May 2023

Deduction in respect of contribution to certain pension funds (1) Where an assessee being an individual has in the previous year paid or deposited any amount 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 clause (23AAB) of section 10, he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income, of the whole of the amount paid or deposited (excluding interest or bonus accrued or credited to the assessee’s account, if any) as does not exceed the amount of one hundred and fifty thousand rupees in the previous year. (2) Where any amount standing to the credit of the assessee in a fund, referred to in sub-section (1) in respect of which a deduction has been allowed under sub-section (1), together with the interest or bonus accrued or credited to the assessee’s account, if any, is received by the assessee or his nominee— (a) on account of the surrender of the annuity plan whether in whole or in part, in any previous year, or (b) as pension received from the annuity plan, an amount equal to the whole of the amount referred to in clause (a) or clause (b) shall be deemed to be the income of the assessee or his nominee, as the case may be, in that previous year in which such withdrawal is made or, as the case may be, pension is received, and shall accordingly be chargeable to tax as income of that previous year. (3) Where any amount paid or deposited by the assessee has been taken into account for the purposes of this section,— (a) 56[***] (b) a deduction with reference to such amount shall not be allowed under section 80C for any assessment year beginning on or after the 1st day of April, 2006.

Submission of return for losses Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139, shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (2) of section 73A or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A.

Deductions to be made in computing total income (1) In computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of this Chapter, the deductions specified in sections 80C to 80U. (2) The aggregate amount of the deductions under this Chapter shall not, in any case, exceed the gross total income of the assessee. (3) Where, in computing the total income of an association of persons or a body of individuals, any deduction is admissible under section 80G or section 80GGA or section 80GGC or section 80HH or section 80HHA or section 80HHB or section 80HHC or section 80HHD or section 80-I or section 80-IA or section 80-IB or section 80-IC or section 80-ID or section 80-IE or section 80J or section 80JJ, no deduction under the same section shall be made in computing the total income of a member of the association of persons or body of individuals in relation to the share of such member in the income of the association of persons or body of individuals. (4) Notwithstanding anything to the contrary contained in section 10A or section 10AA or section 10B or section 10BA or in any provisions of this Chapter under the heading “C.—Deductions in respect of certain incomes“, where, in the case of an assessee, any amount of profits and gains of an undertaking or unit or enterprise or eligible business is claimed and allowed as a deduction under any of those provisions for any assessment year, deduction in respect of, and to the extent of, such profits and gains shall not be allowed under any other provisions of this Act for such assessment year and shall in no case exceed the profits and gains of such undertaking or unit or enterprise or eligible business, as the case may be. (5) Where the assessee fails to make a claim in his return of income for any deduction under section 10A or section 10AA or section 10B or section 10BA or under any provision of this Chapter under the heading “C.—Deductions in respect of certain incomes”, no deduction shall be allowed to him thereunder. (6) Notwithstanding anything to the contrary contained in section 10A or section 10AA or section 10B or section 10BA or in any provisions of this Chapter under the heading “C.—Deductions in respect of certain incomes”, where any goods or services held for the purposes of the undertaking or unit or enterprise or eligible business are transferred to any other business carried on by the assessee or where any goods or services held for the purposes of any other business carried on by the assessee are transferred to the undertaking or unit or enterprise or eligible business and, the consideration, if any, for such transfer as recorded in the accounts of the undertaking or unit or enterprise or eligible business does not correspond to the market value of such goods or services as on the date of the transfer, then, for the purposes of any deduction under this Chapter, the profits and gains of such undertaking or unit or enterprise or eligible business shall be computed as if the transfer, in either case, had been made at the market value of such goods or services as on that date. Explanation.—For the purposes of this sub-section, the expression “market value”,—   (i) in relation to any goods or services sold or supplied, means the price that such goods or services would fetch if these were sold by the undertaking or unit or enterprise or eligible business in the open market, subject to statutory or regulatory restrictions, if any;  (ii) in relation to any goods or services acquired, means the price that such goods or services would cost if these were acquired by the undertaking or unit or enterprise or eligible business from the open market, subject to statutory or regulatory restrictions, if any; (iii) in relation to any goods or services sold, supplied or acquired means the arm’s length price as defined in clause (ii) of section 92F of such goods or services, if it is a specified domestic transaction referred to in section 92BA. (7) Where a deduction under any provision of this Chapter under the heading “C.—Deductions in respect of certain incomes” is claimed and allowed in respect of profits of any of the specified business referred to in clause (c) of sub-section (8) of section 35AD for any assessment year, no deduction shall be allowed under the provisions of section 35AD in relation to such specified business for the same or any other assessment year.

