June 6, 2023

Deduction in respect of contributions given by any person to political parties In computing the total income of an assessee, being any person, except local authority and every artificial juridical person wholly or partly funded by the Government, there shall be deducted any amount of contribution made by him, in the previous year, to a political party or an electoral trust : Provided that no deduction shall be allowed under this section in respect of any sum contributed by way of cash. Explanation.—For the purposes of sections 80GGB and 80GGC, “political party” means a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951). Analysys of section 80GGC When calculating the total income of a person, excluding local authorities and government-funded artificial juridical persons, any amount they contributed to a political party or an electoral trust during the previous year can be deducted. However, it’s important to note that no deduction is allowed for cash contributions. In this context, a “political party” refers to a party registered under Section 29A of the Representation of the People Act, 1951. Let’s consider an example to further illustrate the concept Ms. Sharma is a self-employed professional in India. During the previous financial year, she earned a total income of ₹10,00,000. She decided to make a contribution of ₹50,000 to a registered political party in support of their activities. Since Ms. Sharma’s contribution was made through a non-cash mode, she is eligible to deduct the entire amount of ₹50,000 from her total income while calculating her taxable income. As a result, her taxable income would be reduced to ₹9,50,000. However, if Ms. Sharma had made a cash contribution instead of a non-cash contribution, she would not be allowed to claim any deduction for that amount. Cash contributions are not eligible for deduction under the applicable tax provisions. It’s important to note that the specific deduction rules and tax rates may vary based on the prevailing tax laws and regulations in India.

Deduction in respect of contributions given by companies to political parties In computing the total income of an assessee, being an Indian company, there shall be deducted any sum contributed by it, in the previous year to any political party or an electoral trust: Provided that no deduction shall be allowed under this section in respect of any sum contributed by way of cash. Explanation.—For the removal of doubts, it is hereby declared that for the purposes of this section, the word “contribute”, with its grammatical variation, has the meaning assigned to it under section 293A80 of the Companies Act, 1956 (1 of 1956).

Deduction in respect of certain donations for scientific research or rural development (1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2). (2) The sums referred to in sub-section (1) shall be the following, namely :— (a) any sum paid by the assessee in the previous year to a research association which has as its object the undertaking of scientific research or to a University, college or other institution to be used for scientific research : Provided that such association, University, college or institution is for the time being approved for the purposes of clause (ii) of sub-section (1) of section 35; (aa) any sum paid by the assessee in the previous year to a research association which has as its object the undertaking of research in social science or statistical research or to a University, college or other institution to be used for research in social science or statistical research : Provided that such association, University, college or institution is for the time being approved for the purposes of clause (iii) of sub-section (1) of section 35. Explanation.—The deduction, to which the assessee is entitled in respect of any sum paid to a research association, University, college or other institution to which clause (a) or clause (aa) applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval to such association, University, college or other institution referred to in clause (a) or clause (aa), as the case may be, has been withdrawn; (b)  any sum paid by the assessee in the previous year—  (i)  to an association or institution, which has as its object the undertaking of any programme of rural development, to be used for carrying out any programme of rural development approved for the purposes of section 35CCA; or (ii)  to an association or institution which has as its object the training of persons for implementing programmes of rural development : Provided that the assessee furnishes the certificate referred to in sub-section (2) or, as the case may be, sub-section (2A) of section 35CCA from such association or institution. Explanation.—The deduction, to which the assessee is entitled in respect of any sum paid to an association or institution for carrying out the programme of rural development to which this clause applies, shall not be denied merely on the ground that subsequent to the payment of such sum by the assessee, the approval granted to such programme, or as the case may be, to the association or institution has been withdrawn; (bb)  any sum paid by the assessee in the previous year to a public sector company or a local authority or to an association or institution approved by the National Committee, for carrying out any eligible project or scheme : Provided that the assessee furnishes the certificate referred to in clause (a) of sub-section (2) of section 35AC from such public sector company or local authority or, as the case may be, association or institution. Explanation 1.— The deduction, to which the assessee is entitled in respect of any sum paid to a public sector company, or to a local authority or to an association or institution for carrying out the eligible project or scheme referred to in section 35AC, shall not be denied merely on the ground that subsequent to the payment of such sum by the assessee,— (a)  the approval granted to such association or institution has been withdrawn; or (b) the notification notifying the eligible project or scheme referred to in section 35AC carried out by the public sector company, or local authority or association or institution has been withdrawn. Explanation 2.—For the purposes of this clause, the expressions “National Committee” and “eligible project or scheme” shall have the meanings respectively assigned to them in the Explanation to section 35AC; (c)  any sum paid by the assessee in any previous year ending on or before the 31st day of March, 2002 to an association or institution, which has as its object the undertaking of any programme of conservation of natural resources or of afforestation, to be used for carrying out any programme of conservation of natural resources or of afforestation approved for the purposes of section 35CCB : Provided that the association or institution is for the time being approved for the purposes of sub-section (2) of section 35CCB; (cc)  any sum paid by the assessee in any previous year ending on or before the 31st day of March, 2002 to such fund for afforestation as is notified by the Central Government under clause (b) of sub-section (1) of section 35CCB; (d)  any sum paid by the assessee in the previous year to a rural development fund set up and notified by the Central Government for the purposes of clause (c) of sub-section (1) of section 35CCA; (e)  any sum paid by the assessee in the previous year to the National Urban Poverty Eradication Fund set up and notified by the Central Government for the purposes of clause (d) of sub-section (1) of section 35CCA. (2A) No deduction shall be allowed under this section in respect of any sum exceeding two thousand rupees unless such sum is paid by any mode other than cash. (3) Notwithstanding anything contained in sub-section (1), no deduction under this section shall be allowed in the case of an assessee whose gross total income includes income which is chargeable under the head “Profits and gains of business or profession”. (4) Where a deduction under this section is claimed and allowed for any assessment year in respect of any payments of the nature specified in sub-section (2), deduction shall not be allowed in respect of such payments under any other provision of this Act for the same or any other assessment year. Explanation.—For the removal of doubts, it is hereby declared that the claim of the assessee for a deduction in respect of any sum referred to in sub-section (2) in the return of income for any assessment year filed by him, shall

