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LESSON 12 DEDUCTIONS Dr Vandana Bansal STRUCTURE 12.0 Objectives 12.1 Introduction 12.2 Deductions from gross total income 12.3 Basic rules governing deductions under sections 80C to 80U 12.4 Deductions 12.5 Deductions to encourage savings 12.5.1 Deduction in respect of life insurance premium, etc.80C 12.5.2 Deduction in respect of pension fund 80CCC 12.5.3 Deduction in respect of contribution to pension scheme of central government 80CCD 12.6 Deductions for certain personal expenditure 12.6.1 Deduction in respect of medical insurance premium 80D 12.6.2 Deduction in respect of maintenance including medical treatment of dependent who is a person with disability - section 80DD 12.6.3 Deduction in respect of medical treatment - section…show more content…
To give impetus to savings these deductions are given on certain investments or certain expenditure made by the assessee. Deduction is allowed when the saving is invested but normally any withdrawal is treated as income in the year of withdrawal. __________________________________________________________________ 12.5.1 DEDUCTION IN RESPECT OF LIFE INSURANCE PREMIA, ETC. (SEC. 80C) A new section 80C has been inserted from the assessment year 2006-07 onwards. Section 80C provides deduction in respect of certain expenditure/ investments (which are specified in this section) paid or deposited by the assessee in the previous year. Deduction under this section is available only to individual & Hindu Undivided Family. Gross Qualifying Amount The following payments/investments qualify for deduction under this section. The total amount of investments made during the P.Y. under these below mentioned schemes is known as Gross Qualifying Amount ( GQA ) 1.Life Insurance premium paid on a policy taken on his own life, life of the spouse or any child (child may be dependent/ independent ). In the case of a Hindu undivided family, policy may be taken on the life of any member of the family. The premium paid should be maximum of 20% of sum assured . 2. Any sum deducted from salary payable to a Government employee for the 167 purpose of securing him a deferred annuity (subject to a maximum of 20% of salary) 3. Contribution towards statutory provident fund and
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