Deductions to be made with reference to the income included in the gross total income Where any deduction is required to be made or allowed under any section included in this Chapter under the heading “C.—Deductions in respect of certain incomes” in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income.

Deduction not to be allowed unless return furnished Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after—  (i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE;  (ii) the 1st day of April, 2018, any deduction is admissible under any provision of this Chapter under the heading “C.—Deductions in respect of certain incomes“, no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139. A Comprehensive Guide to Section 80AC of the Income Tax Act, 1961 Navigating Deductions and Filing Deadlines with Clarity Section 80AC of the Indian Income Tax Act, 1961, acts as a crucial link between tax deductions and timely filing of income tax returns. It emphasizes that to avail certain deductions, taxpayers must adhere to the prescribed due dates for filing returns. Understanding this section is essential for optimizing tax benefits and maintaining compliance. Key Provisions of Section 80AC: Eligibility for Deductions: Taxpayers claiming deductions under various sections within Chapter VIA of the Income Tax Act, such as sections 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID, 80-IE, and others, are subject to this provision. Mandatory Return Filing: To claim these deductions, it’s mandatory to file the income tax return for the relevant assessment year on or before the due date specified under sub-section (1) of section 139. No Extension of Deadline: Even a slight delay in filing the return beyond the due date can lead to the denial of these deductions. Illustrative Examples (Indian Context): Example 1: A manufacturing company invests in new plant and machinery, eligible for a deduction under section 80-IA. If the company fails to file its return by the due date, it forfeits the deduction, resulting in a higher tax liability. Example 2: An individual invests in an eligible start-up venture, seeking a deduction under section 80-IAC. Missing the return filing deadline would make them ineligible for the deduction, increasing their tax burden.   For more information the following government website can be referred:1) Government Income Tax E-filing Wesbite2) Government Income Tax Website Disclaimer: This information is intended to provide general guidance and should not be considered as a substitute for professional tax advice. Please consult a qualified tax advisor for specific guidance relevant to your individual circumstances. Practice area’s of B K Goyal & Co LLP Income Tax Return Filing | Income Tax Appeal | Income Tax Notice | GST Registration | GST Return Filing | FSSAI Registration | Company Registration | Company Audit | Company Annual Compliance | Income Tax Audit | Nidhi Company Registration| LLP Registration | Accounting in India | NGO Registration | NGO Audit | ESG | BRSR | Private Security Agency | Udyam Registration | Trademark Registration | Copyright Registration | Patent Registration | Import Export Code | Forensic Accounting and Fraud Detection | Section 8 Company | Foreign Company | 80G and 12A Certificate | FCRA Registration |DGGI Cases | Scrutiny Cases | Income Escapement Cases | Search & Seizure | CIT Appeal | ITAT Appeal | Auditors | Internal Audit | Financial Audit | Process Audit | IEC Code | CA Certification | Income Tax Penalty Notice u/s 271(1)(c) | Income Tax Notice u/s 142(1) | Income Tax Notice u/s 144 |Income Tax Notice u/s 148 | Income Tax Demand Notice  Company Registration Services in major cities of India Company Registration in Jaipur | Company Registration in Delhi | Company Registration in Pune | Company Registration in Hyderabad | Company Registration in Bangalore | Company Registration in Chennai | Company Registration in Kolkata | Company Registration in Mumbai | Company Registration in India Our Offices CA in Delhi | CA in Jaipur | CA in Gurgaon | CA Firm in India

Deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc Key Takeaways: Deduction of up to ₹150,000: Individuals and HUFs can claim a deduction of up to ₹150,000 from their taxable income under Section 80C. Eligible Investments and Expenses: This deduction covers a wide range of investments and expenses, including: Life insurance premiums Provident fund contributions Equity-linked savings schemes (ELSS) National Pension Scheme (NPS) Sukanya Samriddhi Yojana (SSY) Public Provident Fund (PPF) 5-year fixed deposits with banks Tuition fees for children Home loan principal repayment Senior Citizens Savings Scheme (SCSS) Post Office Time Deposit (POTD) Conditions and Restrictions: Investments must be made in specified instruments or schemes. Maximum deduction limit of ₹150,000 applies collectively to all eligible investments. Some investments have lock-in periods. Premature withdrawals may lead to loss of tax benefits. Illustrative Examples (Indian Context): Rahul, a salaried employee, invests ₹50,000 in an ELSS, ₹50,000 in PPF, and pays ₹50,000 as life insurance premium. He can claim a deduction of ₹150,000 under Section 80C. Riya, a self-employed individual, contributes ₹40,000 to her NPS account and pays ₹1.1 lakh as tuition fees for her two children. She can claim a deduction of ₹1.5 lakh under Section 80C.   Section 80C Tax Deductions in India: A Comprehensive Table Category Eligible Investments/Expenses Maximum Deduction Lock-in Period Additional Notes           Life Insurance – Premiums paid for self, spouse, children Up to 10% of actual sum assured (15% for disabled & specified diseases) Policy term Tax benefit reduces if policy surrendered early (< 2/5 years for single premium, < 2 years for regular) Provident Funds – Employee Provident Fund (EPF) contributions Up to 12% of salary Minimum 10 years     – Public Provident Fund (PPF) contributions ₹1.5 lakh 15 years Early withdrawal incurs penalty   – Voluntary Provident Fund (VPF) contributions Up to 100% of basic salary Minimum 10 years   Equity-Linked Savings Schemes (ELSS) Investment in ELSS mutual funds ₹1.5 lakh 3 years Market-linked risks apply National Pension Scheme (NPS) Tier-I contributions by individuals Up to ₹1.5 lakh (additional ₹50,000 under 80CCD(1B)) 60 years Government pension after retirement Sukanya Samriddhi Yojana (SSY) Deposits for girl child below 10 years Up to ₹1.5 lakh 21 years Attractive interest rate Other Investments – Unit Linked Insurance Plans (ULIPs) ₹1.5 lakh Policy term Tax benefit based on premium and investment components   – Senior Citizens Savings Scheme (SCSS) ₹1.5 lakh 5 years Higher interest rate for senior citizens   – 5-year bank fixed deposits with specific schemes ₹1.5 lakh 5 years Premature withdrawal may incur penalty Education Expenses – Tuition fees for children upto 2 children (full-time education) ₹1.5 lakh N/A Only for recognized schools/colleges in India Home Loan – Principal repayment of home loan ₹1.5 lakh Until loan tenure Interest on home loan deductible under Section 24 Provision of section 80C of Income Tax act 1961 (1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year, being the aggregate of the sums referred to in sub-section (2), as does not exceed one hundred and fifty thousand rupees. (2) The sums referred to in sub-section (1) shall be any sums paid or deposited in the previous year by the assessee—   (i) to effect or to keep in force an insurance on the life of persons specified in sub-section (4);  (ii) to effect or to keep in force a contract for a deferred annuity, not being an annuity plan referred to in clause (xii), on the life of persons specified in sub-section (4): Provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity; (iii) by way of deduction 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 so deducted does not exceed one-fifth of the salary; (iv) as a contribution by an individual to any provident fund to which the Provident Funds Act, 1925 (19 of 1925) applies;  (v) as a contribution 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 any person specified in sub-section (4); (vi) as a contribution by an employee to a recognised provident fund; (vii) as a contribution by an employee to an approved superannuation fund; (viii) as subscription, in the name of any person specified in sub-section (4), to any such security of the Central Government or any such deposit scheme as that Government may, by notification in the Official Gazette, specify in this behalf; (ix) as subscription to any such savings certificate as defined in clause (c) of section 2 of the Government Savings Certificates Act, 1959 (46 of 1959), as the Central Government may, by notification in the Official Gazette, specify in this behalf;  (x) as a contribution, in the name of any person specified in sub-section (4), for participation in the Unit-linked Insurance Plan, 1971 (hereafter in this section referred to as the Unit-linked Insurance Plan) specified in Schedule II of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002); (xi) as a contribution in the name of any person specified in sub-section (4) for participation in any such unit-linked insurance plan of the LIC Mutual Fund referred to in clause (23D) of section 10, as the Central Government may, by notification in the Official Gazette, specify in this behalf; (xii) to effect or to keep in force a contract

Deduction in respect of investment in certain new shares [Omitted by the Finance (No. 2) Act, 1996, w.r.e.f. 1-4-1993.]

