Deduction in respect of contribution to certain pension funds (Section 80CCC)

Deduction in respect of investment made under an equity savings scheme (Section

Section 80CCC 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

Newly inserted Section 80CCG provides deduction wef assessment year 2013-14 in respect of

Insurance Corporation of India or any other insurer for receiving pension from the

investment made under notified equity saving scheme. Rajiv Gandhi Equity Savings Scheme

Fund referred to in section 10(23AAB). However, the deduction shall exclude interest or

2012 has been notified vide SO No 2777 dated 23.11.2012 as a scheme under this section. The

bonus accrued or credited to the employee's account, if any and shall not exceed Rs. 1 lakh.

deduction under this section is available if following conditions are satisfied:

However, if any amount is standing to the credit of the employee in the fund referred to above

(a) The assesse is a resident individual

and deduction has been allowed as stated above and the employee or his nominee receives this

(b) His gross total income does not exceed Rs. 12 lakhs;

amount together with the interest or bonus accrued or credited to this account due to the reason

(c) He has acquired listed shares in accordance with a notified scheme or listed units of

an equity oriented fund as defined in section 10(38);

(i) Surrender of annuity plan whether in whole or part

(d) The assesse is a new retail investor;

(ii) Pension received from the annuity plan

(e) The investment is locked-in for a period of 3 years from the date of acquisition in

then the amount so received during the Financial Year shall be the income of the employee or

accordance with the above scheme;

his nominee for that Financial Year and accordingly will be charged to tax.

(f) The assesse satisfies any other condition as may be prescribed. 33

Amount of deduction –The amount of deduction is at 50% of amount invested in equity

Where any amount paid or deposited by the employee has been taken into account for the

shares/units. However, the amount of deduction under this provision cannot exceed Rs. 25,000.

purposes of this section, a deduction with reference to such amount shall not be allowed under

Withdrawal of deduction – If the assesse, after claiming the aforesaid deduction, fails to satisfy

section 80C.

the above conditions, the deduction originally allowed shall be deemed to be the income of the

assesse of the year in which default is committed.

Deduction in respect of contribution to pension scheme of Central Government

This deduction is now allowed for three consecutive assessment years beginning with the AY in

(Section 80CCD):32

which the listed equity shares or units were first acquired. If any deduction is claimed by a

Section 80CCD(1) allows an employee, being an individual employed by the Central

taxpayer under this section in any year, he shall not be entitled to any deduction under this

Government or any other employer, on or after the 01.01.2004, a deduction of an amount paid

section for any other year.

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 or as may be notified by the Central

Deductions in respect of maintenance including medical treatment of a dependent

Government. However, the deduction shall not exceed an amount equal to 10% of his

who is a person with disability (section 80DD):

salary(includes Dearness Allowance but excludes all other allowance and perquisites).

Under section 80DD, where an employee, who is a resident in India, has, during the previous

As per Section 80CCD(2), where an employee receives any contribution in the said pension

scheme from the Central Government or any other employer then the employee shall be

(a) incurred any expenditure for the medical treatment (including nursing), training and

allowed a deduction from his total income of the whole amount contributed by the Central

rehabilitation of a dependant, being a person with disability; or

Government or any other employer subject to limit of 10% of his salary of the previous year.

(b) paid or deposited any amount under a scheme framed in this behalf by the Life Insurance

However, if any amount is standing to the credit of the employee in the pension scheme

Corporation or any other insurer or the Administrator or the specified company subject to the

referred above and deduction has been allowed as stated above and the employee or his

conditions specified in this regard and approved by the Board in this behalf for the

nominee receives this amount together with the amount accrued thereon, due to the reason of

maintenance of a dependant, being a person with disability, the employee shall be allowed a

(i) Closure or opting out of the pension scheme or

deduction of a sum of fifty thousand rupees from his gross total income of that year.

(ii) Pension received from the annuity plan purchased and taken on such closure or opting

However, where such dependant is a person with severe disability, an amount of one hundred

thousand rupees shall be allowed as deduction subject to the specified conditions.

then the amount so received during the FYs shall be the income of the employee or his

The deduction under (b) above shall be allowed only if the following conditions are fulfilled:-

nominee for that Financial Year and accordingly will be charged to tax.

(i) the scheme referred to in (b) above provides for payment of annuity or lump sum

Where any amount paid or deposited by the employee has been taken into account for the

amount for the benefit of a dependant, being a person with disability, in the event of the

purposes of this section, a deduction with reference to such amount shall not be allowed under

death of the individual in whose name subscription to the scheme has been made;

section 80C.

(ii) the employee nominates either the dependant, being a person with disability, or any

Further it has been specified that w.e.f 01.04.09 that any amount received by the employee

other person or a trust to receive the payment on his behalf, for the benefit of the

from the new pension scheme shall be deemed not to have received in the previous year if such

dependant, being a person with disability.

amount is used for purchasing an annuity plan in the previous year.

However, if the dependant, being a person with disability, predeceases the employee, an

amount equal to the amount paid or deposited under sub-Para(b) above shall be deemed to be

It is emphasized that as per the section 80CCE the aggregate amount of deduction under

the income of the employee of the previous year in which such amount is received by the

sections 80C, 80CCC and Section 80CCD(1) shall not exceed Rs.1,00,000/-. However the

employee and shall accordingly be chargeable to tax as the income of that previous year.

contribution made by the Central Government or any other employer to a pension scheme u/s

80CCD(2) shall be excluded from the limit of Rs.1,00,000/- provided under this Section.

