Section 80GGC – Deduction on Donation given to Political Parties

Individuals making donations to political parties can claim tax deductions under section 80GGC of the Income Tax Act. There are certain eligibility criteria to follow in order to claim deduction under this section. This article will help in understanding the various aspects that need to be kept in mind while availing deduction under section 80GGC.

What is the Eligibility Criteria to Claim Deduction u/s 80GGC?

An individual who is planning to claim a deduction under section 80GGC must comply by the following criterias:

  • One must make donations to a political party or an electoral trust to claim a deduction
    • With respect to section 80GGB and 80GGC a ‘Political Party’ is defined as a political party registered under section 29A of the Representation of the People Act, 1951
  • Any person i.e. individual, HUF, firm, an AOP, BOI or an Artificial Juridical Person can claim a tax benefit under this section
  • Any local authority or artificial juridical person that is wholly or partly funded by the government will be able to claim deduction under this section
  • Companies do not qualify to claim deduction under 80GGC
  • An assesses or the taxpayer can claim the entire (100%) contribution amount as a deduction under this section
  • This deduction falls under Chapter VI A meaning that the total amount of tax deduction must not be more than the complete assessable income of the person
Deduction under section 80GGC is not allowed if the taxpayer opts for the new tax regime
Tip
Deduction under section 80GGC is not allowed if the taxpayer opts for the new tax regime

What are the Exceptions Under Section 80GGC?

  • As of April 1, 2014, the donation made to the political parties or electoral trusts must not be in the form of cash. Donation made in the form of cash is not eligible under this section.
  • Any donation made in the form of gifts or kind cannot be claimed as a deduction under this section

What is the Procedure to Avail Deduction Under Section 80GGC?

Below mentioned are the things one needs to keep in mind for availing deduction under 80GGC:

  • Fill out the specified ITR Form
  • Under Chapter VI-A, the section 80GGC is mentioned, one has to fill in the amount of contribution made by you to the political party of your choice
  • Individuals must submit the details of the donations to the employer for incorporating it in form 16. If not then the details must be mentioned in the specified column while submitting tax returns
  • As proof of the donation, the political party will issue a receipt. It will contain the name and address of the party, the amount donated and the PAN and TAN of the party

FAQs

What is the difference between section 80GGC and 80GGB?

Under section 80GGC deduction is allowed only to an assessee, being any person whereas under section 80GGB deductions can availed by any Indian company.

Can I claim tax benefits on donations made to more than one political parties?

Yes, one can claim a deduction on donations made to multiple political parties, u/s 80GGC.

How much tax deduction is allowed on the amount donated to a political party?

One can avail a deduction on 100% of the amount contributed, provided that the same is made by any mode other than cash.

Proofs for Income Tax Declaration

The HR Department of your company is all set to roll up their sleeves and email you asking you to submit proofs of your Income Tax Declaration with the approaching new year. Employees have to submit investment proofs and provide income tax declaration so that their employer deducts the correct amount of TDS. There are things that you must be aware of pertaining to investment proofs that an individual needs to provide to their employer. These details are to be submitted under Form 12BB.

Major Sections to Claim Income Tax Declaration

Section 80C

Maximum deduction available under section 80C is INR 1,50,000. Following are the deductions covered under this section.

  • Life Insurance: Life insurance Premium slips (in the name of self/spouse/children)
  • ELSS/Mutual Fund (Tax Saving): ELSS/Mutual Fund Statement
  • PPF: Copy of PPF Passbook (Self, Spouse, any child)
  • Principal Repayment of Housing Loan: Home loan Statement mentioning principal amount repayment / Certificate from Bank
  • Children Tuition Fees (up to 2 children): Children Education fee receipts
  • Fixed Deposits (Tax Savings): Copy of Tax saving FD receipt
  • Unit linked Insurance Scheme / Plan: Receipts /Certificate / Statement of Account / Copy of passbook of the current financial year (Self, Spouse, any child)
  • NSC: NSC certificate, Interest statements on NSC purchased
  • Sukanya Samriddhi Account: Sukanya Samriddhi Account passbook.
  • Deferred Annuity Plan: Proof for the payment made for a non-commutable deferred annuity on the life of the individual himself or spouse or any child
  • Subscription to any deposit scheme/pension fund set up by the National Housing Bank (NHB): Subscription proof of deposit scheme or any pension fund or home loan account scheme of National Housing Bank

Section 80CCC

  • Pension Plan: Receipts /Certificate / Statement of Accounts / Copy of passbook of current financial year

Section 80D

The section 80D provides deduction for payment of medical health insurance premium.

  • Medical Health Insurance for self, spouse, and children
    • Proofs: Mediclaim policy copy or Copy of Premium receipt, Health- Checkup receipts
    • Deduction Limit: INR 25,000/- (for citizen above 60 years, the limit is INR 50,000/-)
  • Medical Health Insurance for parents
    • Proofs: Mediclaim policy copy or Copy of Premium receipt, Health- Checkup receipts
    • Deduction Limit: INR 25,000/- (If parents are above 60 years then the limit is INR 50,000/-)

Section 80DD

  • Expenditure on Dependents with Disability u/s 80DD.
    • Proofs: Certificate from Prescribed Authority in Form No. 10-IA or as per the applicable prescribed Form.
    • Deduction Limit:
      • INR 75,000 for 40% or more disability
      • INR 125,000 for 80% or more disability

Section 80U

  • Expenditure on own Disability u/s 80U.
    • Proofs: Certificate from Prescribed Authority in Form No. 10-IA or as per the applicable prescribed Form
    • Deduction Limit:
      • INR 75,000 for 40% or more disability
      • INR 125,000 for 80% or more disability

Section 80DDB

Treatment of Specified Diseases u/s 80DDB.