Deduction in respect of deposits under National Savings Scheme or payment to a deferred annuity plan (1) Where an assessee, being—  (a) an individual, or  (b) a Hindu undivided family,  (c) [***] has in the previous year—   (i) deposited any amount in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf; or  (ii) paid any amount to effect or to keep in force a contract for such annuity plan of the Life Insurance Corporation as the Central Government may, by notification in the Official Gazette, specify, out of his income chargeable to tax, he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income of the whole of the amount deposited or paid (excluding interest or bonus accrued or credited to the assessee’s account, if any) as does not exceed the amount of twenty thousand rupees in the previous year : Provided that in relation to—  (a) the assessment years commencing on the 1st day of April, 1989 and the 1st day of April, 1990, this sub-section shall have effect as if for the words “twenty thousand rupees”, the words “thirty thousand rupees” had been substituted;  (b) the assessment year commencing on the 1st day of April, 1991 and subsequent assessment years, this sub-section shall have effect as if for the words “twenty thousand rupees”, the words “forty thousand rupees” had been substituted: Provided further that no deduction under this sub-section shall be allowed in relation to any amount deposited or paid under clauses (i) and (ii) on or after the 1st day of April, 1992. (2) Where any amount—  (a) standing to the credit of the assessee under the scheme referred to in clause (i) of sub-section (1) in respect of which a deduction has been allowed under sub-section (1) together with the interest accrued on such amount is withdrawn in whole or part in any previous year, or  (b) is received on account of the surrender of the policy or as annuity or bonus in accordance with the annuity plan of the Life Insurance Corporation in any previous year, an amount equal to the whole of the amount referred to in clause (a) or clause (b) shall be deemed to be the income of the assessee of that previous year in which such withdrawal is made or, as the case may be, amount is received, and shall, accordingly, be chargeable to tax as the income of that previous year : Provided that nothing contained in this sub-section shall apply to any amount received by the assessee on account of the surrender of the policy in accordance with the terms of the annuity plan of the Life Insurance Corporation where the assessee elects to surrender before the 1st day of October, 1992, the said annuity plan in respect of which he had paid any amount under clause (ii) of sub-section (1) before the 1st day of April, 1992. (3) Notwithstanding anything contained in any other provision of this Act, where a partition has taken place among the members of a Hindu undivided family or where an association of persons has been dissolved after a deduction has been allowed under sub-section (1), the provisions of sub-section (2) shall apply as if the person in receipt of income referred to therein is the assessee. Explanation I.—For the removal of doubts, it is hereby declared that interest on the deposits made under the scheme referred to in clause (i) of sub-section (1) shall not be chargeable to tax except in the manner and to the extent specified in sub-section (2). Explanation II.—For the purposes of this section, “Life Insurance Corporation” shall have the same meaning as in clause (a) of sub-section (8) of section 80C.

Deduction in respect of investment made under Equity Linked Savings Scheme (1) Where an assessee, being— (a) an individual, or (b) a Hindu undivided family, (c) [* * *] has acquired in the previous year, out of his income chargeable to tax, units of any Mutual Fund specified under clause (23D) of section 10 or of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), under any plan formulated in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf (hereafter in this section referred to as the Equity Linked Savings Scheme), he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income of so much of the amount invested as does not exceed the amount of ten thousand rupees in the previous year : Provided that no deduction shall be allowed in relation to any amount invested under this sub-section on or after the 1st day of April, 1992. (2) Where any amount invested by the assessee in the units issued under a plan formulated under the Equity Linked Savings Scheme in respect of which a deduction has been allowed under sub-section (1) is returned to him in whole or in part either by way of repurchase of such units or on the termination of the plan, by the Fund or the Trust, as the case may be, in any previous year, it shall be deemed to be the income of the assessee of that previous year and chargeable to tax accordingly. (3) Notwithstanding anything contained in any other provision of this Act, where a partition has taken place among the members of a Hindu undivided family or where an association of persons has been dissolved after a deduction has been allowed under sub-section (1), the provisions of sub-section (2) shall apply as if the person in receipt of income referred to therein is the assessee.