Section
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Nature of deduction
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Who can claim
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(1)
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(2)
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(3)
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Against 'salaries'
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Entertainment allowance
[actual or at the rate of
1/5th of salary, whichever
is less] [limited to Rs.
5,000]
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Government employees
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Employment tax
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Salaried assessees
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Against 'income
from house properties'
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Taxes levied by local authority
and borne by owner if
paid in relevant previous year
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All assessees
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Standard deduction [30%
of the annual value
(gross annual value less
municipal taxes)]
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All assessees
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Interest on borrowed
capital
(Rs. 30,000/Rs. 1,50,0001,
subject to specified conditions)
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All assessees
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Standard deduction of
30 per cent of arrears of
rent received
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All assessees who has
received arrears of rent
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Against 'profits and gains of
business or profession'
A. Deductible items
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Rent, rates, taxes, repairs (excluding
capital expenditure) and insurance for premises
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All assessees
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Repairs (excluding capital expenditure)
and insurance of machinery, plant and furniture
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All assessees
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Depreciation on buildings, machinery, plant or
furniture, know-how, patents, copyrights,
trade marks, licences, franchises, or any
other business or commercial rights of similar nature,
being intangible assets -
Prescribed percentage on
WDV in the case of any block of assets2
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All assessees
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Investment in new plant and machinery between
1-4-2013 and 31-3-2015 (subject to certain
conditions and limits)
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A company engaged in
manufacture or production
of
any article or thing
|
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Development allowance - 50 per cent of actual
cost of planting (subject
to certain conditions
and limits) (planting should have been completed
before 1-4-1990)
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Assessee engaged in business
of growing and manufacturing
tea in India
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Tea/Coffee/Rubber Development Account
-
Amount
deposited in account with National
-
Bank
(Special Account) or in Deposit
-
Account
of Tea Board, Coffee Board
-
or
Rubber Board in accordance with
-
approved scheme or 40% of profits
-
of
business, whichever is less (subject
-
to
certain conditions)
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Assessees engaged in business
of growing and
manufacturing
tea/Coffee/Rubber in India
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Amount deposited in Special Account
with SBI/Site Restoration Account or
20 per cent of profits, whichever is less
(subject to certain conditions)
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Assessee carrying on business
of prospecting for, or extraction
or production of, petroleum or
natural gas or both in India
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Expenditure on scientific research
for certain specific purposes (subject to
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All assessees
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Expenditure incurred before 1-4-1998 on
acquisition of patent rights or copyrights
[equal to appropriate
fraction of expenditure
on acquisition to be
deducted in fourteen
equal annual instalments
beginning with
previous year in which
such expenditure
has been incurred] (subject to certain conditions)
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All assessees
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Lump sum payment made in any previous year
relevant to assessment
year commencing on or
before 1-4-1998, for
acquisition of technical
know-how [consideration
for acquisition to
be deducted in six equal annual instalments
(3 equal annual
instalments where know-how
is developed in certain
laboratories,
universities and institutions)]
(subject to certain conditions)
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All assessees
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Expenditure incurred for obtaining licence
to operate telecommunication services
either before commencement of such business
or thereafter at any time
during any previous year
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All assessees
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Expenditure by way of payment of any sum
to a public sector company/local
authority/approved association or institution
for carrying out any eligible scheme or project
(subject to certain conditions)
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All assessees
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Capital expenditure incurred, wholly and
exclusively, for the purpose of any
specified business [setting up and operating
a cold chain facility; setting up and operating a
warehousing facility for
storage of agricultural
produce; laying and
operating a cross-country
natural gas or crude or petroleum oil pipeline
network for distribution, including storage
facilities being an integral part of such network;
building and operating,
anywhere in India,
a
hotel of two-star or above category as
classified by the Central Government;
building and operating,
anywhere in India,
a hospital with at least one hundred beds
for patients; developing
and building a
notified housing project under a
scheme for slum redevelopment or rehabilitation
framed by the Government,
as the case may
be, in accordance with
prescribed guidelines;
developing and building a notified housing
project under a scheme for affordable housing
framed by the Government,
as the case
may be, in accordance with prescribed
guidelines; production of
fertilizer in India;
setting up and operating an inland container
depot or a container
freight station
which is
approved/notified under the Customs
