits and gains derived from the business of developing and
building housing projects.
Quantum of An amount equal to 100% of the profits and gains derived from such business
deduction: is allowed as deduction.

Conditions: A housing project shall be a project which fulfils the following conditions:
a. the project is approved by the competent authority after
the 1st day of June, 2016, but on or before the 31st day of
March, 2021 [Amendment vide Finance Act, 2020];
b. the project is completed within a period of 5 years from
the date of approval by the competent authority:
c. the carpet area of the shops and other commercial
establishments included in the housing project does not
exceed 3% of the aggregate carpet area
d. the project is on a plot of land measuring not less than
1000 square metres, where the project is located within
the cities of Chennai, Delhi, Kolkata or Mumbai or within
the distance, measured aerially, of 25 kilometres from the
municipal limits of these cities or 2000 metres, where the
project is located in any other place;
e. the stamp duty value of a residential unit does not exceed
Rs. 45 lakhs if project is approved after 30/09/2019.
f. the carpet area of the residential unit comprised in the
housing project does not exceed 30 square meters (60
square meters if project approved after 30/09/2019),
where the project is located within the cities of Chennai,
Delhi, Kolkata or Mumbai or within the distance,
measured aerially, of 25 kilometres from the municipal
limits of these cities or 60 square metres (90 square
meters if project approved after 30/09/2019), where the
project is located in any other place;

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 24

Meaning “Carpet The net usable floor area of an apartment [excluding (i) the area covered by
Area” the external walls (ii) areas under the service shafts/exclusive balcony or
verandah area/exclusive open terrace area, but including the area covered by
the internal partion wall of the apartment.]

Section 80JJA: Deduction in respect of profits and gains from the

Business of collecting and processing Bio-Degradable Waste
Eligible Assessee: Assessee whose gross total income includes any profits and gains derived from
the 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 briquette for fuel
or organic manure.
Quantum of It is allowed to the extent of an amount equal to the whole of such profit and
deduction: gains for a period of five consecutive assessment years beginning with the
assessment year relevant to the previous year in which such business
commences.

Section 80JJAA: Deduction in respect of Employment of New

Employees
Eligible Assessee: Any assessee to whom section 44AB i.e. Tax Audit applies.
Deduction is Additional employee cost incurred in the course of business in the previous
allowed for year.
Quantum of It is allowed to the extent of 30% of additional employee cost incurred in the
deduction: course of business in the previous year. It would be allowed for three
assessment years including the assessment year relevant to previous year in
which such employment is provided.
Conditions: a. The business should not be formed by splitting up or the
reconstruction of an existing business.
b. The business is not acquired by the assessee by way of
transfer from any other person or as a result of any
business reorganisation.
c. The Report of Accountant, giving the prescribed
particulars, has to be furnished before 30th September of
the Assessment Year, being the specified date referred to
in section 44AB i.e. the date one month prior to due date
of filing of Return of Income under section 139(1).
Meaning of Total emoluments paid or payable to additional employees employed during
“Additional the previous year.
employee cost”: In case of an existing business
Additional employee cost shall be NIL, if-
a. There is no increase in number of employees from the
total number of employees employed as on the last date
of the preceding year.
b. Emoluments are paid otherwise than by an account payee
cheque or account payee bank draft or by use of ECS
through a bank account or through any other prescribed
electronic mode.
In the first year of new business
The emoluments paid or payable to the employees employed during that
previous year shall be deemed to be the additional employee cost.

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 25

Meaning of An employee who has been employed during the previous year and whose
“Additional employment has the effect of increasing the total number of employees
employee”: employed by the employer as on last day of the preceding year.
Exclusions from the definition:
a. An employee whose total emoluments are more than
₹25,000 per month; or
b. An employee for whom the entire contribution is paid by
the Government under the Employees’ Pension scheme
notified in accordance with the provisions of the
Employee’s Provident Funds and Miscellaneous Provisions
Act, 1952; or
c. An employee who does not participate in the Recognised
Provident Fund (RPF).
d. An employee employed for a period of less than 240 days
during the previous year. In case of an assessee engaged in
the business of manufacturing of apparel or footwear or
leather products, an employee employed for a period of
less than 150 days during the previous year.
Meaning of Any sum paid or payable to an employee in lieu of his employment by
“emoluments”: whatever name called.
Exclusions from this definition:
a. Any contribution paid or payable by the employer to any
pension fund or provident fund or any other fund for the
benefit of employee under any law for the time being in
force; and
b. Any lump-sum payment paid or payable to an employee at
the time of termination of his service or superannuation or
voluntary retirement, such as gratuity, severance pay,
leave encashment, voluntary retrenchment benefits,
commutation of pension, etc.