  • Proofs: The prescription in respect of the diseases or ailments specified diseases by the specialists
  • Deduction Limit: INR 40,000 [INR 1,00,000 in case of a senior citizen (aged 60 years or more)]

Section 80G

  • Donations to specified trust u/s 80G: Receipts of donations & PAN of Donee

Section 80E

  • Deduction of education loan interest u/s 80E: Copy of loan certificate reflecting the interest payments

Section 24(b)

  • Interest on Housing Loan:
    • Proofs: Certificate from Bank/Home Loan statement, Self- Declaration whether the house is self-occupied or let-out one, submit completion certificate or occupancy certificate for claiming interest paid on housing loan
    • Deductions: INR 2,00,000 in case of Self-Occupied Property. The total amount of interest paid in case of Let out property

House Rent Allowance (HRA)

Rental agreement or Monthly rent receipts (with Revenue Stamp in case rent in cash is INR 5,000/- or more-). In case, annual rent paid is more than INR 1 Lakh, landlord’s permanent account number should be quoted.

Section 10(5)

  • Leave Travel Allowance: LTA can be claimed in respect of two journeys performed in a block of four calendar years. The current block runs from 2018-2021
  • Proofs: Travel tickets

Section 17(2)

  • Medical Reimbursement
    • Proofs: Original Medical bills (including Parents, Wife/husband, Children)
    • Maximum Limit: INR 15,000
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FAQ

Can a company or a firm take the benefit of Section 80C?

The provisions of Section 80C are applicable only to individuals or a Hindu Undivided Family (HUF). Hence, a company or a firm cannot take the benefit of Section 80C.

What are the tax benefits that I can avail of for repaying a home loan ?

You will be eligible to claim both the interest and principal components of your repayment during the year.

Is the interest received on the tax saving FD taxable?

Yes, the interest received on a tax saving FD is taxable.

AMT – Alternative Minimum Tax under Section 115JC

The Income Tax Department had introduced the provision of AMT i.e. Alternate Minimum Tax for taxpayers other than Company. The government had introduced incentives and deductions to specified industries to encourage investment and growth. There were many taxpayers who misused the provision by paying zero tax. Thus, the IT department introduced MAT (Minimum Alternate Tax) for Companies and AMT (Alternative Minimum Tax) for taxpayers other than Company. As part of AMT, the government ensured collecting minimum tax from such taxpayers. Further, it also gave an option to carry forward the AMT Credit and adjust it in future years.

Applicability of AMT

The provisions of Alternative Minimum Tax are applicable to the following category of taxpayers:

  1. Individual, HUF, AOP (Association of Persons) or BOI (Body of Individuals) if the adjusted total income exceeds INR 20 lacs
  2. Any other taxpayer (other than Company) irrespective of the total income.

The AMT provisions are applicable to the above category of taxpayers only if:

  • Taxpayer claims a deduction under Section 80H to Section 80RRB (except Section 80P)
  • Taxpayer claims a deduction under Section 35AD.
  • The taxpayer claims a deduction under Section 10AA.

AMT Rate & Adjusted Total Income

Rate of Alternative Minimum Tax is 18.5% of the Adjusted Total income. In addition to this, surcharge and cess are applicable. Calculate the adjusted total income in the following manner:

  Particulars Amount (INR)
  Taxable Income XXXX
Add Deduction claimed u/s 80H to 80RRB (except 80P) XXXX
Add Deduction claimed u/s 35AD reduced by regular depreciation allowed as per Section 32 XXXX
Add Deduction claimed u/s 10AA XXXX
  Adjusted Total Income XXXX
  AMT – 18.5% of Adjusted Total Income XXXX

Tax Liability if AMT is applicable

If the provisions of Alternative Minimum Tax are applicable, Tax Liability would be higher of the following:

  • Tax Liability as per normal provisions of the Income Tax Act
    Calculate Total Income of the taxpayer from all sources of income and after claiming Chapter VI-A deductions. Calculate Tax Liability on the Total Income as per the applicable slab rates.
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  • Tax Liability as per AMT Rate
    Calculate Adjusted Total Income of the taxpayer as per the above table. Calculate Tax Liability on the Adjusted Total Income at the rate of 18.5%.

Example

Taxable Income of Samir for FY 2019-20 is INR 18,00,000. The taxable income is computed after claiming the deduction of INR 3,00,000 under Section 80QQB for a royalty on books. Is he covered under the provisions of AMT? Calculate Tax Liability.

Solution

  1. Calculate Adjusted Total Income

    Taxable Income = INR 18,00,000
    Add: Deduction u/s 80QQB = INR 3,00,000
    Adjusted Total Income = INR 21,00,000

  2. Applicability of AMT

    Adjusted Total Income exceeds INR 20 lacs. Therefore, the provisions of Alternative Minimum Tax are applicable.