Act, 1962; bee-keeping
and production of
honey and beeswax; and setting up and
operating a warehousing facility for storage
of sugar5,
carried on by the assessee during
the previous year in
which such expenditure
is incurred (subject to certain conditions)
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All assessees
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Payment to associations/institutions for carrying
out rural development
programmes (subject
to certain conditions)
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All assessees
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Expenditure incurred before 1-4-2002 by way of
payment to approved associations/institutions
for carrying out approved programmes of
conservation of natural resources or afforestation
(subject to certain conditions)
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All assessees
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One and a half times of expenditure on notified
agricultural extension project (subject to certain
conditions)
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All assessees
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One and a half times of expenditure on
notified skill development project
(subject to certain conditions)
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A company
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Amortisation of certain preliminary expenses
[deductible in 5 equal annual instalments]
(subject to certain conditions)
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Indian companies and resident
non-corporate assessees
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Amortisation of expenditure incurred after
31-3-1999 in case of
amalgamation or
demerger in the hands of an Indian company
(one-fifth of such
expenditure for 5 successive
previous years) (subject
to certain conditions)
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Indian Company
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Amortisation of expenditure incurred under
voluntary retirement
scheme in 5 equal annual
instalments starting with
the year when the
expenditure is incurred
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All assessees
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Expenditure on prospecting, etc., for
certain minerals [deductible in ten equal annual
instalments] (subject to
certain conditions)
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Indian companies and
resident non-corporate
assessees engaged in prospecting,
etc., for minerals
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Insurance premium covering risk of damage
or destruction of stocks/stores
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All assessees
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Insurance premium covering life of cattle
owned by a member of co-operative society
engaged in supplying milk
to federal milk
co-operative society
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Federal milk co-operative
societies
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Medical insurance premium paid by any mode
other than cash, to
insure employee's health
under (a) scheme
framed by GIC of India
and approved by Central Government;
or (b) scheme framed by any other insurer
and approved by IRDA
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All assessees as employers
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Bonus or commission paid to employees
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All assessees
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Interest on borrowed capital
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All assessees
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Pro rata amount of discount on a zero coupon
bond based on life of such bond and
calculated in prescribed manner
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All assessees
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Contributions to recognised provident fund
and approved superannuation fund [subject
to certain limits and conditions]
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All assessees as
employers
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Any sum paid by assessee-employer by way
of contribution towards a pension scheme,
an employee to the extent
it does not exceed
10 per cent of the employee's salary in the
previous year.
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All assessees as
emloyers
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Contributions to approved gratuity fund
[subject to certain
limits and conditions]
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All assessees as
employers
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Contributions to any provident fund or
superannuation fund or
any fund set up
under Employees' State Insurance Act, 1948 or
any other fund for
welfare of such employees,
received from employees
if the same are
credited to the employee's account in relevant
fund or funds before due
date
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All assessees as
employers
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Allowance in respect of animals which have
died or become
permanently useless
[subject to certain conditions]
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All assessees
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Bad debts which have been written off as
irrecoverable [subject to limitation in the case of
banks and financial
institutions]
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All assessees
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Provision for bad and doubtful debts
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■ up to 7½ per cent of total income before
making any deduction
under this clause and
Chapter VI-A, and up to
10 per cent of
aggregate average advances made by
its rural branches
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Certain scheduled banks,
non-scheduled banks
(but other than foreign banks)
and co-operative bank
(other than primary agricultural
credit society or primary co-operative
agricultural and rural
development
bank)
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■ up to 5 per cent (10% in case of Public
Financial Institutions,
State Financial
Corporations and State Industrial
Investment Corporations in any of
the two consecutive
assessment
years 2003-04 and 2004-05 – subject
t to certain conditions) of total
income before making any
deduction under this clause and Chapter VI-A
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Foreign banks/Public financial
institutions/State
financial
corporations/State industrial
investment corporations
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Amounts transferred to special reserve
[subject to certain
conditions and maxi-mum of
20 per cent of profits
derived from eligible business]
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Specified entities, namely,