Deductions in respect of rents paid  In computing the total income of an assessee, not being an assessee having any income falling within clause (13A) of section 10, there shall be deducted any expenditure incurred by him in excess of ten per cent of his total income towards payment of rent (by whatever name called) in respect of any furnished or unfurnished accommodation occupied by him for the purposes of his own residence, to the extent to which such excess expenditure does not exceed five thousand rupees per month or twenty-five per cent of his total income for the year, whichever is less, and subject to such other conditions or limitations as may be prescribed79, having regard to the area or place in which such accommodation is situated and other relevant considerations : Provided that nothing in this section shall apply to an assessee in any case where any residential accommodation is—  (i)  owned by the assessee or by his spouse or minor child or, where such assessee is a member of a Hindu undivided family, by such family at the place where he ordinarily resides or performs duties of his office or employment or carries on his business or profession; or (ii) owned by the assessee at any other place, being accommodation in the occupation of the assessee, the value of which is to be determined under clause (a) of sub-section (2) or, as the case may be, clause (a) of sub-section (4) of section 23. Explanation.—In this section, the expressions “ten per cent of his total income” and “twenty-five per cent of his total income” shall mean ten per cent or twenty-five per cent, as the case may be, of the assessee’s total income before allowing deduction for any expenditure under this section.

Deduction in respect of donations to certain funds, charitable institutions, etc (1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section,—  (i)  in a case where the aggregate of the sums specified in sub-section (2) includes any sum or sums of the nature specified in sub-clause (i) or in sub-clause (iiia) or in sub-clause (iiiaa) or in sub-clause (iiiab) or in sub-clause (iiib) or in sub-clause (iiie) or in sub-clause (iiif) or in sub-clause (iiig) or in sub-clause (iiiga) or sub-clause (iiih) or sub-clause (iiiha) or sub-clause (iiihb) or sub-clause (iiihc) or sub-clause (iiihd) or sub-clause (iiihe) or sub-clause (iiihf) or sub-clause (iiihg) or sub-clause (iiihh) or sub-clause (iiihi) or sub-clause (iiihj) or sub-clause (iiihk) or sub-clause (iiihl) or sub-clause (iiihm) or in sub-clause (vii) of clause (a) or in clause (c) or in clause (d) thereof, an amount equal to the whole of the sum or, as the case may be, sums of such nature plus fifty per cent of the balance of such aggregate; and (ii)  in any other case, an amount equal to fifty per cent of the aggregate of the sums specified in sub-section (2). (2) The sums referred to in sub-section (1) shall be the following, namely :— (a) any sums paid by the assessee in the previous year as donations to—  (i)  the National Defence Fund set up by the Central Government; or 66[(ii) the Jawaharlal Nehru Memorial Fund referred to in the Deed of Declaration of Trust adopted by the National Committee at its meeting held on the 17th day of August, 1964; or] (iii) the Prime Minister’s Drought Relief Fund; or (iiia) the Prime Minister’s National Relief Fund or the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND); or (iiiaa) the Prime Minister’s Armenia Earthquake Relief Fund; or (iiiab) the Africa (Public Contributions – India) Fund; or (iiib)  the National Children’s Fund; or 67[(iiic) the Indira Gandhi Memorial Trust, the deed of declaration in respect whereof was registered at New Delhi on the 21st day of February, 1985; or] 68[(iiid) the Rajiv Gandhi Foundation, the deed of declaration in respect whereof was registered at New Delhi on the 21st day of June, 1991; or] (iiie) the National Foundation for Communal Harmony; or (iiif) a University or any educational institution of national eminence as may be approved by the prescribed authority69 in this behalf; or (iiig) the Maharashtra Chief Minister’s Relief Fund during the period beginning on the 1st day of October, 1993 and ending on the 6th day of October, 1993 or to the Chief Minister’s Earthquake Relief Fund, Maharashtra; or (iiiga) any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat; or (iiih) any Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district for the purposes of improvement of primary education in villages and towns in such district and for literacy and post-literacy activities. Explanation.—For the purposes of this sub-clause, “town” means a town which has a population not exceeding one lakh according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or (iiiha) the National Blood Transfusion Council or to any State Blood Transfusion Council which has its sole object the control, supervision, regulation or encouragement in India of the services related to operation and requirements of blood banks. Explanation.—For the purposes of this sub-clause,— (a) “National Blood Transfusion Council” means a society registered under the Societies Registration Act, 1860 (21 of 1860) and has an officer not below the rank of an Additional Secretary to the Government of India dealing with the AIDS Control Project as its Chairman, by whatever name called; (b) “State Blood Transfusion Council” means a society registered, in consultation with the National Blood Transfusion Council, under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India and has Secretary to the Government of that State dealing with the Department of Health, as its Chairman, by whatever name called; or (iiihb)  any fund set up by a State Government to provide medical relief to the poor; or (iiihc)  the Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependants; or (iiihd)  the Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996; or (iiihe)  the National Illness Assistance Fund; or (iiihf)  the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund in respect of any State or Union territory, as the case may be : Provided that such Fund is— (a) the only Fund of its kind established in the State or the Union territory, as the case may be; (b) under the overall control of the Chief Secretary or the Department of Finance of the State or the Union territory, as the case may be; (c) administered in such manner as may be specified by the State Government or the Lieutenant Governor, as the case may be; or (iiihg)  the National Sports Fund to be set up by the Central Government; or (iiihh)  the National Cultural Fund set up by the Central Government; or (iiihi)  the Fund for Technology Development and Application set up by the Central Government; or (iiihj)  the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities constituted under sub-section (1) of section 3 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999); or (iiihk)  the Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act,