  3. Calculate Tax Liability as per normal provisions

    Tax on Total Income of INR 18,00,000 as per slab rates
    Basic Tax = INR 3,52,500
    Total Tax = Basic Tax + Cess = 3,52,500 + 4% Cess = INR 3,66,600

  4. Calculate Tax Liability as per AMT provisions

    Tax on Adjusted Total Income of INR 21,00,000 at 18.5%
    Basic Tax = INR 3,88,500
    Total Tax = Basic Tax + Cess = 3,88,500 + 4% Cess = INR 4,04,040

  5. Final Tax Liability

    Higher of the above = INR 4,04,040

  6. AMT Credit

    Tax as per AMT – Tax as per Slab rates = 4,04,040 – 3,66,600 = INR 37,440. The AMC Credit can be carried forward for 15 years.

AMT Credit

A taxpayer to whom provisions of Alternative Minimum Tax are applicable pays tax as per normal provisions or as per the rate of 18.5% whichever is higher. When the tax liability for a financial year is paid as per Alternative Minimum Tax, the taxpayer can claim the credit of excess tax paid in the future financial years as per Section 115JD of the Income Tax Act. Excess Tax is the amount of Alternative Minimum Tax paid in excess of tax as per normal provisions.

The AMT Credit can be carried forward for a period of 15 financial years. If the taxpayer is unable to utilise the AMT Credit in 15 years, this credit will lapse. No interest is paid on such credit.

Example

Aryan Enterprises is a Partnership Firm covered under the provisions of Alternative Minimum Tax. Below are the details:

FY 2019-20

Tax Liability as per normal provisions = INR 15,00,000
Tax Liability as per AMT provisions = INR 18,00,000

Final Tax Liability = INR 18,00,000 (higher of the above)
Carry Forward AMT Credit = INR 3,00,000 (18,00,000-15,00,000)

FY 2020-21

Tax Liability as per normal provisions = INR 10,00,000
Tax Liability as per AMT provisions = INR 9,00,000
Brought forward AMT Credit from FY 2019-20 = INR 3,00,000

Final Tax Liability = INR 10,00,000 (higher of the above)
Since there is an AMT Credit of the previous financial year, the taxpayer can utilise AMT Credit up to the extent of difference between tax liability as per normal provisions and tax liability as per AMT.

Thus, the credit can be utilised for INR 1,00,000 (10,00,000-9,00,000). Remaining Credit of INR 2,00,000 can be carried forward to future years.

Report from CA

A taxpayer to whom the provisions of Alternative Minimum Tax are applicable should obtain a report from a Chartered Accountant in Form 29C. It is the report under Section 115JC of the Income Tax Act Under this report, the CA would certify that the Adjusted Total Income and AMT is calculated as per the provisions of the Income Tax Act.

How to fill Form 12BB?

All the salaried taxpayers need to fill Form 12BB. It is supposed to be submitted at the beginning of every financial year by the employee to his/ her employer for the correct deduction of TDS. It discloses all their tax-saving investments of that particular financial year.

Steps to Fill Form 12BB

Time needed: 3 minutes.

  1. Download Sample Form 12BB

    You can download the sample Form 12BB from the Income Tax Department website.

  2. Add Personal Details

    Fill Personal Details i.e, Add your Name, Address, and PAN details. Also, mention the current financial year i.e 2020-2021.

  3. Add house rent allowance Details

    If you are incurring any rental expenses for your work then that can be deducted under HRA.

  4. Add LTA Details

    Add details of LTA if any.

  5. Enter Details regarding Interest on Loan for Borrowings

    If you are paying any Interest on EMI of home loans in this particular Financial year it can avail you benefit up to 2,00,000 for self-occupied property and no limit on rented property.

  6. Add Chapter VI-A Deductions

    Add details of tax deductable investments and deductions under 80C, 80CCD (1B), 80D, 80DD, 80E, 80G etc.

Who needs to Fill Form 12BB?

Effective from 1st June 2016, Every salaried taxpayer has to submit Form 12BB. You will also have to submit proofs/evidence to support your investments. It can help you reduce your taxable income and it also helps your employer to deduct correct TDS from your salary. 

Yet in case… If you haven’t filed your Form 12BB your employer might have deducted excess TDS from your salary. But, you can claim your excess TDS while filing your Income Tax returns.

FAQs

What is Form 12BB?

Salaried employees have to provide certain information to their employer in order to avail tax benefits while filing for Income Tax Return. There was no particular standard format before to disclose investments. But, from June 2016, Introduction of standard form 12BB has made lives easier.

What is the purpose of form 12BB?

Form 12BB serves the following two purposes:
1. Helps employer deduct correct TDS of an employee,
2. Helps employee determine his tax liability and make tax savings investments accordingly.

Do I have to submit the Form 12BB to Income tax department?

No, the form is not to be submitted to the Income-tax department. It is to be submitted to the employer.

Section 80TTB: Interest Deduction on Deposits for Senior Citizens

Budget 2018 introduced a new section 80TTB under the Income Tax Act which allows resident senior citizens to claim a deduction on interest income up to INR 50,000. This section is applicable from FY 2018-19 (AY 2019-20) onwards. For earlier years deduction was allowed under section 80TTA.

Deduction under section 80TTB is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime
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Deduction under section 80TTB is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime

Who can Claim Deduction Under Section 80TTB?

