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Deductions And Rebate In Income Tax India

  1. After the income is computed as per the provisions of the Income-tax Act, a further deduction is allowed of certain amount from the tax computed on the income earned by the assessee.
  2. This deduction is termed as Rebate. Rebate is a reduction from income tax liability and not a deduction from income.

Certain Investments and Deposits (U/s 88):

  1. Rebate is available to individual and HUFs only.
  2. The rebate is allowed only in respect of investment made in certain securities some which are mentioned as follows:
    • Life Insurance Premium paid on the policy for self, spouse children but not parents.
    • Contribution to statutory or recognized provident Fund in his own account.
    • Contribution to Public Provident Fund
    • Contribution of ULIP, Dhanraksha plan or LIC Mutual Fund equity linked saving scheme of mutual fund.
    • Deposit in 10 year Account under post office saving bank cumulative time deposit rules 1959 [CTD]
    • Repayment of loan taken from a public financial institution in respect of a residential accommodation or cost of construction subject to maximum of Rs. 20,000 during a year.
    • Deposit in National Saving Certificate
    • Deposit in National Saving Scheme
    • Investment in notified infrastructure bonds, debentures, mutual fund and shares
    • Tuition fees excluding payment towards any development fees or donation or payment of similar nature either at the time of admission or thereafter to any university, college, school or other educational institution situated within India for the purpose of full-time education.
    • And other investments as specified.
  3. Amount of deduction: Rebate is allowed @ 20 % of the eligible investment / payment / deposit made subject to maximum investment of Rs. 60,000. However in respect of individuals whose salary income is less than Rs.1 lakh before claiming deduction u/s 16 and whose salary comprises at least than 90 % of his gross total income, rebate will be allowed @ 30 % of the investments, etc. made.
  4. If the investments are made in the eligible infrastructure bonds, the rebate of Rs. 4,000 is additionally allowed to the assessee. In other words, the investment up to Rs. 20,000 is allowed in addition to maximum limit of Rs. 60,000.
  5. The benefit for rebate shall be available only to so much of the amount of premium as is not in excess of 20% of actual capital sum assured.
  6. No deduction shall be allowed in respect of the deposit in eligible investments in excess of the total income chargeable to tax.

Rebate To Senior Citizens (U/s 88B):

  1. The rebate under this section is available to resident Individuals who are more than 65 years of age
  2. The rebate of income-tax liability up to Rs. 15,000 is allowed irrespective of the income.

Rebate To Women Assessee (U/s 88C):

  1. The rebate under this section is available to women assessee resident in India who are below the age of 65 years
  2. Under this section, a rebate of Rs. 5,000 is adhocly allowed to any tax liability of women.

Deductions From Gross Total Income
Gross total Income is the total of income under all heads for a particular previous year. Out of the said Gross total Income, deductions are allowed under various sections comprised in chapter VI-A. To claim the said deductions, certain conditions have to be fulfilled.

80CCC - Contribution to Pension Fund of LIC

80D - Medical Insurance premia

80DD - Maintenance including medical treatment of handicapped dependent

80DDB - Medical treatment, etc.

80-E - Repayment of loan taken for higher education

80G - Certain Donations to Charitable trusts of institutions for charitable purpose.

80GG - Rent Paid by an Assessee

80GGA - Donations for scientific research or rural or urban development

80-HH - Deduction in respect of profits and gains from newly established industrial undertakings or hotel in backward areas.

80-HHA - Deduction in respect of profits and gains from newly established small scale industrial undertakings in certain areas.

80-HHB - Deduction in respect of profits and gains from projects outside India.

80-HHBA - Deduction in respect of profits and gains from housing projects in certain areas.

80-HHC - Deduction in respect of profits and gains from export of goods outside India.

80-HHD - Deduction in respect of earning in foreign exchange

80-HHE - Deduction in respect of profit from export of computer software, etc.

80-HHF - Deduction in respect of profit from export or transfer of film software, etc.

80-IA - Deduction in respect of profit and gains of certain industrial undertakings or enterprises, etc.

80-IB - Deduction in respect of profit and gains of certain industrial undertakings other than infrastructure development undertakings, etc.

80-JJA - Profits and gains from business of collecting and processing biodegradable waste.

80-JJAA - Deduction in respect of employment of new workmen.

80-L - Interest on securities, dividends, etc.

80 O - Royalties, commissions, fees for professional services etc, earned in convertible foreign exchange

80-P - Certain income of Co-operative Societies

80-R, 80-RR and 80-RRA - Income from foreign sources.

80-U - Income of handicapped Assessee.

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