The aggregate of income computed under each head, after giving effect to the provisions for clubbing of income and set off of losses, is known as "Gross Total Income". In computing the total income of an assessee, certain deductions are permissible under sections 80C to 80U from Gross Total Income.
These deductions are however not allowed from the following incomes although these incomes are part of Gross Total Income:
(a) Long-term capital gains.
(b) Short-term capital gain on transfer of equity shares and units of equity oriented find through a recognised stock exchange i.e. short-term capital gain covered under section 111A.
(c) Winnings of lotteries, races, etc.
(d) Incomes referred to in sections 115A, 115AB, 115AC, 115ACA, 115AD and 115D.
These deductions are of two types:—
(1) Deductions on account of certain payments and investments covered under sections 80C to 80GGC.
(a) Deduction in respect of Life Insurance Premium, Deferred Annuity, Contribution to Provident Fund, Subscription to certain Equity Shares or Debenture, etc. [Section 80C]
(b) Deduction in respect of Contribution to certain Pension Fund [Section 80CCC]
(c) Deduction in respect of contribution to Pension Scheme of Central Government by Central Government or any other employer [Section 80CCD]
(d) Deduction in respect of Medical Insurance Premia [Section 80D]
(e) Deduction in respect of maintenance including medical treatment of a dependent who is a person with disability [Section 80DD}
(f) Deduction in respect of Medical Treatment , etc. [Section 80DDB]
(g) Deduction for interest paid on loan taken for pursuing higher education [Section 80E]
(h) Deduction in respect of interest on loan taken for residential house property [Section 80EE]
(i) Deduction in respect of interest on loan taken for certain house property [Section 80EEA]
(j) Deduction in respect of purchase of Eclectic Vehicle [Section 80EEB]
(k) Deduction in respect of Donation to certain Funds, Charitable Institutions, etc. [Section 80G]
(l) Deduction in respect of Rent Paid [Section 80GG]
(m) Deduction in respect of certain Donation for Scientific Research or Rural Development [Section 80GGA]
(n) Deduction in respect of contribution given by companies to political parties [Section 80GGB]
(o) Deduction in respect of contribution given by any person to political parties [Section 80GGC]
(2) Deductions on account of certain incomes which are already included under Gross Total Income covered under sections 80-IA to 80U.
(a) Deduction in respect of profits and gains from undertakings or enterprises engaged in infrastructure development, etc. [Section 80-IA]
(b) Deduction in respect of profits and gains by an undertaking or an enterprise engaged in development of Special Economic Zone (SEZ) [ Section 80-IAB]
(c) Special provision on respect of eligible business of eligible start up [Section 80-IAC]
(d) Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings [Section 80-IB]
(e) Deduction in respect of Profits and Gains from Housing Projects [Section 80-IBA]
(f) Special provisions in respect of certain undertakings in North Eastern States [Section 80-IE]
(g) Deduction in respect of profits and gains from business of collecting and processing of bio-degradable waste [Section 80JJA]
(h) Deduction in respect of employment of new employees [Section 80JJAA]
(i) Deduction in respect of certain incomes of Offshore Banking Units and International Financial Services Center [Section 80LA]
(j) Deduction in respect of income of Co-operative Societies [Section 80P]
(k) Deduction in respect of income of Farm Producer Companies [Section 80PA]
(l) Deduction in respect of royalty income, etc., of author of certain books other than text books. [ Section 80QQB]
(m) Deduction in respect of Royalty on Patents [Section 80RRB]
(n) Deduction in respect of interest on deposits in savings accounts to the maximum extent of Rs. 10,000 [ Section TTA]
(o) Deduction in respect of interest on deposits in case of senior citizens [Section 80TTB]
(p) Deduction in case of a person with disability [Section 80U]
The income arrived at, after claiming the above deductions from Gross Total Income, is known as Total Income. It may also be called Taxable Income. The Total Income, thus calculated, should be rounded off to the nearest Rs. 10.
Provisions of Chapter VIA, other than the provisions of section 80CCD(2) or section 80JJAA, shall not apply to an individual or HUF who exercises the option to be taxed under section
115BAC (i.e. under the new regime).
(3) Basic Rules of Deductions U/s 80A to 80U [Sections 80A / 80AB / 80AC]
1. Deductions cannot Exceed Gross Total Income [Section 80A(2)]:
The aggregate amount of deductions under sections 80C to 80U. i.e., under Chapter VI-A shall not, in any case, exceed the "Gross Total Income" (exclusive of long-term capital gains, short-term capital gain covered under section 111A, winnings of lotteries, crossword, puzzles, etc. and income referred to in sections 115A to 115AD and 115D) of the assessee.
Therefore, the total income after deductions will either be Positive or Nil. It cannot be negative due to deductions. If the "Gross total income" is Negative or Nil, No Deduction can be permitted under this Chapter.
2. Deduction not allowed to Members if allowed to AOP/BOI [Section 80A(3)]:
If a deduction is allowed under the above sections to the AOP or BOI then deductions for the same payment/income will not be allowed to the members of the AOP/BOI. [Section 80A(3)].
3. Double Deduction Not Allowed and Deduction cannot exceed the profit of the particular Undertaking or Unit or Enterprise. etc. [Section 80A(4)]:
Notwithstanding anything to the contrary contained in section 10AA or in any provisions of this Chapter under the heading "C.—Deductions in respect of certain incomes" (i.e. deductions under sections 80IA to 80RRB), 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.
4. Deduction Allowed only when it is Claimed by the assessee [Section 80A(5)]:
Where the assessee fails to make a claim in his return of income for any deduction under section 10AA or under any provision of this Chapter under the heading "C—Deductions in respect of certain incomes" (i.e. sections 80-IA to 80RRB). no deduction shall be allowed to him thereunder.
5. Profit or Gain to be Recomputed if inter unit or inter business transfer is not at market value [Section 80A(6)]
6. Assessee's Duty to place Relevant Material before the Statutory Authority:
If an assessee approaches a statutory authority for obtaining a concession under the taxing statute, he should in fairness place all the material before the said authority and be also in a position to satisfy the said authority that he was entitled to obtain the concession.
7. Deduction to be Allowed in respect of Net Income included in Gross Total Income [Section 80-AB]:
Where any deduction is required to be made or allowed under any section in respect of any income then for the purpose of computing the deduction under that section. the net income computed in accordance with the provisions of the Income-tax Act (before making any deduction under this chapter i.e. Chapter VIA) shall alone be regarded as the income received by the assessee and which is included in his Gross Total Income. [Section 80AB].
8. Benefits of certain Deductions Not to be Allowed in cases where return is not filed within the specified time limit [Section 80AC]:
Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after 1.4.2018, any deduction is admissible under any provision of this Chapter under the heading "C.—Deductions in respect of certain incomes" (i.e. sections 80-IA to 80RRB), then such deduction shall not be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under section 139(1)