Section 80TTB was introduced to give more benefits to senior citizens of India. Any resident individual who has attained the age of 60 years or more during FY 2018-19 can claim deduction under section 80TTB . An NRI senior citizen cannot claim deduction u/s 80TTB.

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Deduction Limit Under Section 80TTB

A resident senior citizen will be able to claim deduction up to INR 50,000 under this section. If the interest earned from the specific deposit is less than INR 50,000 the same would be allowed as deduction u/s 80TTB. But if the interest earned from the specific deposit is more than INR 50,000 then maximum INR 50,000 is allowed as a deduction.

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Which Interests are Eligible for Deduction Under Section 80TTB?

The deduction is allowed on interest earned from following deposits:

  • Interest earned on Bank Deposits i.e, saving account interest, fixed deposits, recurring deposits
  • Any interest earned on deposits with Co-operative Society engaged in banking
  • Interest earned from Post Office Deposits i.e, Saving Account Interest, NSC, Senior Citizens Savings Scheme Accounts, Time Deposits, 5-year recurring deposits, and monthly income schemes

Exceptions to Section 80TTB

Deduction under section 80TTB can only be claimed on the interest received on saving accounts held with a bank, co-operative society or post office. The interest received on below-mentioned earnings cannot be claimed u/s 80TTB:

  • Interest earned from Company FD
  • Interest earned on Bonds and Debentures

Furthermore, the following entities cannot claim section 80TTB deduction:

  • Non-Resident Indians
  • Residential Individuals and HUF’s other than senior citizens
  • Entities such as Associate of Persons, a body of individuals or firms are exempt from claiming the interest earned by them on the saving accounts

How is the Deduction Calculated Under Section 80TTB?

In-order to understand the calculations better, let us take an example;

Mr Inder is a resident senior citizen. And he has earned the following income during the FY 2018-19:

  • Interest earned from Bank FD: INR 26,000
  • Interest earned from Senior Citizens Savings Scheme (SCSS): INR 32,000
  • Interest earned on Debentures: INR 3,500

Deduction under section 80TTB is available only on interest from Bank FD and SCSS. And eligible deduction under section 80TTB is INR 50,000.

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How to Claim Deduction Under Section 80TTB?

You can claim a deduction by filing your ITR. First, you need to add total interest earned as income under the head “Income From Other Source”. And then enter the same amount as a deduction under Chapter VI-A.

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ITR Form Applicable for Section 80TTB

The taxpayer can claim deductions u/s 80TTB while filing ITR if all the above-mentioned conditions are full-filled. Individuals/HUFs can claim 80TTA in any of the ITR forms, i.e, ITR 1ITR 2ITR 3, and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.

For FY 2019-20, due to COVID-19 the due date for filing ITR has been extended to 10th January 2021 for all taxpayer.
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For FY 2019-20, due to COVID-19 the due date for filing ITR has been extended to 10th January 2021 for all taxpayer.

Supporting Documents

This tax deduction is accessible by all HUFs and individuals. The document required apart from the common documents such as Form 16, is the savings account bank statement is enough to calculate your interest in income and tax deductions on incomes.

FAQs

Can an NRI senior citizen claim deduction under section 80TTB?

No, an NRI senior citizen can not claim deduction under this section. However, they can claim a deduction on interest from savings account under section 80TTA.

Can a senior citizen claim deduction under section 80TTA?

No. From FY 2018-19 onwards, resident senior citizens can only claim a deduction on interest under 80TTB. However, for earlier financial years deduction on interest income can be claimed under section 80TTA.

Are FDs and RDs covered under 80TTB?

Yes, you can claim a deduction for interest earned from RD and FD and some more specific deposits up to INR 50,000 per annum.

Is the deduction that is availabe under section 80TTB over and above the deduction availabe under section 80C?

Yes, the deduction of INR 50,000 under section 80TTB is availabe over and above the deduction of INR 1,50,000 availabe under section 80C.

Form 12BB : Investment Declaration

Form 12BB (Investment Declaration) is an essential document for a salaried person. It is basically a disclosure of all their tax-saving investments in that particular Financial Year. Form 12BB is required by the employer for an accurate calculation and deduction of TDS on salary income. It needs to be submitted at the beginning of every financial year.

For example… Mr. Yash has invested 3 lakhs in tax saving schemes in this FY 2019-20. So, he has to file his form 12BB disclosing all the details of those investments to his/her employer between 1st April 2019 to 30th June 2019. While He can submit all evidence of those investments between 1st January 2020 to 31st March 2020. This practice is advisable for an accurate TDS deduction.

Sample Form 12BB – Investment Declaration

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Form 12BB
Download the draft of Form 12BB
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Form 12BB
Download the draft of Form 12BB
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Supporting Documents – Form 12BB

FAQs

Is it mandatory to submit Form 12BB?

No. It is not mandatory to submit the Investment declaration. However, if you do not submit the same to your an employer, than he will deduct excess TDS on your total salary without allowing you any tax deductions. So it is highly advisable to submit your investment declaration in Form 12BB to your employer.

When do I have to submit Investment Declaration?

Generally, employers ask for a declaration in the month of April i.e, at the beginning of the financial year to calculate TDS for the year. If you join a new job then at that time you need to submit Form 12BB. Employees may submit the investment proofs later on during the financial year.