Past Year Questions:

1. Sudhan Ltd. incorporated in April, 2021 commenced commercial production from

01.06.2021. It deployed 100 employees who were employed for 260 days during
the year and recruited 50 casual workmen who were employed for 100 days during
the financial year 2021-22. The salary paid to 100 employees was ₹25,00,000 and
salary paid to casual workmen was ₹6,00,000.

The quantum of deduction under section 80JJAA is ………………………..

{December 2017, 1 Mark MCQ}

Solution:

Deduction under section 80JJAA will be allowed to the extent of 30% of the
additional employee cost.

Here, the 100 employees who were employed for 260 days during the Previous Year
2021-22 are additional employees.

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 26

 Therefore, allowable deduction = ₹25,00,000 * 30% = ₹7,50,000.

Note: The 50 casual workmen who were employed only for 100 days are not
additional employees as they have been employed for less than 240 days.

2. SJG Ltd., a manufacturer of leather goods in a factory located at Noida having an

annual turnover of ₹50 crore. The company during the year, employed 200 new
regular workers in the factory, which was 20% of the existing work force employed
on the last day of preceding year. It paid ₹30,00,000 to the new workers during the
year as additional wages. All workmen were employed from 1st May, 2021.
The eligible amount of deduction which the company can claim under section
80JJAA of Income Tax Act, 1961 is …………………………….

(December 2018, 1 Mark MCQ)

Solution:

Amount of deduction shall be 30% of the additional employee cost =

₹30,00,000*30% = ₹9,00,000

Section 80LA: Deduction in respect of certain incomes of

Offshore Banking Units
Eligible assessee: Assessee being a scheduled bank, or any bank incorporated by or under the
laws of a country outside India.
Deduction is a. Of an offshore banking unit in a special economic zone
allowed with b. from the business, referred to in Sub-section (1) of Section 6 of
respect to income the Banking Regulation Act, 1949(10 of 1949), with an
from – undertaking located in a special economic zone or any other
undertaking which develops, develops and operates or
operates and maintains a special economic zone; received in
convertible foreign exchange, in accordance with the
regulations made under the Foreign Exchange Management
Act, 1999 (42 of 1999).
Quantum of Upto Assessment Year 2019-20:
deduction: a. 100% of such income for five consecutive assessment years
beginning with the assessment year relevant to the previous
year in which the permission, under Clause (a) of Sub-section
(1) of Section 23 of the Banking Regulation Act, 1949 (10 of
1949), was obtained, and thereafter;
b. 50% of such income for next five consecutive assessment years
From Assessment Year 2021-22
100% of such income for any 10 consecutive years out of 15 years beginning
with the year in which necessary permission is obtained, at the option of the
assessee.

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 27

 Past Year Question:

The quantum of deduction available to offshore Banking units under section 80LA of
Income Tax Act, 1961 located in Special Economic Zone (SEZ) and satisfying all the
conditions from the Gross Total Income is ………………………..

A. 100% of such income for five consecutive assessment years, relating to the
previous year in which the permission was obtained.
B. 50% of such income for next five consecutive years
C. 25% of such income for next ten years
D. Both A and B above.

(December 2018, 1 Mark MCQ)

Solution:

A and B is the correct answer. {Assuming that it is upto Assessment Year 2019-20}

Section 80M: Deduction in respect of certain inter-corporate

dividends
Eligible assessee: Domestic Company.
Deduction will be Any income by way of dividends from any other domestic company or a
allowed for foreign company or a business trust.
Quantum of An amount equal to so much of the amount of income by way of dividends
deduction: received from such other domestic company or foreign company or business
trust as does not exceed the amount of dividend distributed by it on or before
the due date.
For the purposes of this section, the expression “due date” means the date
one month prior to the date for furnishing the return of income under sub-
section (1) of section 139.

Section 80P: Deduction in respect of Income of Co-Operative

Societies
Eligible assessee: Co-operative societies
Deduction is A. 100% of the profits of a primary society engaged in
allowed in respect supplying milk, oilseeds, fruits or vegetables raised or
of following grown by its members to –
incomes which are - The Government or a Local Authority; or
included in the - A government company or a statutory corporation; or
Gross Total - A federal co-operative society, engaged in the business of
Income: supplying the above-said products.

