Deduction-80 C for A Y 2021-22

Deduction-80 C for A Y 2021-22

According to Income Tax 1961 Section 80 C is very popular deduction for assessee.  Deduction 80 C claim by mostly assessee.

SECTION 80C

The deduction is allowed only to the following assesses from their gross total income computed as per provisions of the Act:

  1. An individual; or
  2. A Hindu Undivided Family.

The above assesses shall be entitled to a deduction of whole of the amount paid or deposited in the previous year, being the aggregate of sum referred to below as does not exceed Rs. 1,50,000:

i.Any sum paid by an individual to effect or to keep in force an insurance on the life of:

  1. An individual himself,
  2. His/her spouse, and
  3. Any child of such individual

The children may be married/unmarried, dependent/not dependent on the individual.

In the case of Hindu Undivided Family the premium should be paid on the life of any member of the family.

The expression insurance shall include:

  1. A pure endowment assurance policy; and
  2. A children deferred endowment assurance policy.

Premium paid on Life Insurance Policy exceeding certain percentage of the capital sum assured not eligible for deduction (Section 80C(3)

Premium paid on insurance policy other than contract of deferred annuity Amount paid eligible for deduction
a.       For policy issued on or before 31.03.2012

b.      For policy issued on or after 1.4.2012

c.       For policy issued on or after 1.04.2013 for the insurance on life of a person, who is-

i.                     A person with disability or a person with severe disability as referred to in section 80U, or

ii.                   Suffering from disease of ailment as specified in the rules made under section 80DDB

20% of the capital sum assured

10% of the capital sum assured

15% of the capital sum assured

 

 

 

 

 

 

 

(ii) Any payment made by the individual only to effect of keep in force a contract of a non-commutable deferred annuity (other than mentioned in clause X below) on the life of: (a) an individual himself, (b) his/her spouse, and (c) any child of such individual;

(iii) any sum deducted in accordance with conditions of services from the salary payable by or on behalf of the Government to any individual for the purpose of securing to him a deferred annuity or making provision for his spouse of children. The sum deducted should not exceed 1/5th of the salary;

(iv) any contribution by the employee towards a statutory provident fund or recognized provident fund or recognized provident fund. The deduction in this respect is allowable to an individual only;

(v) any contribution to a public provident fund by an individual of HUF. The contribution may be made to an account standing in the name of any person mentioned under clause (i) above;

(vi) any contribution by an employee to an approved superannuation fund;

(vii) (any subscription, in the name of any person specified in sub-section (4), to) any such security of the central government or such deposit scheme as that government may, by notification in the official Gazette, specify in this behalf;

Following schemes have since been notified:

  1. Subscription by an individual of HUF to National Saving Scheme, 1992
  2. Sum paid or deposited in the name of a girl child under the Sukanya Samriddhi Account scheme, w.e.f. A.Y. 2016-16

For the purpose of clause (b) above, the sum may be paid by the individual or any girl child of that individual, or any girl child for whom such person is the legal guardian;

(viii) any subscription by an individual to national savings certificates (VIII Issue) or IX issue. Any interest accrued on these certificates which is deemed to be reinvested also qualifies for deduction:

(ix) any contribution by an individual of HUF for participation in the unit linked insurance plan of the unit trust of India of unit linked insurance plan (formerly known as Dhanraksha 1989) of LIC mutual fund referred to in section 10(23D). the contribution may be made in the name of any person mentioned under clause (i) above

(x) Payment made by and individual or HUF to effect or keep in force a contract for notifed annuity plan of the life insurance corporation or any other insurer. New Jeevan Dhara, New Jeevan Dhara – I and New Jeevan Akshay, New Jeevan Akshey – I and New Jeevan Akshey – II are the schemes which has been notified;

(xi) any subscription, by an individual of HUF to notified units of (a) any mutual fund referred to in section 10(23D), ot (b) the administrator or the specified company as referred in section 2 of the Unit Trust of India. Equity linked saving scheme, 2005 has since been notified;

(xii) any contribution by an individual to a notified pension fund set up by any mutual fund referred to in section 10(23D), or by the administrator or the specified company as referred in section 2 of the Unit Trust of India. UTI – Retirement benefit pension fund has since been notified;

(xiii) any subscription by an individual of HUF to any deposit scheme or contribution to any pension fund set up by the National Housing Bank. The Home Loan Account scheme of the National Housing Bank has been notified.