What if I don’t submit Form 12BB on time to my employer?

In case you don’t submit form 12BB to your employer within a prescribed time, the employer will not be able to give you the benefit of deductions. As a result, excess TDS will be deducted from your salary. Do not worry you can claim a refund of such excess TDS while filing your income tax return.

Do I have to submit Form-12BB to income tax department?

No. You need to submit Form 12BB to your employer. This form will allow the employer to calculate and deduct accurate TDS from your salary.

Section 80TTA: Deduction for Interest Earned on Savings Account

What is Deduction under section 80TTA?

Every quarter bank credits interest to your savings account. This savings interest is considered as your taxable income under the head “Income From Other Source.” Section 80TTA of the Income Tax Act was introduced in order to allow a deduction of up to INR 10,000 on such interest.

Deduction under section 80EEA is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime
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Deduction under section 80EEA is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime

Who can Claim Savings Interest Deduction Under Section 80TTA?

80TTA deduction was introduced to encourage taxpayers to generate more savings. It is available to individuals and HUFs other than senior citizens. Section 80TTB is applicable in the case of a senior citizen.

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What is the Deduction Limit Under Section 80TTA?

The maximum deduction allowed under section 80TTA of Income Tax Act is INR 10,000 for FY 2018-19 (AY 2019-20). If interest income from all the saving accounts is less then INR 10,000 then the entire amount is deductible. If total interest from saving accounts exceeds INR 10,000 then the maximum of INR 10,000 will be deductible and the remaining amount will be taxable.

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Which Interests are Eligible for Deduction Under Section 80TTA?

Following interests are eligible for a savings interest deduction under this section:

  • Interest earned from Saving Account with Bank,
  • Any interest earned from Saving Account with Co-operative Society,
  • Interest earned from Saving Account with Post Office.

Following interests are not eligible for deduction under this section:

  • Interest earned from fixed deposits,
  • Any interest earned from recurring deposits,
  • Interest earned from any other time deposits.

How to Claim Savings Interest Deduction Under Section 80TTA?

You can claim a deduction by filing your ITR. First, you need to add total saving interest as income under the head “Income From Other Source”, and then enter the same amount as a deduction under Chapter VI-A.

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How is the Deduction Calculated Under Section 80TTA?

In-order to understand the calculations better, let us take an example;

Ms Desai is a resident individual. And has earned the following income during the FY 2019-20:

  • Interest earned from Union Bank Savings Account: INR 16,000
  • Interest earned from Post Office FD: INR 24,000
  • Interest earned on Debentures: INR 3,500

Ms Desai will be able to claim deduction under section 80TTA only on the interest earned from Union Bank Savings Account and the eligible deduction that is available u/s 80TTA that she can claim is INR 10,000.

Comparison between Section 80TTB and 80TTA

Parameters Section 80TTB Section 80TTA
Eligibility Only senior citizens Individuals and HUFs can also claim deductions
Exemption Limit Maximum INR 50,000 a year Maximum INR 10,000 a year
Specified Income Deduction on interest from all kind of deposits Deduction on interest from the savings account only
Applicability for NRI’s NRI’s are not eligible to claim deductions under 80TTB NRI and NRO’s who have a savings account can claim deduction u/s 80TTA

ITR Form Applicable for Section 80TTA

The taxpayer can claim deductions under this section while filing ITR if all the above-mentioned conditions are full-filled. Individuals/HUFs can claim 80TTA in any of the ITR forms, i.e, ITR 1ITR 2ITR 3, and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.

Supporting Documents

In the case of Section 80TTA, along with the common documents such as Form 16, you only need to show present your bank statements showing your transactions of savings account for calculating the interest earned and the deductions.

FAQs

Is TDS applicable on saving bank account interest?

No. TDS is not applicable on saving bank account interest. However, if it is NRO account then TDS is applicable.

Can an NRI claim a deduction u/s 80TTA?

Yes, an NRI can claim a deduction on saving bank account interest under section 80TTA.

What documents are required to claim deduction u/s 80TTA?

The bank account statement is required to calculate and claim deduction under section 80TTA.

For how many bank accounts can I claim a deduction u/s 80TTA?

There is no limit on the number of accounts or the interest that is earned via these accounts. One has to note that the maximum deduction that is available u/s 80TTA is INR 10,000 irrespective of the number of accounts.

Can a senior citizen claim deduction u/s 80TTA?

No, a senior citizen can claim deduction under section 80TTB and not section 80TTA

Is the deduction that is available under section 80TTA over and above the deduction available under section 80C?

Yes, the deduction of INR 10,000 under section 80TTA is available over and above the deduction of INR 1,50,000 availabe under section 80C.

Section 80U: Deduction for Individuals with Disability

Deduction under setion 80U can be claimed by a Resident Individual with a disability. HUF cannot claim deduction u/s 80U if any of its members are suffering from a disability. This income tax deduction can be claimed at the time of filing ITR under Chapter VI-A.

Deduction under section 80U is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime
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Deduction under section 80U is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime

Who is Eligible to Claim Deduction u/s 80U?