financial corporations/financial
corporation which is a
public
sector company/banking
company/co-operative bank
other than a primary agricultural
credit society or a
primary
co-operative agricultural
and
rural development
bank/housing
finance company/any other
financial corporation
including a
public company
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Expenditure for promoting family planning
amongst employees
(deductible in 5 equal annual installments in
case of capital expenditure)
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Companies
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Expenditure incurred wholly and exclusively
by the assessee on or
after the 1st
April, 1999 but before the 1st April, 2000 in
respect of a non-Y2K compliant system,
owned by the assessee and used for the
purposes of his business or profession, so
as to make such system
Y2K compliant
computer system
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All assessees
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Any expenditure (not being in the nature
of capital expenditure) incurred by a notified
corporation or body corporate, by whatever
name called, constituted or established by a
Central, State or Provincial Act, for the
objects and purposes
authorised by the Act
under which such
corporation or body
corporate was constituted or established
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Notified corporation or body
corporate, by whatever
name
called, constituted or
established
by a Central, State or
Provincial
Act
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Any banking cash transaction tax paid during the previous year
on taxable banking transaction entered into by the assessee
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All assessees
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Contribution to notified credit guarantee trust fund for small
industries
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Public financial institution
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Securities Transaction Tax paid if corresponding income is
included as income under the head 'Profits and gains of business or
profession'
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All assessees
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Amount equal to commodities transaction tax paid by an assessee
in respect of taxable commodities transactions entered into in the course of
his business during the previous year, if the income arising from such
transactions is included in the income computed under the head "Profits
and gains of business or profession"
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All assessees
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Any other expenditure [not being personal or capital expenditure
and expenditure mentioned in sections
30 to 36]
laid out wholly and exclusively for purposes of business or profession6
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All assessees
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B. Non-deductible
items
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Advertisement in souvenir, brochure, tract, pamphlet, etc., of
political party
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All assessees
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Interest, royalty, fees for technical services or other
chargeable sum payable outside India,
or in India
to a non-resident or foreign company, on which tax has not been paid/deducted
during the previous year or in the subsequent year within time prescribed
under section
200(1). Where in respect of any such sum, tax has been deducted in any
subsequent year or, has been deducted in the previous year but paid in any
subsequent year after the expiry of the time prescribed under sub-section (1)
of section
200, such sum shall be allowed as a deduction in computing the income of
the previous year in which such tax has been paid7
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All assessees
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Any interest, commission or brokerage, rent, royalty, fees for
professional services or fees for technical services payable to a resident,
or amounts payable to a contractor or sub-contractor, being resident, for
carrying out any work (including supply of labour for carrying out any work)8,
on which tax is deductible at source under Chapter XVII-B and such tax has
not been deducted or, after deduction, has not been paid on or before the due
date specified in sub-section (1) ofsection
139.
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All assessees
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However, where in respect of any such sum, tax has been deducted
in any subsequent year, or has been deducted during the previous year but
paid after the due date specified in sub-section (1) of section
139, such sum shall be allowed as a deduction in computing the income of
the previous year in which such tax has been paid.
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Rate or tax levied on the profits or gains of any business or
profession
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All assessees
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Wealth-tax paid
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All assessees
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Amount paid by way of royalty, licence fee, service fee,
privilege fee, service charge or any other fee or charge, by whatever name
called, which is levied exclusively on, or any amount which is appropriated,
whether directly or indirectly, from a State Government undertaking by the
State Government
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State Govt. undertakings
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Salaries payable outside India,
or in India
to a non-resident, on which tax has not been paid/deducted at source
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All assessees as employers
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Payments to provident fund/other funds for employees' benefit
for which no effective arrangements are made to secure that tax is deducted
at source on payments made from such funds which are chargeable to tax as
'salaries'
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All assessees as employers
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All assessees as employers
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Interest, salary, bonus, commission or remuneration paid to
partners (subject to certain conditions and limits)
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Firms
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Interest, salary, bonus, commission or remuneration paid to
members (subject to certain conditions and limits)
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Association of persons or body
of individuals
(except a company or a
co-operative society,
society registered under Societies
Registration Act, etc.)