(xiv) a subscription by an individual of HUF to any notified deposit scheme of;

  1. A public sector company which is engaged in providing long-term finance for construction or purchase of houses in India for residential purpose; or
  2. Any authority constituted in India by or under any law enacted either 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 and villages, or for both;

(xv) any sum paid by an individual as tution fees provided following conditions are satisfied :

  1. Such sum should have been paid as tution fees excluding any payment towards development fees or donation or payment of similar nature.
  2. It should have been paid at the time of admission or thereafter.
  3. It is paid to any university, college, school or other educational institution situated within India.
  4. It is paid for the purpose of full-time education.
  5. It is paid for any two children of such individual.

(xvi) any payment by an individual or HUF for purchase or construction of a resident house property, the income from which is chargeable to tax under the head ‘Income from house property’. Such payment may be made towards:

  • Any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or
  • Any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him; or
  • Any repayment of the amount borrowed by the assessee from
  • The Central Government or any State government, or
  • Any bank, including a co-operative bank, or
  • The life insurance corporation, or
  • The National Housing bank, or
  • Any company in which the public company formed and registered in India with the main object of carrying on the business of proving long-term finance for construction or purchase of houses in India for residential purpose which is eligible for deduction under clauses (viii) of sub – section (1) of section 36, or
  • Any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or
  • The assessee’s employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society;
  • The assessee’s employer where such employer is an authority or a board or a corporation or any other body established or constituted under a central or state act.
Deduction for repayment of loan is not available when loan was taken after acquisition of the house property. Deduction under section 80C(2) (xviii) is available only If loan was utilized for acquisition of the property therefore, assessee was not entitled to claim the deduction under section 80C (Vijay Aggarwal v CIT 2016 236 taxman 542

 

(D) Stamp duty, registration fee and other expense for the purpose of transfer of such house property to the assessee.

The following payments shall not qualify for deduction:

  1. The admission fee, cost of share and initial deposit which a shareholder of a company or a member of a co-operative society has to pay for becoming such shareholder or member; or
  2. The cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property or any part thereof has either been occupied by the assessee or any other person on this behalf or been let out; or
  3. Any expenditure in respect of which deduction is allowable under the provisions of section 24;

(xvii) Any subscription by an individual of HUF to equity shares or debentures forming part of any eligible issue of capital approved by the board of an application made by a public financial institution in the prescribed form:

For the purpose of this clause:

  1. “eligible issue of capital” means an issue made by a public company formed and registered in India or a public financial institution and the entire proceeds of the issue are utilized wholly and exclusively for the purpose of any business referred to in sub-section (4) of section 80-IA;
  2. “Public company ” shall have the meaning assigned to it in section 3 of the companies act, 1956;
  3. “Public financial institution” shall have the meaning assigned to it in section 4A of the companies act, 1956;

(xviii) Any subscription by an individual of HUF to any units of any mutual fund referred to in section 10(23D) and approved by the board on an application made by such mutual fund in the prescribed form:

Provided further that this clause shall apply if the amount of subscription to such units is subscribed only in the eligible issue of capital of any company.

For the purposes of this clause “eligible issue of capital” means an issue referred to in clause (xvii) above.

(xix) Any sum deposited in a term deposit-

  1. For a fixed period of not less than 5 years with a scheduled bank; and
  2. Which is in accordance with a scheme framed and notified by the Central government in the official gazette for the purpose of this clause.

(xx) Subscription to such bonds issued by the national bank for agriculture and rural development NABARD as the central government may, by notification in the official gazette, specify in this behalf.

(xxi) Any sum deposited in an account under the senior citizens saving scheme rules, 2004

(xxii) Any sum deposited as five years time deposit in an account under the post office time deposit rules, 1981