An individual suffering from any of the following disabilities is eligible to claim deduction u/s 80U:

  • Autism
  • Cerebral palsy
  • Blindness
  • Low vision
  • Leprosy cured
  • Hearing impairment
  • Locomotor disability
  • Mental retardation
  • Mental illness

One has to note that an individual will be considered disabled if he/she is suffering from a disability which is 40% or more but less than 80%. If a taxpayer is suffering from more than 80% disability then it will be termed as Severe Disability and the deductions will vary based on the severity of the disability.

ITR for Salaried Individuals
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What are the Conditions to Claim Deduction u/s 80U?

  • The deduction must be claimed by a resident Indian
  • An individual should be independent. A dependant individual cannot claim this deduction on his disability
  • A copy of the certificate issued by medical authorities certifying the ‘person with a disability’ should be kept by an individual as proof
  • Unlike section 80DD, there is no condition of incurring expenses for such disability, in order to claim deduction u/s 80U
  • The certificate of disability that is provided by the Medical Authority has an expiry date. If the validity of the certificate expires within a financial year, deductions can be claimed by showing the expired certificate. However, one will need a new certificate for claiming deductions for the next financial year.
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Who is Considered as a Medical Authority?

Below mentioned are the medial authorities who are eligible to issue a disability certificate:

  • A neurologist with an MD in Neurology
  • Pediatric Neurologist in case of children
  • A civil surgeon or Cheif Medical Officer of a government hospital

How is the Deduction Calculated Under Section 80U?

Let us take an example in-order to understand the calculations better;

Ankit is an individual who is suffering from hearing impairment. He is suffering from a 40% disability. During FY 2018-19, he has earned a salary of INR 5,20,000. And he has obtained a certificate from the medical authority for his disability.

Solution

In the above case, Ankit can claim a deduction of INR 75,000. He can claim this deduction under chapter VI-A while filing his ITR.

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What is the Deduction Limit u/s 80U?

For FY 2018-19 deduction limit u/s 80U is as follows, a person with a disability is categorized into two parts:

  • Disabled Person: An individual suffering from at least 40% of disability.
  • Severely Disabled Person: An individual suffering from at least 80% of disability.
Category Deduction Amount
Disabled Person INR 75,000
Severely Disabled Person INR 1,25,000

ITR Form Applicable for Section 80U

The taxpayer can claim deductions u/s 80U while filing ITR if all the above-mentioned conditions are full-filled. Individuals/HUFs can claim 80U in any of the ITR forms, i.e, ITR 1ITR 2ITR 3, and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.

For FY 2019-20, due to COVID-19 the due date for filing ITR has been extended to 10th January 2021 for all taxpayer.
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For FY 2019-20, due to COVID-19 the due date for filing ITR has been extended to 10th January 2021 for all taxpayer.

Supporting Documents

Along with the common documents such as Form 16, you only require the disability certificate issued by a medical authority to claim this deduction. However, in the case of illness such as autism and cerebral palsy, Form 10-IA additionally needs to be filled up.

FAQs

How to get certificate for claiming deduction u/s 80U?

Income Tax Rule 11A has prescribed the format of a certificate for claiming a deduction. You can download the certificate format from the Income Tax Department. You need to get this certificate from medical authorities. Any doctor who is notified by the central government to certify the disabilities can issue this certificate.

Do I have to incur expenses on treatment of disability, to claim deduction under 80U?

No. It is not necessary to incur any expenses to claim a deduction. You only have to obtain a certificate from medical authorities about your disability.

What are the documents required to claim deduction u/s 80U?

You should keep the certificate by the medical authority for your disability. Moreover for an illness like autism or cerebral palsy file Form 10-IA with IT Department.

Can an NRI claim deduction under section 80U?

No, deductions under section 80U are available only to residential individuals.

What is the difference between 80U and 80DD?

Both section 80U and 80DD are related to providing deductions to taxpayers with disability. However, the beneficiaries under each section are different. U/S 80U, it is the individual who is disabled can claim a deduction for oneself whereas u/s 80DD family members who are dependent on the individual who is suffering from disability can claim the deduction.

Can I claim deduction under section 80U and 80DD simultaniously?

No, a taxpayer cannot claim deduction under both the sections at the same time. If he/she is claiming a deduction u/s 80U then he cannot claim deduction u/s 80DD and vice a versa.

Do I have to submit medical reports and/or bills inorder to claim a deduction u/s 80U?

No, in order to claim deduction one does not need to submit medical reports or bills. However, a medical certificate is required to be submitted.

Section 80GG – Deduction for Rent

Section 80GG of Income Tax Act allows individuals a deduction for rent paid for furnished or unfurnished accommodation. The deduction is allowed to taxpayers who do not receive any HRA from their employer.

Deduction under section 80GG is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime
Tip
Deduction under section 80GG is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime

What are the Conditions to Claim a Deduction for Rent Paid Under Section 80GG of Income Tax Act?

  • Only an independent individual can claim deduction u/s 80GG
  • An individual can be salaried or self-employed
  • In the case of a salaried person, he should not be receiving House Rent Allowance (HRA) from an employer
  • For claiming a deduction, Form 10BA needs to be submitted with the IT Department
  • Assessee or his spouse or minor child or HUF of which he is a member should not own any residential accommodation at the place where he is residing/performing office duties under-employment/carrying business or profession
  • The assessee should not own a self-occupied house property at any place

What is the Deduction Limit Under Section 80GG?