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Expenditure involving payment to
relative/director/partner/substantially interested person, etc., which, in
the opinion of the Assessing Officer, is excessive or unreasonable
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All assessees
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100% of payments exceeding Rs. 20,000 (Rs. 35,000 in case of
payment made for plying, hiring or leasing goods carriages) made to a person
in a day otherwise than by account payee cheque/bank draft (subject to
certain conditions)
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All assessees
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Any provision for payment of gratuity to employees, other than a
provision made for purposes of contribution to approved gratuity fund or for
payment of gratuity that has become payable during the year (subject to
specified conditions)
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All assessees as employers
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Any sum paid for setting up or formation of, or as contribution
to, any fund, trust, company, AOP, BOI, Society or other institution, other
than recognised provident fund/approved superannuation fund/pension scheme
referred to in section
80CCD/approved gratuity fund
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All assessees as employers
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C. Other deductible items
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In case of mineral oil concerns allowances specified in
agreement entered into by Central Government with any person (subject to
certain conditions and terms of agreement)
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Assessees
engaged in
prospecting
for or extraction or
production
of mineral oils
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In case of mineral oil concerns expenditure incurred remaining
unallowed as reduced by proceeds of transfer
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Assessee whose business
consists of prospecting for
or extraction or production of petroleum and natural gas and who
transfers any interest in such business
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Any sum which is actually paid, relating to (i)
tax/duty/cess/fee levied under any law, (ii) contribution to provident
fund/superannuation fund/gratuity fund/any fund for employees' welfare, (iii)
bonus/commission to employees, (iv) interest on loan/borrowing from
any public financial institution, State Financial Corporation or State
Industrial Investment Corporation/interest payments to scheduled
banks/Co-operative banks on loans or advances, and (v) sum payable by
employers by way of leave encashment to employees. Deduction will not be
allowed in year in which liability to pay is incurred unless actual payment
is made in that year or before the due date of furnishing of return of income
for that year
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All assessees
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Expenditure in excess of subscription, etc., received from
members (subject to certain conditions and limits)
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Trade, professional or similar
association
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Head office expenditure (subject to certain conditions and
limits)
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Non-resident
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Against 'capital gains'
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Expenditure incurred wholly and exclusively in connection with
transfer of capital asset
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All assessees
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Cost of acquisition of capital asset and of any improvement
thereto (indexed cost of acquisition and indexed cost of improvement, in case
of long-term capital assets)
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All assessees
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Long-term capital gains on sale of residential house and land
appurtenant thereto invested in purchase/construction of another residential
house9 (subject to certain conditions and
limits)
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Individual/HUF
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Capital gains on transfer of land used for agricultural purposes,
by an individual or his parents or a HUF, invested in other land for
agricultural purposes (subject to certain conditions and limits)
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Individual/HUF
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Capital gains on compulsory acquisition of land or building
forming part of an industrial undertaking invested in purchase/construction
of other land/building for shifting/re-establishing said undertaking or
setting up new industrial undertaking (subject to certain conditions and
limits)
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Any assessee
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Net consideration on transfer of long-term capital asset made
before 1-4-2000 invested in specified bonds, debentures, shares of a public
comp-any or units of notified mutual funds (subject to certain conditions and
limits)
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Any assessee
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Long-term capital gains on transfer of any long-term capital
asset made be-fore 1-4-2000 invested in specified long-term assets (subject
to certain conditions and limits)
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Any assessee
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Long-term capital gains invested in long-term specified asset
(bond redeemable after 3 years) (maximum investment in a financial year is
Rs. 50 lakhs)10 issued by National Highways
Authority of India; or by the Rural Electrification Corporation Limited
(subject to certain conditions and limits)
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Any assessee
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Long-term capital gains on transfer before 1-4-2006 of certain
listed securities or units invested in equity shares forming part of an
eligible issue of capital (subject to certain conditions and limits)
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Any assessee
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Net consideration on transfer of long-term capital asset other
than residential house invested in residential house11(subject
to certain conditions and limits)
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Individual/HUF
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Capital gain on transfer of machinery, plant, land or building
used for the purposes of the business of an industrial undertaking situate in
an urban area (transfer being effected for shifting the undertaking to a
non-urban area) invested in new machinery, plant, building or land, in the
said non-urban area, expenses on shifting, etc. (subject to certain conditions
and limits)
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Any assessee
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Exemption of capital gains on transfer of assets in cases of
shifting of industrial undertaking from urban area to any Special Economic
Zone (subject to certain conditions and limits)
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All assessees
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Exemption in respect of capital gain arising from the transfer
of a long-term capital asset, being a residential property (a house or a plot
of land), owned by the eligible assessee, and such assessee before the due
date of furnishing of return of income under sub-section (1) of section
139 utilises the net
consideration for subscription in the equity shares of an eligible company
and such company has, within one year from the date of subscription in equity
shares by the assessee, utilised this amount for purchase of specified new
asset (subject to certain conditions and limits).
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Individual/HUF
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Against 'income from other
sources'
A. Deductible items
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Any reasonable sum paid by way of commission or remuneration for
purpose of realising dividend (other than dividends referred to in section
115-O)
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All assessees
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Any reasonable sum paid by way of commission or remuneration for
the purpose of realising interest on securities
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All assessees
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Contributions to any provident fund or superannuation fund or
any fund set up under Employees' State Insurance Act, 1948 or any other fund
for welfare of employees, if the same are credited to employees' accounts in
relevant funds before due date
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All assessees
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Repairs, insurance, and depreciation of building, plant and
machinery and furniture
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Assessees engaged in business
of letting out of
machinery,
plant and furniture and buildings on hire
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In case of family pension, 331/3 per cent of such pension or Rs.