B. 100% of the profits of co-operative society engaged in any

one of the following activities
- Carrying on the business of banking or providing credit
facilities to its member, or
- A cottage industry, or
- The marketing of agricultural produce grown by its
members, or
- The purchase of agricultural implements for the purpose

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 28

 of supplying them to its members, or
- The processing, without the aid of power, of agricultural
produce of its members, or
- The collective disposal of the labour of its member, or
- Fishing or allied activities for the purpose of supplying
them to its members.

Note:
Profits and gains of co-operative society other than those
specified in A and B above is allowed as deduction up to the
specified limits:
– in case of a consumer co-operative society - Rs. 1,00,000
– in any other case - Rs. 50,000

C. All profits by way of interest or dividend from its

investment with any other co-operative society.

D. 100% of income or profit of a Co-operative Society from the

letting of godowns or warehouse for storage, processing or
facilitating the marketing of commodities.

E. A co-operative society, not being a housing society or an

urban consumers society or a society carrying on transport
business or a society engaged in the performance of any
manufacturing operation with the aid of power, where the
gross total income does not exceeds Rs. 20,000. The
amount of any income by way of interest on securities or
any income from house property chargeable under Section
22 will also be allowed as deduction.

PAST YEAR QUESTIONS:-

1. The profits of co-operative society engaged in (i) carrying out the business of
banking, (ii) a cottage industry and (iii) collective disposal of labour of its member
are eligible for deduction under section 80P upto –

{June 2018, December 2019, 1 Mark MCQ}

Solution:

100% of profits.

2. Which of the under mentioned incomes of a co-operative society is not eligible for
deduction under section 80P of the Income Tax Act, 1961 when the gross total
income of the society exceeds ₹20,000?
A. Agency business
B. Income from letting of godown
C. Income from House Property
D. Dividend from other co-operative societies.

(December 2018, 1 Mark MCQ)

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 29

 Solution:

Income from House Property

Note: Other incomes of co-operative society shall be allowed as deduction

irrespective of the amount of its gross total income.

3. In case of which of the following co-operative society, the deduction under section
80P is restricted to ₹1,00,000 –
A. Consumers’ Co-operative society
B. Society engaged in collection and disposal of labour
C. Society engaged in fishing
D. Society engaged in processing of agricultural produce without the aid of
power.

(June 2016, 1 Mark MCQ)

Solution:-

Consumers’ Co-operative society

Section 80PA: Deduction in respect of certain income of

Producer Companies
Eligible assessee: Producer Company having a total turnover of less than one hundred crore
rupees.
Quantum of 100% Deduction of the profits derived from eligible business
deduction:
Benefit shall be available for the previous year relevant to an assessment
year commencing on or after the 1st day of April, 2019, but before the 1st
day of April, 2025.
In a case where the assessee is entitled also to deduction under any other
provision of this Chapter, the deduction under this section shall be allowed
with reference to the income, if any, as referred to in this section included in
the gross total income as reduced by the deductions under such other
provision of this Chapter.
Meaning of “eligible a. the marketing of agricultural produce grown by the
business” members
b. the purchase of agricultural implements, seeds, livestock
or other articles intended for agriculture for the purpose
of supplying them to the members.
c. the processing of the agricultural produce of the
members
Meaning of “Member” and “Producer Company” shall have the meaning assigned to it in
“Member” and section 581A of the Companies Act, 1956.
“Producer Company”

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 30

 Section 80QQB: Deduction in respect of Royalty Income, etc.,
of authors of certain books other than textbooks:
Eligible assessee: Resident Individual.
Deduction is allowed to an author of book other than text books for the
royalty income.
Quantum of Eligible income or; ₹3,00,000, whichever is lower.
deduction: Here, eligible income (before deducting expenditure) is
lower of-
a. Lumpsum consideration for the assignment or grant.
b. Royalty not exceeding 15%
c. If such income is earned outside India, the part of the
income brought to India in convertible foreign exchange
within 6 months from the end of the previous year or
the extended period by the RBI will be considered.
No deduction under this section shall be allowed unless an assessee
furnishes a certificate in the prescribed form 10CCD/10H.

Past Year Questions:

1. Under section 80QQB, the maximum deduction in respect of royalty is allowed upto
……………

(December 2016, 1 Mark MCQ)

Solution:

₹3,00,000

2. Mr.Uday is a resident individual having patent registered on 01.07.2017 under the

Patents Act, 1970. He received ₹5,00,000 by way of Royalty from ABC Ltd. during
the Financial Year 2021-22.
The quantum of Royalty eligible for deduction would be:-

(December 2017, 1 Mark MCQ)

Solution:

Actual amount of Royalty earned i.e. ₹5,00,000 or; the ceiling limit of deduction
under section 80QQB i.e. ₹3,00,000, whichever is lower.

