1. Entertainment Allowance [Section 16(ii)]: A deduction is also allowed under section 16(ii) in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee, who is in receipt of a salary from the Government, a sum equal to one-fifth of his salary(exclusive of any allowance, benefit or other perquisite) or five thousand rupees whichever is less. No deduction on account of entertainment allowance is available to non-government employees.
2. Tax on Employment [Section 16(iii)]: The tax on employment (Professional Tax) within the meaning of article 276(2) of the Constitution of India, livable by or under any law, shall also be allowed as a deduction in computing the income under the head "Salaries
3. DEDUCTIONS UNDER CHAPTER VI-A OF THE ACT
In computing the taxable income of the employee, the following deductions under Chapter VI-A of the Act are to be allowed from his gross total income:
1 Deduction in respect of Life insurance premium, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc. (section 80C).
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A. Section 80C, entitles an employee to deductions for the whole of amounts paid or deposited in the current financial year in the following schemes, subject to a limit of Rs.1,50,000/-:
(1) Payment of insurance premium to effect or to keep in force an insurance on the life of the individual, the spouse or any child of the individual.
(2) Any payment made to effect or to keep in force a contract for a deferred annuity, not being an annuity plan
(3) Any sum deducted from the salary payable by, or, on behalf of the Government to any individual, being a sum deducted in accordance with the conditions of his service for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum deducted does not exceed 1/5th of the salary;
(4) Any contribution made :
(a) by an individual to any Provident Fund to which the Provident Fund Act, 1925 applies;
(b) to any provident fund set up by the Central Government, and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of an individual, or spouse or children
(c) by an employee to a Recognized Provident Fund;
(d) by an employee to an approved superannuation fund; It may be noted that "contribution" to any Fund shall not include any sums in repayment of loan or advance;
(5) Any sum paid or deposited during the year as a subscription :- (a) in the name of employee or a girl child of that employee including a girl child for whom the employee is the legal guardian in any such security of the Central Government or any such deposit scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf; [The Central Government has since notified the scheme ‘Sukanya Samriddhi Account
(6) Any sum paid as contribution in the case of an individual, for himself, spouse or any child, a. for participation in the Unit Linked Insurance Plan,
(7) Deduction in respect of contribution to certain pension funds (Section 80CCC) Section 80CCC(1) allows an employee deduction of an amount paid or deposited out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the Fund referred to in section 10(23AAB). Section 80CCD(1) allows an employee, being an individual employed by the Central Government on or after 01.01.2004 or being an individual employed by any other employer, 33 or any other assessee being an individual, a deduction of an amount paid or deposited out of his income chargeable to tax under a pension scheme as notified vide Notification F. N. 5/7/2003- ECB&PR dated 22.12.2003 National Pension System-NPS or as may be notified by the Central Government. However, the deduction shall not exceed an amount equal to 10% of his salary (includes Dearness Allowance but excludes all other allowance and perquisites).
As per section 80CCD(1B), an assessee referred to in 80CCD(1) shall be allowed an deduction in computation of his income, of the whole of the amount paid or deposited in the previous year in his account under the pension scheme notified or as may be notified by the Central Government, which shall not exceed Rs. 50,000. The deduction of Rs. 50,000 shall be allowed whether or not any deduction is allowed under sub-section(1). However, the same amount cannot be claimed both under sub-section (1) and sub-section (1B) of section 80CCD.
As per Section 80CCD(2), where any contribution in the said pension scheme is made by the Central Government or any other employer then the employee shall be allowed a deduction from his total income of the whole amount contributed by the Central Government or any other employer subject to limit of 10% of his salary of the previous year. If any amount is standing to the credit of the employee in the pension scheme referred above and deduction has been allowed as stated above, and the employee or his nominee receives this amount together with the amount accrued thereon, due to the reason of (i) Closure or opting out of the pension scheme or (ii) Pension received from the annuity plan purchased and taken on such closure or opting out then the amount so received during the FYs shall be the income of the employee or his nominee for that Financial Year and accordingly will be charged to tax. Where any amount paid or deposited by the employee has been taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C.
(Section 80D) Section 80D provides for deduction available for health insurance premia paid, etc. which is calculated as under: Sl No Persons for whom payment made Nature of payment Mode of payment Allowable Deduction (in Rs) 1 Employee or his family* the whole of the amount paid to effect orv to keep in force an insurance on the health of the employee or his family or any contribution made to the CGHS orv such other scheme as may be notified by Central Government (Finance Act 2013) any mode other than cash Aggregate allowable is Rs 25,000/ (Rs 30000/- for senior and very senior citizen) any payment on account of preventive 2 health check-up of the employee or family, [restricted to Rs 5000/-; cash payment allowed here] any mode including cash,
Under section 80DD, where an employee, who is a resident in India, has, during the previous year- (a) incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or (b) paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or any other insurer or the Administrator or the specified company subject to the conditions specified in this regard and approved by the Board in this behalf for the maintenance of a dependant, being a person with disability, the employee shall be allowed a deduction of a sum of Rs 75,000/- from his gross total income of that year. However, where such dependant is a person with severe disability, an amount Rs 1,25,000/- shall be allowed as deduction subject to the specified conditions.