15,000, whichever is less
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Assessees in receipt of family
pension on death of employee
being member of assessee's family
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Any other expenditure (not being capital expenditure) expended
wholly and exclusively for earning such income
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All assessees
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In case of interest received on compensation or on enhanced compensation
referred to in section
145A(2), a deduction of 50 per cent of such income (subject to certain
conditions)
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All assessees
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B.
Non-deductible items
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Personal expenses
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All assessees
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Interest chargeable to tax which is payable outside India on
which tax has not been paid or deducted at source
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All assessees
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'Salaries' payable outside India on which no tax is paid or
deducted at source
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All assessees
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Wealth-tax
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All assessees
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All assessees
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Expenditure in connection with winnings from lotteries,
crossword puzzles, races, games, gambling or betting
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All assessees
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For certain
payments
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■ Life insurance premium for policy :
- in case of individual, on life
of assessee, assessee's spouse and any child of assessee
- in case of HUF, on life of any
member of the HUF
■ Sum paid under a contract for a deferred
annuity :
- in case of individual, on life
of the individual, individual's spouse and any child of the individual
(however, contract should not contain an option to receive cash payment in
lieu of annuity)
■ Sum deducted from salary payable to
Government servant for securing deferred annuity or making provision for his
wife/children [qualifying amount limited to 20% of salary]
■ Contributions by an individual made under
Employees' Provident Fund Scheme
■ Contribution to Public Provident Fund
Account in the name of:
- in case of individual, such
individual or his spouse or any child of such individual
■ Contribution by an employee to a recognised
provident fund
■ Contribution by an employee to an approved
superannuation fund
■ Subscription to any notified security or
notified deposit scheme of the Central Government
■ Subscription to notified savings
certificates [National Savings Certificates (VIII Issue)]
■ Contribution for participation in
unit-linked Insurance Plan of UTI :
- in case of an individual, in
the name of the individual, his spouse or any child of such individual
- in case of a HUF, in the name
of any member thereof
■ Contribution to notified unit-linked
insurance plan of LIC Mutual Fund [Dhanaraksha 1989]
- in the case of an individual,
in the name of the individual, his spouse or any child of such individual
- in the case of a HUF, in the
name of any member thereof
■ Subscription to notified deposit scheme or
notified pension fund set up by National Housing Bank [Home Loan Account
Scheme/National Housing Banks (Tax Saving) Term Deposit Scheme, 2008]
■ Tuition fees (excluding development fees,
donations, etc.) paid by an individual to any university, college, school or
other educational institution situated in India, for full time education of
any 2 of his/her children
■ Certain payments for purchase/construction
of residential house property
■ Subscription to notified schemes of (a)
public sector companies engaged in providing long-term finance for
purchase/construction of houses in India for residential purposes/(b)
authority constituted under any law for satisfying need for housing
accommodation or for planning, development or improvement of cities, towns
and villages, or for both
■ Sum paid towards notified annuity plan of
LIC (New Jeevan Dhara/New Jeevan Dhara-I/New Jeevan Akshay/New Jeevan
Akshay-I/New Jeevan Akshay-II/Jeewan Akshay-III plan of LIC) or other insurer
■ Subscription to any units of any notified
[u/s 10(23D)] Mutual Fund or the UTI (Equity Linked Saving Scheme,
2005)
■ Contribution by an individual to any
pension fund set up by any mutual fund which is referred to in section
10(23D) or by the
UTI (UTI Retirement Benefit Pension Fund)
■ Subscription to equity shares or debentures
forming part of any approved eligible issue of capital made by a public
company or public financial institutions
■ Subscription to any units of any approved
mutual fund referred to in section
10(23D), provided amount of subscription to such units is
subscribed only in 'eligible issue of capital' referred to above.
■ Term deposits for a fixed period of not
less than 5 years with a scheduled bank, and which is in accordance with a
scheme 12 framed and notified.
■ Subscription to notified bonds issued by
the NABARD.
■ Deposit in an account under the Senior
Citizen Savings Scheme Rules, 2004 (subject to certain conditions)
■ 5-year term deposit in an account under the
Post Office Time Deposit Rules, 1981 (subject to certain conditions)
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Individual/HUF
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