Deductions in respect of a person with disability (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

Section 80D provides for deduction available for health insurance premia paid, etc.

disability, there shall be allowed a deduction of a sum of fifty thousand rupees. However,

Aggregate

where such individual is a person with severe disability, a higher deduction of one lakh rupees

allowable is

shall be allowable.

Rs 15,000/

DDOs should note that 80DD deduction is in case of the dependent of the employee whereas

80U deduction is in case of the employee himself. However under both the Sections the

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

employee shall furnish to the DDO following:

Section 80E allows deduction in respect of payment of interest on loan taken from any

1. A copy of the certificate issued by the medical authority as defined in Rule 11A(1) in the

financial institution or any approved charitable institution for higher education for the purpose

prescribed form as per Rule 11A(2) of the Rules. The DDO has to allow deduction only

of pursuing his higher education or for the purpose of higher education of his spouse or his

after seeing that the Certificate furnished is from the Medical Authority defined in this

children or the student for whom he is the legal guardian.

Rule and the same is in the form as mentioned therein.

The deduction shall be allowed in computing the total income for the Financial year in

2. Further in cases where the condition of disability is temporary and requires reassessment

which the employee starts paying the interest on the loan taken and immediately succeeding

of its extent after a period stipulated in the aforesaid certificate, no deduction under this

seven Financial years or until the Financial year in which the interest is paid in full by the

section shall be allowed for any subsequent period unless a new certificate is obtained

employee, whichever is earlier.

from the medical authority as in 1 above and furnished before the DDO. 35

For the purpose of this section -

3. For the purposes of section 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

(a) "approved charitable institution" means an institution established for

Unit Trust of India (Transfer of Undertaking and Repeal) Act, 200 ;

charitable purposes and approved by the prescribed authority section 10(23C), or an

(b) “dependant” means—

institution referred to in section 80G(2)(a);

(i) in the case of an individual, the spouse, children, parents, brothers and

(b) "financial institution" means a banking company to which the Banking Regulation

sisters of the individual or any of them;

Act, 1949 applies (including any bank or banking institution referred to in section 51

(ii) in the case of a Hindu undivided family, a member of the Hindu

of that Act); or any other financial institution which the Central Government may, by

undivided family, dependant wholly or mainly on such individual or

notification in the Official Gazette, specify in this behalf;

Hindu undivided family for his support and maintenance, and who has

(c) "higher education” means any course of study pursued after passing the Senior

not claimed any deduction under section 80U in computing his total

Secondary Examination or its equivalent from any school, board or university

income for the assessment year relating to the previous year;

recognized by the Central Government or State Government or local authority or by any

(c) “disability” shall have the meaning assigned to it in clause (i) of section 2 of the

other authority authorized by the Central Government or State Government or local

Persons with Disabilities (Equal Opportunities, Protection of Rights and Full

authority to do so;

Participation) Act, 1995 and includes “autism”, “cerebral palsy” and “multiple disability”

referred to in clauses (a), (c) and (h) of section 2 of the National Trust for Welfare of

Deduction in respect of interest on loan taken for residential house property

Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act,

(Section 80EE):

Vide Finance Act 2013, an individual is allowed a deduction upto a limit of Rs 1,00,000 being

(d) “Life Insurance Corporation” shall have the same meaning as in clause (iii) of subsection (8) of section 88;

paid as interest on a loan taken from a Financial Institution, sanctioned during the period 01-04-

(e) “medical authority” means the medical authority as referred to in clause (p) of section

2013 to 31-03-2014 (loan not to exceed Rs 25 lakhs) for acquisition of a residential house

2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full

whose value does not exceed Rs 40 lakhs. However the deduction is available if the assesse

Participation) Act, 1995 or such other medical authority as may, by notification, be

does not own any residential house property on the date of sanction of the loan.

specified by the Central Government for certifying “autism”, “cerebral palsy”, “multiple

disabilities”, “person with disability” and “severe disability” referred to in clauses (a), (c),

Deductions on respect of donations to certain funds, charitable institutions, etc.

(h), (j) and (o) of section 2 of the National Trust for Welfare of Persons with Autism,

(Section 80G):

Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;

Section 80G provides for deductions on account of donation made to various funds , charitable

(f) “person with disability” means a person as referred to in clause (t) of section 2 of the

organizations etc. In cases where employees make donations to the Prime Minister’s National

Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 or clause (j)

Relief Fund, the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund

of section 2 of the National Trust for Welfare of Persons with

through their respective employers, it is not possible for such funds to issue separate certificate 37

Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;

to every such employee in respect of donations made to such funds as contributions made to

(g) “person with severe disability” means—

these funds are in the form of a consolidated cheque. An employee who makes donations

(i) a person with eighty per cent or more of one or more disabilities, as

towards these funds is eligible to claim deduction under section 80G. It is, hereby, clarified that

referred to in sub-section (4) of section 56 of the Persons with Disabilities

the claim in respect of such donations as indicated above will be admissible under section 80G

(Equal Opportunities, Protection of Rights and Full Participation) Act, 1995; or

on the basis of the certificate issued by the Drawing and Disbursing Officer (DDO)/Employer

(ii) a person with severe disability referred to in clause (o) of section 2 of the