For FY 2018-19 (AY 2019-20), Deduction under this section will be the least of the following:

  • Total rent paid less 10% of total income
  • 25% of the annual salary
  • INR 5000 per month i.e INR 60,000 annually

What is the Exception to Section 80GG?

With respect to claiming deductions under section 80GG there are certain exceptions that one needs to take care of:

  • One cannot claim deduction under section 80GG if he/she is claiming a deduction on a house property that is owned by them in another location
  • One cannot claim deduction u/s 80GG on house rent if one owns a house in the location they are employed in or are doing business in

How is the Deduction Calculated Under Section 80GG?

Below mentioned are the medial authorities who are eligible to issue a disability certificate:

Mr Modi’s annual income is INR 8 lakh and he does not get HRA. He is paying a rent of INR 20,000 per month which is INR 2,40,000 annually. Let us now calculate his deductible income, whichever of the following is lower will be considered as the deductible amount:

Point 1: Total rent paid less 10% of the total income

Rent paid by Mr Modi in total is INR 2,40,000 less 10% of his annual income (INR 8,00,000) is INR 80,000 hence the deductible amount will come to INR 1,60,000 (2,40,000-80,000)

Point 2: 25% of the annual salary

Under this, the 25% of INR 8,00,000 would come to INR 2,00,000

Point 3: INR 5000 per month i.e INR 60,000 annually

Here Mr. Modi can avail INR 60,000 as a deduction amount.

As the condition to claim deduction under section 80GG is that the amount has to be the lowest from the above three, Mr Modi will be able to claim INR 60,000 as a deduction.

Who is eligible to claim deduction u/s 80GG?

Salaried Individuals are eligible if

  • Individuals paying house rent,
  • You don’t receive any House Rent Allowance from your employer,
  • You or your spouse or minor children or HUF in which you are a member do not own residential accommodation at the place of employment,
  • Not owning self-occupied residential accommodation at any other place.
  • You file Form 10BA before you claim the deduction.

Non-Salaried individuals are eligible if

  • Individuals paying house rent,
  • You or your spouse or minor children or HUF in which you are a member do not own residential accommodation at the place of employment,
  • Not owning self-occupied residential accommodation at any other place.
  • You file Form 10BA before you claim the deduction.

What is the threshold limit for claiming deduction u/s 80GG?

The lowest of the following is allowed as a deduction:

  1. Total rent paid less 10% of the total income
  2. 25% of the total income
  3. INR 5,000 per month i.e, INR 60,000 annually.

Let’s understand this with an example: Sharad is a salaried individual who does not receive HRA from his employer and lives in rented premises in Bangalore. Sharad pays INR 20,000 per month as rent for a year and his total income is INR 12,00,000. Neither Sharad nor his wife owns any residential property in Bangalore or at any other place.

In the above case, Sharad will be eligible to claim deduction under section 80GG even though he is a salaried individual. The deduction will be the lowest of the following:

  1. INR 1,20,000 (INR 20,000*12 months – 10% of INR 12,00,000)
  2. INR 3,00,000 (25% of INR 12,00,000)
  3. 60,000 (INR 5,000*12 months)    

Therefore, Sharad can claim a deduction of INR 60,000 for rent paid by him during the year provided he files Form 10BA first.   

ITR Form Applicable for Section 80GG

The taxpayer can claim deductions u/s 80GG while filing ITR by full-filling the above conditions. Individuals/HUFs can claim 80GG in any of the ITR forms, i.e, ITR 1ITR 2ITR 3, and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.

For FY 2019-20, due to COVID-19 the due date has been extended to 31st of December to file the tax audit report and 31st of January 2021 to file the ITR
Tip
For FY 2019-20, due to COVID-19 the due date has been extended to 31st of December to file the tax audit report and 31st of January 2021 to file the ITR

Supporting Documents

Apart from the usual documents like Form 16 and PAN, you will need the following documents:

  • Rent agreement & Rent receipts
  • PAN Details of the landlord, if the rent amount exceeds INR 1,00,000.
  • Filing Form 10BA which ensures that you are not claiming the benefit of self-occupied property in the same or any other location

FAQs

Can I claim deduction u/s 80GG if I own a residential house?

You can claim deduction under section 80GG if you own a residential house property subject to following conditions:
– You or your spouse or children should not own a house property at your ordinary place of residence or office or employment; or
– You should not own a self-occupied house property anywhere in India.
So if you own a residential house property but it is given on rent then you can claim deduction under section 80GG for rent paid.

Can I claim a deduction u/s 80GG even if I’m Self employed?

Yes. You can claim a deduction for rent paid up to INR 60,000 even if you are self-employed.

Who can claim a deduction u/s 80GG?

Only an individual can claim deduction for rent paid under this section.

Can I claim 80GG along with my HRA?

No. Deduction under section 80GG is only available to individuals who do not get House Rent Allowance (HRA).

Can I claim 80GG in new tax regime?

No. Section 80GG is part of Chapter VI-A. The New Income Tax regime doesn’t allow any exemptions under chapter VI-A. Hence, you cannot claim section 80GG.

Section 80G : Deduction for Donation to Charitable Organizations

What is Deduction under section 80G?