Therefore, allowable deduction shall be ₹3,00,000.

3. Babu Lal authored a book which is covered as per provision of section 80QQB and
received an amount of Royalty of ₹2,00,000 @ 20% during the year ended
31.03.2022. He had incurred an expenditure of ₹30,000 for earning the amount of
royalty of ₹2,00,000. The entire royalty was received by him from abroad and

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 31

 amount of ₹1,10,000 out of the royalty amount shall be remitted to India till
30.09.2022.
He can claim deduction out of such royalty income in the assessment year 2022-23
for an amount of …………………….

(December 2020, 1 Mark MCQ)

Solution:

Amount eligible for Deduction under section 80QQB for the Assessment Year
2022-23 (Relevant to Previous Year 2021-22) shall be determined as follows:-

It shall be lower of the following:-

a. Royalty not exceeding 15% {₹2,00,000 * 15/20} = ₹1,50,000

b. Income brought to India in convertible foreign exchange = ₹1,10,000

Therefore, Income eligible for deduction = ₹1,10,000

Less: Expenses incurred to earn such income (₹30,000)
Income from Royalty allowed as deduction under section 80QQB ₹80,000

(It is allowed as deduction as it is within the limit of ₹3,00,000)

Question for practice:

Mr. X receives royalty on books Rs. 1,00,000 at a rate of 18 percent and incurs ₹ 10, 000
as expenditure for earning royalty.
The books are covered under section 80QQB and royalty is received from abroad and ₹
50,000 are remitted to India till September 30, 2022. Determine deduction under
section 80 QQB for the assessment year 2022-23.

(ICSI Module)

Solution:

Eligible income (before deducting expenditure incurred) is lower of:

1. Lump sum consideration = Nil
2. Royalty upto 15% {₹1,00,000 * 15/18} = ₹83,333
3. Income brought to India in convertible foreign exchange = ₹50,000

Therefore, eligible income = ₹50,000

(-) Expenditure incurred ₹10,000
Therefore, Deduction under section 80QQB ₹40,000

{It is allowed as deduction as it is within the ceiling limit of ₹3,00,000 of section 80QQB.}

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 32

 Section 80RRB: Deduction in respect of Royalty on Patents

Eligible Assessee: Resident individual.

Deduction is allowed to a patentee who is in receipt of income by way of
royalty in respect of patent registered.
This deduction shall be available only to a resident individual who is
registered as the true and first inventor in respect of an invention under
the Patents Act, 1970 including the co-owner of the patent.
Quantum of Lower of 100% of such income or; Rs. 300,000.
deduction:
In case, any such income is earned from any sources outside India, so
much of the income, shall be taken into account for the purpose of this
section as is brought into India by, or on behalf of, the assessee in
convertible foreign exchange within a period of six months from the end
of the previous year in which such income is earned or within such further
period as the competent authority may allow in this behalf.

Past Year Question:

An Indian resident patentee is entitled to a deduction under section 80RRB to the

extent of –

(December 2014, 1 Mark MCQ)

Solution:

100% of such income or; ₹3,00,000, whichever is less.

Section 80TTA: Deduction in respect of interest on deposits

in savings accounts

Eligible assessee: Individual and HUF.

Deduction is allowed with respect to income by way of interest on
deposits in a saving account with Bank, Co-operative society engaged in
carrying on the business of banking or a post office.
Quantum of Amount of interest on savings deposit or; ₹10,000 per financial year,
deduction: whichever is lower.
Deduction under this section would, however, not be available to a
resident senior citizen eligible for deduction under section 80TTB.

Past Year Questions:

1. Following is not allowed as deduction under section 80TTA:

A. Interest on deposits in a savings account with bank upto ₹10,000
B. Interest on time deposits with bank upto ₹10,000
C. Interest on deposits in a savings account with post office upto ₹10,000

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 33

 D. Interest on deposits with co-operative society engaged in carrying on the business of
banking upto ₹10,000

(December 2014, 1 Mark MCQ)

Solution:

Interest on time deposits with bank is not allowed as deduction under section 80TTA.

2. Deduction in respect of interest on savings accounts under section 80TTA shall be

allowed with respect to savings account with –
A. Bank
B. Co-Operative society
C. Post Office
D. All of the above

(June 2016, 1 Mark MCQ)

Solution:-

All of the above.

