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Deductions U/S 80C to 80U || Assessment Year 2018-19

80C Deductions: LIC, PF, PPF etc.

80C deductions are the most popular Income Tax Deductions. The maximum tax deduction benefit that you can avail under this section is Rs. 1,50,000. The various options of investments and payments that qualify for deduction under this section are:

• Life Insurance Premium (LIP)Deduction is allowed in respect of life insurance premium that you pay on your LIC policy but policy must be in the name of:
  1. In case of an individual:Individual, spouse or any child of such individual.
  2. In case of HUF:Any member of HUF.
Do note that before making the payment towards the premium, first check with agent or read the policy description whether it is eligible for deduction for income tax purpose.
• Public Provident Fund (PPF)Deduction is allowed in respect of Contribution made by you towards your PPF. The limit for minimum deposit in PPF A/C is Rs. 500 and limit for maximum deposit is Rs 1,50,000 during a year. PPF can be in the name of:
  1. In case of an individual:Individual, spouse or any child of such individual.
  2. In case of HUF:Any member of HUF.
  The best part about PPF is that the interest you receive on your PPF account and receipts on maturity or withdrawals is fully tax free. The PPF account matures after 15 years but part of the money can be withdrawn after 5 years.
• Unit Linked Insurance Plan (ULIP)Deduction is allowed in respect of Contribution made by you towards your ULIP. You can make investments in the name of:
  1. In case of an individual:Individual, spouse or any child of such individual.
  2. In case of HUF:Any member of HUF.
• Children's Tuition FeesYou can claim deduction for the payment of tuition fees of your children to any university, college, school or other educational institution situated within India for the purpose of education. However, deduction would not be allowed for payment towards any development fees or donation or payment of similar nature. This deduction is allowed for maximum two children.
• Principal Repayment of Housing LoanYou can claim the deduction of principal repayment of your housing loan taken for purchase or construction of residential house property. Deduction can also be availed in respect of stamp duty charges, registration fee and other expenses paid for purchase of your house. This deduction is available for both individuals and HUF.
• • Sukanya Samriddhi SchemeIn lines with the Beti Bachao, Beti Padhao campaign, this scheme was launched on 22nd January, 2015 by Prime Minister Narendra Modi. You claim deduction under this scheme for any sum deposited by you in the Sukanya Samriddhi Account of your girl child or any girl child for whom you’re her legal guardian. The minimum limit of deposit under this account is Rs 1000 annually and maximum Rs 1,50,000. Interest earned and money withdrawals from this account are tax free.
  • Mutual Funds (Equity Linked Saving Scheme)You can claim deduction in respect of subscription to units of UTI or mutual funds specified u/s 10(23D) of Income Tax India, 1961.
  • Provident FundIf you're an employee, then you can claim deduction in respect of contribution towards your Statutory Provident Fund or Recognized Provident Fund Account.
  • Bank FDR’s (Known as 5 Year Tax Saving FDR’s)Almost everyone invests in Bank FDR’s but did you know that you can claim deduction for it too. Investment must be made in term deposit for a fixed period of 5 years or more with scheduled banks to avail the deduction.
  • Post Office Tax Saving FDR’s (Post Office Time Deposit Scheme)Similar to Bank FDR’s, 5 year FDRs of Post Offices are also eligible for deduction under section 80C.
  • National Saving Certificate (NSC)Subscribe to NSC and you’ll be eligible for deduction for the amount you contribute. These can be purchased from Post Office.
  • Deferred Annuity PlanYou can claim deduction in respect of payment made by you under Deferred Annuity Plan. This annuity may be in your name, your spouse's name or in the name of any of your child. But to claim deduction under this annuity plan, there should be no provision of receiving cash in lieu of annuity.
    And, if you're a government employee and any sum is deducted from your salary under deferred annuity plan, then deduction is restricted to only 1/5th of your salary.
  • Others
    1. Contribution towards Approved Superannuation Fund.
    2. Subscription to any deposit scheme/pension fund of National Housing Bank (NHB)
    3. Subscription to bonds issued by National Bank for Agriculture and Rural Development (NABARD)
    4. Deposit in an account under the Senior Citizen Savings Scheme.
    5. Subscription to notified deposit scheme of:
    6. Public Sector Housing Finance Company
    7. Housing Development Authority of cities, towns and villages
    8. Contribution towards annuity plans of LIC like Jeevan Dhara, Jeevan Akshay etc. or any other insurer as approved by Central Government.
    9. Subscription to equity shares or debentures of Public Company or any Public financial institution forming part of any eligible issue of capital approved by Board where proceeds are utilized for infrastructure company.

       80CCC: Pension Plan

       Deposit/Payment made by you towards LIC or any other insurer in the approved annuity plan for receiving pension from the fund referred to in section 10(23AAB) can be claimed as deduction under this section being lower of the following:
       • 100% of the amount paid
       • Rs 1,50,000

         • Section 80 CCD: 

         
         
         • Section 80 CCD aims to encourage the habit of savings among individuals, providing them an incentive for investing in pension schemes which are notified by the Central Government. Contributions made by an individual and his/her employer, both are eligible for tax deduction, subject to the deduction being less than 10% of the salary of the person. Only individual taxpayers are eligible for this deduction.

       • Deduction u/s 80D 

       • health insurance premium is Rs 25,000. For Senior Citizens it is Rs 30,000. For very senior citizen above the age of 80 years who are not eligible to take health insurance, deduction is allowed for Rs 30,000 toward medical expenditure.

         Section 80DD

         You can claim up to Rs 75,000 for spending on medical treatments of your dependents (spouse, parents, kids or siblings) who have 40% disability. The tax deduction limit of upto Rs 1.25 lakh in case of severe disability can be availed.