Section 80G of the Income Tax Act allows a deduction for any contribution made to certain relief funds and charitable institutions. This deduction can be claimed by individuals, HUFs, and businesses. However, not all donations are eligible for deductions under section 80G. Only donations made to prescribed funds by the government of India qualify as a deduction.

Deduction under section 80G is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime
Tip
Deduction under section 80G is not allowed for Financial Year 2020-21 if the taxpayer opts for the new tax regime

How to Claim Deduction Under Section 80G?

Section 80G is available to all types of taxpayers. Even the mode of payment is an important thing while considering deductions. The deductions can only be claimed when the mode of payment is Cheque or Draft or Cash. However, donations made in cash that are exceeding INR 2000 will not be deductible. Similarly, other materials such as food, clothes, or medicines are not eligible for deductions under Section 80G.

In order to claim the deduction under Section 80G for a contribution, one needs to submit the following details:

  • Name of Donee
  • PAN of Donee
  • Address of Donee
  • Amount Donated

Eligibility for Deduction Under Section 80G

Tax Deduction on Donation

List of Funds Eligible for Deduction Under Section 80G

Donations with 100% Income Tax Deduction without any qualifying limit:

  • National Defense Fund set up by the Central Government
  • Prime Minister’s National Relief Fund
  • National Foundation for Communal Harmony
  • An approved university/educational institution of National Eminence
  • Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
  • Fund set up by a State Government for the medical relief to the poor
  • National Illness Assistance Fund
  • National Blood Transfusion Council or to any State Blood Transfusion Council
  • Fund for Technology Development and Application
  • National Sports Fund
  • National Cultural Fund
  • The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
  • National Children’s Fund
  • Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
  • National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities
  • The Maharashtra Chief Minister’s Relief Fund during October 1, 1993, and October 6, 1993
  • Chief Minister’s Earthquake Relief Fund, Maharashtra
  • Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the earthquake in Gujarat
  • Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of the earthquake in Gujarat (contribution made during January 26, 2001, and September 30, 2001) or
  • Prime Minister’s Armenia Earthquake Relief Fund
  • Africa (Public Contributions — India) Fund
  • Swachh Bharat Kosh (applicable from the financial year 2014-15)
  • Clean Ganga Fund (applicable from the financial year 2014-15)
  • National Fund for Control of Drug Abuse (applicable from the financial year 2015-16)

Donations with 50% Income Tax Deduction without any qualifying limit:

  • Jawaharlal Nehru Memorial Fund
  • Prime Minister’s Drought Relief Fund
  • Indira Gandhi Memorial Trust
  • The Rajiv Gandhi Foundation

Donations with 100% Income Tax Deduction subject to qualifying limit of 10% of adjusted gross total income:

  • Government or any approved local authority, institution or association to be utilized for the purpose of promoting family planning
  • Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India
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Donations with 50% Income Tax Deduction subject to qualifying limit of 10% of adjusted gross total income

  • Any other fund or any institution which satisfies conditions mentioned in Section 80G(5)
  • Government or any local authority to be utilized for any charitable purpose other than the purpose of promoting family planning
  • Any authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both
  • Any corporation referred in Section 10(26BB) for promoting the interest of minority community
  • For repairs or renovation of any notified temple, Mosque, Gurudwara, Church, or another place
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What is Adjusted Gross Total Income under 80G?

The taxpayer needs to calculate Adjusted Gross Total Income for donation made to charity/Trust which is subject to the qualifying limit. For calculating “Adjusted Gross Total Income” one needs to first calculate the gross total income earned from all the sources, and subtract the following from it:

  • All the Chapter VI-A Deductions except 80G,
  • Exempt Income,
  • Short Term Capital Gains taxed @15% u/s 111A,
  • All Long Term Capital Gains,
  • Income referred to in Sections 115A, 115AB, 115AC, 115AD relating to non-residents and foreign companies.

ITR Form Applicable for Section 80G

The taxpayer can claim deductions u/s 80G while filing ITR if all the above-mentioned conditions are full-filled. Individuals/HUFs can claim 80G in any of the ITR forms, i.e, ITR 1ITR 2ITR 3, and ITR 4 depending upon their income sources. The due date for filing ITR is 31st July of the next FY if the tax audit is not applicable.

Supporting Documents

Apart from the usual documents such as PAN and Form 16, we need to file the Income Tax Returns, you will require the following documents:

  • Stamped Receipt: A stamped receipt for the donations made. Whenever a donation is made towards a fund or a trust, they must give a receipt. Keep it safe, and submit it while filing tax to get an exemption for the amount. The receipts should contain the stamp of the organization, name, date, and PAN
  • Form 58: For donations made towards funds with 100% exemptions, a Form 58 from the organization is also necessary

FAQs

Can I claim deduction for a donation made in cash for Rs. 25,000

As per the Income Tax Act, any contribution made by cash in excess of Rs. 10,000 will not be allowed as deduction u/s 80G. So you can claim a maximum deduction of Rs. 10,000 for cash donations.

What is the limit for deductions allowed u/s 80G?

There is no upper limit set under section 80G for claiming a deduction for donations made to charitable organizations. As long as you have taxable income to claim a deduction from, there is no limit on the amount of deduction to be claimed u/s 80G.

Can I claim a deduction for a donation made through cheque worth Rs. 50,000?

Yes, you can. There are no limits for contributions made through cheques.