Deduction in respect of expenses on higher education in certain cases [Omitted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981. Original section was inserted by the Finance Act, 1975, w.e.f. 1-4-1976.]

Deduction in respect of educational expenses in certain cases [Omitted by the Finance Act, 1985, w.e.f. 1-4-1986. Original section was inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968 in place of section 87A which was inserted by the Finance Act, 1964, w.e.f. 1-4-1964. It was later amended by the Finance Act, 1968, w.e.f. 1-4-1969. New section 80F, dealing with deduction in respect of amounts applied for charitable or religious purposes, etc., was inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. This section was omitted by the Direct Tax Laws (Amendment) Act, 1989, with effect from the same date.]

Deduction in respect of purchase of electric vehicle (1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of purchase of an electric vehicle. (2) The deduction under sub-section (1) shall not exceed one lakh and fifty thousand rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2020 and subsequent assessment years. (3) The deduction under sub-section (1) shall be subject to the condition that the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2019 and ending on the 31st day of March, 2023. (4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year. (5) For the purposes of this section,— (a) “electric vehicle” means a vehicle which is powered exclusively by an electric motor whose traction energy is supplied exclusively by traction battery installed in the vehicle and has such electric regenerative braking system, which during braking provides for the conversion of vehicle kinetic energy into electrical energy; (b) “financial institution” means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies, or any bank or banking institution referred to in section 51 of that Act and includes any deposit taking non-banking financial company or a systemically important non-deposit taking non-banking financial company as defined in clauses (e) and (g) of Explanation 4 to section 43B.

Deduction in respect of interest on loan taken for certain house property (1) In computing the total income of an assessee, being an individual not eligible to claim deduction under section 80EE, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property. (2) The deduction under sub-section (1) shall not exceed one lakh and fifty thousand rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2020 and subsequent assessment years. (3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—  (i)  the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2019 and ending on the 31st day of March, 64[2022]; (ii)  the stamp duty value of residential house property does not exceed forty-five lakh rupees; (iii) the assessee does not own any residential house property on the date of sanction of loan. (4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year. (5) For the purposes of this section,— (a) the expression “financial institution” shall have the meaning assigned to it in clause (a) of sub-section (5) of section 80EE; (b) the expression “stamp duty value” means value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property.

Deduction in respect of interest on loan taken for residential house property (1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential property. (2) The deduction under sub-section (1) shall not exceed fifty thousand rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2017 and subsequent assessment years. (3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—  (i)  the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2016 and ending on the 31st day of March, 2017; (ii)  the amount of loan sanctioned for acquisition of the residential house property does not exceed thirty-five lakh rupees; (iii) the value of residential house property does not exceed fifty lakh rupees; (iv) the assessee does not own any residential house property on the date of sanction of loan. (4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year. (5) For the purposes of this section,— (a) “financial institution” means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies, or any bank or banking institution referred to in section 51 of that Act or a housing finance company; (b) “housing finance company” means a public company formed or registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes.