Guide to .. Tax Management ,Tax Planning and Tax Saving
 

Deductions and Allowances under the Income-Tax Act. for the Assessment Year 2018-19 & 2019-20

Section

Nature of Deduction

Who can Claim

UNDER THE HEAD ‘SALARIES”

16(ia)

Standard deduction (maximum Rs. 40,000) (applicable from the assessment year 2019-20)

Salaried employees

16(ii)

Entertainment allowance [subject to maximum of Rs. 5,000]

Government employees

16(iii)

Tax on employment within the meaning of article 276(2) of the Constitution, leviable by or under any law

Salaried employees

UNDER THE HEAD “INCOME FROM HOUSE PROPERTY”

23(1), proviso

Taxes levied by local authority and paid by the owner

All assessees

24(a)

Standard deduction [30 per cent of net annual value]

All assessees

24(b)

Interest on borrowed capital

All assessees

UNDER THE HEAD “PROFITS AND GAINS OF BUSINESS OR PROFESSION”

30

Rent, rates, taxes, repairs and insurance for buildings

All assessees

31

Repairs and insurance of machinery, plant and furniture

All assessees

32

Depreciation [subject to certain conditions]

All assessees

32AC

Investment allowance

Companies

32AD

Additional investment allowance for setting up industrial undertakings in Andhra Pradesh, Bihar, Telangana and West Bengal

All assessees

33AB

Tea/Coffee/rubber development account

All assessees carrying on the business of growing and manufacturing tea or coffee or rubber in India

33ABA

Site restoration fund

All assessees engaged in the business of the prospecting for, or extraction or production of, petroleum or natural gas or both in India

35

Expenditure on scientific research [subject to certain conditions]

All assessees

35ABA

Expenditure for obtaining right to use spectrum for telecommunication services

Any assessee

35ABB

Expenditure for obtaining licence to operate telecommunication services

All assessees

35AC

Expenditure on eligible projects/schemes

All assessees

35AD

Expenditure on specified business

All assesses (only Indian companies in some cases)

35CCA

Expenditure by way of payment to associations and institutions for carrying out rural development programmes and contribution towards notified Rural Development Funds [subject to certain conditions]

All assessees

35CCC

Weighted deduction for expenditure incurred on  agricultural extension project

All assesses

35CCD

Weighted deduction for expenditure for skill development

Companies

35D

Amortisation of preliminary expenses [deductible in five equal instalments]

Indian companies and resident non-corporate assessees

35DD

Amortisation of expenditure in case of amalgamation or demerger

Indian company

35DDA

Amortisation of expenditure incurred under voluntary retirement scheme

All assessees

35E

Expenditure on prospecting, etc., for certain minerals [deductible in ten equal instalments]

Indian companies and resident non-
corporate assessees engaged in prospecting etc., of any minerals

36(1)(i)

Premium paid in respect of insurance against risk of damage or destruction of stocks/stores

All assessees

36(1)(ia)

Premium paid for insurance on life of cattle owned by a member of a society engaged in supplying milk to the federal milk co-operative society

Federal milk co-operative societies

 

Medical insurance paid by employers

All assessees

36(1)(ii)

Bonus or commission paid to employees

All assessees

36(1)(iii)

Interest on borrowed capital

All assesses

36(1)(iiia)

Discount on zero coupon bond

Infrastructure capital companies/ infrastructure capital funds/public sector funds/public
sector banks

36(1)(iv)

Contributions to recognised provident fund and approved superannuation fund

All assessees

36(1)(v)

Contributions to approved gratuity fund

All assessees

36(1)(va)

Employees’ contributions to staff welfare schemes

All assessees

36(1)(vi)

Write off allowance in respect of animals [subject to certain conditions]

All assessees

36(1)(vii)

Bad debts

All assessees

36(1)(viia)

Provisions for bad and doubtful debts in respect of advances made by rural branches of banks

Scheduled banks and non-scheduled banks

36(1)(viii) / (viiia)

Amount transferred to special reserve

Approved Financial Corporations and public companies of specified nature/scheduled banks/National Housing Bank

36(1)(ix)

Expenditure for promoting family planning amongst employees [deductible in 5 equal annual instalments in the case of capital expenditure]

Companies

36(1)(x)

Contribution towards notified Exchange Risk Administration Fund

Public financial institutions

36(1)(xii)

Expenditure incurred by statutory entities

Statutory entities

36(1)(xiii)

Banking cash transaction tax

Any assessee

36(1)(xv)

Securities transaction tax

All assessees

36(1)(xvi)

Commodities transactions tax

All assessees

36(1)(xvii)

Expenditure incurred for purchase of sugarcane

Co-operative societies

36(1)(xviii)

Marked to market loss

All assessees

37(1)

Any other expenditure [ not being personal or capital expenditure and expenditure mentioned in sections 30 to 36 ] laid out wholly and exclusively for business

All assessees

37(2B)

Expenditure on advertisement

All assessees

UNDER THE HEAD ‘CAPITAL GAINS”

48

Expenditure incurred wholly and exclusively in connection with transfer of capital asset

All assessees

48

Cost of acquisition of capital asset and of any improvement thereto

All assessees

 

UNDER THE HEAD ‘INCOME FROM OTHER SOURCES”

 

57(i)

Any reasonable sum paid by way of commission or remuneration for the purpose of realizing dividend/interest on securities

All assessees

57(ii)

Repairs, insurance and depreciation of buildings, plant and machinery and furniture

Assessees engaged in the business of letting out of machinery, plant and furniture on
hire

57(iii)

Any other expenditure (not being capital expenditure) expended wholly and exclusively for earning such income

All assessees

DEDUCTION UNDER CHAPTER VI-A IN RESPECT OF PAYMENTS

80C

Life insurance premia, provident fund contribution (maximum Rs. 1,50,000)

Individuals and HUFs

80CCC

Pension fund [maximum Rs. 1,50,000]

Individuals

80CCD(1)

Contribution by an employee or any other individual towards National Pension System (NPS) (up to 10% of the salary of the employee or up to 20% of gross total income in the case of any other individual)

Individuals

80CCD(1B)

Contribution by an individual towards NPS (maximum; Rs. 50,000)

Individuals

80CCD(2)

Contribution by the employer towards NPS (up to 10% of salary of the employee)

Employees

80D

Medical insurance premia [subject to maximum of Rs.1,00,000]

Individuals and HUFs

80DD

Maintenance including medical treatment of a handicapped dependent who is a person with disability [maxi mum : Rs. 1,25,000)

Resident individuals or resident HUFs

80DDB

Medical treatment expenses [maximum Rs. 1,00,000]

Resident individuals or resident HUFs

80E

Payment of interest of loan taken for higher studies

Individuals

80EE

Interest on loan taken for residential property

Individuals

80G

Donations to certain funds, charitable institutions [subject to maximum of 50 per cent of qualifying donation (100 per cent in some eases)]

All assessees

80GG

Rent paid for furnished/unfurnished accommodation [subject to maximum of Rs. 24,000]

Individuals

80GGA

Certain donations for scientific research or rural development

All assessees not having any income chargeable under the head “Profits and gains of busi-. ness or profession”

80GGB/80GGC

Contribution to political parties

 

 

DEDUCTION UNDER CHAPTER VI-A IN RESPECT OF CERTAIN INCOMES

 

80-IA

Profits and gains from enterprises engaged in infrastructure development

All assessees

80-IAB

Profits and gains by an undertaking engaged in development of SEZ

Developers

80-IAC

Profits and gains from eligible start-up

Companies/LLPs

80-IB

Profits and gains from industrial undertakings

All assessees

80-IBA

Profits and gains from housing projects

All assessees

80-IC

Profits of certain undertakings or enterprises in certain special category States

All assessees

80-ID

Profits and gains from business of hotels/convention centres

All assessees

80-IE

Understandings in North Eastern States

All assessees

80-JJA

Profits and gains from the business of collecting and processing of bio-degradable waste

All assessees

80-JJAA

Employment of new workmen/employee

All assessees

80LA

Income of offshore Banking Units

Scheduled banks

80P

Specified incomes [subject to amount specified in subsection (2)]

Co-operative societies

80PA

Profits and gains derived from eligible business (applicable from assessment year 2019-20)

Producer companies

80QQB

Royalty income of authors (maximum Rs. 3 lakh)

Resident individuals

80RRB

Royalty on patents (maximum Rs. 3 lath)

Resident individuals

80TTA

Interest on deposits in savings account

Individuals/HUFs

80TTB

Interest on deposits with bank/co-operative bank/post office (maximum : Rs. 50,000) (applicable from the assessment year 2019-20)

Senior citizens

80U

Income of a person with disability [maximum Rs. 1,25,000]

Resident individuals

 
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