3. An amount of maximum ₹10,000 is deductible under section 80TTA from gross total
income of-
A. Individual only
B. HUF and individual only
C. Company only
D. All assessee

(June 2017, 1 Mark MCQ)

Solution:

HUF and individual only

Section 80TTB: Deduction in respect of interest on deposits in

case of senior citizens
Eligible assessee: A senior citizen i.e. a resident individual who is of age of 60 years or more at
any time during the relevant Previous Year.
Deduction is Interest on deposits (both fixed deposits and savings account) with –
allowed with a. A banking company
respect to b. A Co-operative society engaged in carrying on business of
banking
c. A post office
Quantum of Actual amount of interest on deposits or; ₹50,000, whichever is less.
deduction:

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 34

 Question for practice:

Mrs. Jyoti, a resident individual aged 65 years, has earned business income of
₹5,00,000. She also earned interest on saving bank account of ₹12,000 and interest on
Fixed Deposit with State Bank of India amounting ₹35,000 and with post office of
₹5,000. Compute Total Income of the assessee assuming that she pays medical
insurance premium of ₹35,000 during the Previous Year 2021-22.

Solution:

PARTICULARS Amount (₹) Amount (₹)

a. Profits and Gains from Business or Profession 5,00,000
b. Income from Other Sources
- Interest on Savings Bank Account 12,000
- Interest on Fixed Deposit with SBI 35,000
- Interest on Fixed Deposit with Post Office 5,000 52,000
c. Therefore, Gross Total Income 5,52,000
d. Less: Deductions under chapter VI-A
Under section 80D {Medical Insurance
Premium, allowed to the extent of ₹50,000 as
the assessee is senior citizen.} 35,000
Under section 80TTB {₹52,000 or; ceiling limit
of ₹50,000, whichever is lower.} 50,000 (85,000)
e. Therefore, Total Income 4,67,000

Section 80U:Deduction in case of person with disability

Eligible assessee: Resident individual
This deduction is for a resident individual who at any time during the
previous year, is certified by the medical authority to be a person with
disability. The benefit of deduction under this section is also available to
persons suffering from autism, cerebral palsy and multiple disabilities.
Quantum of ₹75,000 in respect of person with disability and ₹1,25,000 for a person
deduction: with sever disability (having disability over 80%).
Note: These amounts of deduction are irrespective of nature of income or
quantum of expenditure. In short this deduction is a flat deduction.
The assessee claiming a deduction under this section shall furnish a copy
of certificate issued by the medical authority in the form and manner, as
may be prescribed, along with return of income under section 139, in
respect of the assessment year for which the deduction is claimed.

Past Year Questions:

1. The maximum amount of deduction under section 80U allowed to a person with
80% or more of one or more disabilities is …………………………..

(December 2014, 1 Mark MCQ)

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 35

 Solution:

₹1,25,000

2. When a person suffers from severe disability, the quantum of deduction allowable
under section 80U is …………………….

(June 2016, 1 Mark MCQ)

Solution:

₹1,25,000

3. Mr. Veer earns a monthly rental income of ₹60,000 from a house property. He
suffers from severe disability and has obtained certificate from the prescribed
medical authority. He has not incurred any expenditure towards treatment of
severe disability.
His Total Income chargeable to tax after the deduction under section 80U would be:

{December 2017, 1 Mark MCQ}

Solution:
Computation of Total Income of Mr.Veer for the Assessment Year 2022-23
(Relevant to Previous Year 2021-22):
PARTICULARS Amount (₹) Amount (₹)
A. Income from House Property
Gross Annual Value {₹60,000 * 12, being
actual rent received in the absence of
Municipal Value, Fair Rent and Standard
Rent } 7,20,000
Less: Municipal Taxes paid by the
assessee during the Previous Year -
Therefore, Net Annual Value 7,20,000
Less: Deductions under section 24
a. Standard Deduction @ 30% of the
NAV (2,16,000)
b. Interest on Borrowed Capital -
Therefore, Income from House 5,04,000
Property/Gross Total Income/Total
Income
Less: Deduction under section 80U
{Allowed to the extent of ₹1,25,000 being
person with severe disability. Further, no
amount is spent on medical treatment of
the assessee does not affect allowability of
deduction.} (1,25,000)
Therefore, Total Income 3,79,000

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 36

CA Pratik Neve’s ZEST LEARNING! 9028777829 Page 37