       • Section 80E:

         Under Section 80E of the Income Tax Act has been designed to ensure that educating oneself doesn’t become an additional tax burden. Under this provision, taxpayers are eligible for tax deductions on the interest repayment of a loan taken to pursue higher education. This loan can be availed either by the taxpayer himself/herself or to sponsor the education of his/her ward/child. Only individuals are eligible for this deduction, with loans taken from approved charitable organisations and financial institutions permitted for tax benefits.

         Tax Deductions under Section 80G:

         Section 80G encourages taxpayers to donate to funds and charitable institutions, offering tax benefits on monetary donations. All assessees are eligible for this deduction, subject to them providing proof of payment, with the limit of deductions decided based on a few factors.
         • 100% deductions without any limit: Donations to funds like National Defence Fund, Prime Minister’s Relief Fund, National Illness Assistance Fund, etc. qualify for 100% deduction on the amount donated.
         • 100% deduction with qualifying limits: Donations to local authorities, associations or institutes to promote family planning and development of sports qualify for 100% deduction, subject to certain qualifying limits.
         • 50% deduction without qualifying limits: Donations to funds like the PMs Drought Relief fund, Rajiv Gandhi Foundation, etc. are eligible for 50% deduction.
         • 50% deduction with qualifying limit: Donations to religious organisations, local authorities for purposes apart from family planning and other charitable institutes are eligible for 50% deduction, subject to certain qualifying limits.
         The qualifying limit refers to 10% of the gross total income of a taxpayer.
       • Tax Deductions under Section 80 IA:

         Section 80 IA provides an avenue for all taxpaying assessees to claim tax deduction on the profits generated through industrial activities. These industrial undertakings can be related to telecommunication, power generation, industrial parks, SEZs, etc.
         The following subsections are related to Section 80-IA
         • Section 80 IAB: Section 80 IAB can be used by SEZ developers, who can claim tax deductions on their profits through development of Special Economic Zones. These SEZs need to be notified after 1/4/2005 in order for them to be eligible for tax deductions.
         • Section 80-IB: Provisions of section 80-IB can be used by all assessees who have profits from hotels, ships, multiplex theatres, cold storage plants, housing projects, scientific research and development, convention centres, etc.
         • Section 80-IC: Section 80 IC can be used by all assessees who have profits from states categorised as special. These include Assam, Manipur, Meghalaya, Himachal Pradesh, Uttaranchal, Arunachal Pradesh, Mizoram, Tripura and Nagaland.
         • Section 80-ID: All assessees who have profits or gain from hotels and convention centres are eligible for deduction under this section, subject to their establishments being located in certain specified areas.
         • Section 80-IE: All assessees who have undertakings in North-East India are eligible for deductions under this Section, subject to certain conditions

           Tax Deduction under Section 80QQB:

           Section 80QQB permits tax deductions on royalty earned from sale of books. Only resident Indian authors are eligible to claim deductions under this section, with the maximum limit set at Rs 3 lakhs. Royalty on literary, artistic and scientific books are tax deductible, whereas royalties from textbooks, journals, diaries, etc. do not qualify for tax benefits. In case of an author getting royalties from abroad, the said amount should be brought into the country within a specified time period in order to avail tax benefits.

Minimum Alteration Tax Assessment Year 2018-2019

Minimum Alteration Tax AY 18-19

MAT (Minimum Alternative Tax) is a tax payable under Income tax Act 1961. The concept of MAT was introduced to target those companies that make huge profits and pay dividend to their shareholders but pay no/minimal tax by taking advantage of the various deductions, and exemptions allowed under income tax act. But with the introduction of MAT, the companies have to pay a fixed percentage of their profits as Minimum alternate Tax.

MAT is calculated u/s 115JB of the income tax Act. Every company should pay higher of the tax calculated under the following two provisions:

1. Tax liability as per the Normal provisions of income tax act(tax rate 30% plus 3% Edu cess plus surcharge (if applicable)
2. Tax liability as per the MAT provisions given in Sec 115JB(18.5 % of Book Profits Plus 3 % edu cess plus surcharge if applicable)

• How to Calculate MAT?

MAT is equal to 18.5% of Book profits(Plus Surcharge and cess as applicable). Book profit means the net profit as shown in the profit & loss account for the year as increased and decreased by following items:

(+) Additions to the Net Profit (If debited to P/l A/c):

1.   Income Tax paid or payable if any calculated as per normal provisions of income tax act 1961
2.   Transfer made to any reserve
3.   Dividend proposed or paid
4.   Provision for loss of subsidiary companies
5.   Depreciation including depreciation on account of revaluation of assets
6.   Amount/provision of deferred tax
7.   Provision for unascertained liabilities e.g. provision for bad debts

(-)Deletions to the Net Profit (If credited to P/L A/c)

1.   Amount withdrawn from any reserves or provisions
2.  The amount of income to which any of the provisions of section 10, 11 & 12 except 10AA & 10(38) apply.
3.  Amount withdrawn from revaluation reserve and credited to profit & loss account to the extent of depreciation on account of revaluation of asset.
4.  Amount of loss brought forward or unabsorbed depreciation, whichever is less as per the books of account. However loss shall not include the depreciation. (if loss brought forward or unabsorbed depreciation is nil then nothing shall be deducted.)
5.  Amount of Deferred Tax, is any such amount is credited in the profit & loss account

What is MAT CREDIT ?

1. When any amount of tax is paid as MAT by the company, then it can claim the credit of such tax paid in accordance with the provision of section 115JAA.
   Allowable Tax Credit = Tax paid as per MAT calculation — Income tax payable under normal provision of Income tax Act, 1961.

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