(section 80U): Under section 80U, in computing the total income of an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person with a disability, there shall be allowed a deduction of a sum of Rs 75,000/-. However, where a such individual is a person with severe disability, a higher deduction of Rs 1,25,000/- shall be allowable. DDOs should note that 80DD deduction is in a case of the dependent of the employee whereas 80U deduction is in a case of the employee himself. However, under both the sections, the employee shall furnish to the DDO the following:
1. A copy of the certificate issued by the medical authority as defined in Rule 11A(1) in the prescribed form as per Rule 11A
(2) of the Rules. The DDO has to allow deduction only after seeing that the Certificate furnished is from the Medical Authority defined in this Rule and the same is in the form as mentioned therein. 2. Further, in cases where the condition of disability is temporary and requires the reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any subsequent period unless a new certificate is obtained from the medical authority as in 1 above and furnished before the DDO.
3. For the purposes of sections, 80DD and 80 U some of the terms defined are as under- (a) “Administrator” means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 ;
(b) “dependant” means— (i) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them; (ii) in the case of a Hindu undivided family, a member of the Hindu undivided family, dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year;
(c) “disability” shall have the meaning assigned to it in clause (i) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.
(Section 80E): 38 Section 80E allows deduction in respect of payment of interest on loan taken from any financial institution or any approved charitable institution for higher education for the purpose of pursuing his higher education or for the purpose of higher education of his spouse or his children or the student for whom he is the legal guardian. The deduction shall be allowed in computing the total income for the Financial year in which the employee starts paying the interest on the loan taken and immediately succeeding seven Financial years or until the Financial year in which the interest is paid in full by the employee,
(Section 80G): Section 80G provides for deductions on account of donation made to various funds , charitable organizations etc. In cases where employees make donations to the Prime Minister’s National Relief Fund, the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund through their respective employers, it is not possible for such funds to issue separate certificate to every such employee in respect of donations made to such funds as contributions made to these funds are in the form of a consolidated cheque. An employee who makes donations towards these funds is eligible to claim deduction under section 80G. It is, hereby, clarified that the claim in respect of such donations as indicated above will be admissible under section 80G on the basis of the certificate issued by the Drawing and Disbursing Officer (DDO)/Employer in this behalf - Circular No. 2/2005, dated 12-1-2005. No deduction under this section is allowable in case the amount of donation exceeds Rs 10000/- unless the amount is paid by any mode other than cash. 5.5.10 Deductions is respect of rents paid
(Section 80GG): Section 80GG allows the employee to a deduction in respect of house rent paid by him for his own residence. Such deduction is permissible subject to the following conditions :- (a) the employee has not been in receipt of any House Rent Allowance specifically granted to him which qualifies for exemption under section 10(13A) of the Act; (b) the employee files the declaration in Form No.10BA. (Annexure X) (c) The employee does not own: 39 (i) any residential accommodation himself or by his spouse or minor child or where such employee is a member of a Hindu Undivided Family, by such family, at the place where he ordinarily resides or performs duties of his office or carries on his business or profession; or (ii) at any other place, any residential accommodation which is in the occupation of the employee, the value of which is to be determined under section 23(2)(a) or section 23(4)(a), as the case may be. (d) He will be entitled to a deduction in respect of house rent paid by him in excess of 10% of his total income. The deduction shall be equal to 25% of total income or Rs. 2,000/- per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under section 80GG. The Drawing and Disbursing Authorities should satisfy themselves that all the conditions mentioned above are satisfied before such deduction is allowed by them to the employee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of rent. 5.5.11 Deductions in respect of certain donations for scientific research or rural development
(Section 80TTA): Section 80TTA has been introduced from the Financial Year 2016-17 and it allows to an employee from his gross total income if it includes any income by way of interest on deposits (not being time deposits) in a savings account, a deduction amounting to (i) in a case where the amount of such income does not exceed in the aggregate ten thousand rupees, the whole of such amount; and (ii) in any other case, ten thousand rupees. The deduction is available if such savings account is maintained in an (a) banking company to which the Banking Regulation Act, 1949, applies (including any bank or banking institution referred to in section 51 of that Act); (b) co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or (c) Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898, For this section, "time deposits" means the deposits repayable on expiry of fixed periods.
6. REBATE OF Rs 5000 FOR INDIVIDUALS HAVING TOTAL INCOME UPTO Rs 5 LAKH [SECTION 87A] Finance Act 2016 provided relief in the form of the rebate to individual taxpayers, resident in India, who are in lower income bracket, i. e. having total income not exceeding Rs 5,00,000/-. The amount of rebate is Rs 5000/- or the amount of tax payable, whichever is lower. This rebate is available for AY 2017-18 and subsequent assessment years.
