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Qualifying Amount (Q.A.) for Deduction u/s 80C

Amount saved and deposited by the employee or assessee in following savings schemes shall qualify for deduction u/s 80C.

  1. Deposits made in Provident Funds
    1. Deposits in Statutory Provident Fund (S.P.F.). Amount deposited by the employee in this fund during the previous year qualifies for deduction.

    2. Deposits in Recognised Provident Fund (R.P.F.). Amount deposited during the previous year fully qualifies for deduction.

    3. Deposits made by the employee in the Unrecognised Provident Fund (U.R.P.F.). Since this fund is not recognised by the Commissioner of Income-Tax, so any amount saved and deposited by the employee in this fund will not qualify for any deduction.

    4. Deposits made in Public Provident Fund. This Provident Fund account can be opened in the name of the employee (assessee), spouse or children and amount deposited by the assessee during the previous year in any of these accounts shall qualify up to a maximum of 1,00,000.

Repayment of any loan taken will not qualify for the deduction.

2. Payment of Life Insurance Premium.

Actual amount of premium deposited by the- employee or on his behalf by his employer or 20% of capital sum assured w.e. is less shall qualify for deduction. Life insurance policies can be obtained in the name of the assessee, spouse and children and in case of HUF in the name of any or all the co-parceners of the
HUF.

The children means all the sons and daughters of the assessee whether minor or major, whether dependent upon assessee or are independent or may be married or unmarried. It also includes step or adopted children.

Capital sum assured shall not include bonus or any premium assured to be returned.

Any premium or other payment made on an insurance policy other than a contract for deferred annuity issued on or after 1-4-2012 shall be eligible for deduction upto 10% of actual capital sum assured
 

Note :  For persons suffering from disability (as referred to in Section 80U) or disease (as specified in the rules made u/s 8ODDB, the deduction u/s 80C shall be available if the premium for the policy does not exceed 15% of capital sum assured for policies issued on or after 1-4-2013.

(3)       Amount deducted out of Govt. employee’s salary towards deferred annuity. In case any amount has been deducted out of salary of Government employee for securing a deferred annuity for him or making a provision for his spouse or children. The amount so deducted but not exceeding 20% of his salary will qualify for this deduction.

(4)       Payment made towards Group Insurance. Any amount deducted and deposited by employer towards employee’s group insurance shall fully qualify for deduction.

(5)       Deposits made in approved Superannuation Fund. Amount deposited during the previous year shall fully qualify for deduction.

(6)       Payment for a deferred annuity. Any payment made to effect or to keep in force a contract for deferred annuity fully qualifies for deduction u/s 80C.

(7)       Deposits made in Unit Linked Insurance Plan (ULIP). Any amount deposited by the assessee in Unit Linked Insurance Plan of UTI or LIC mutual fund shall fully qualify for deduction. Amount can be deposited in the name of assessee, spouse and children.

(8) Amount invested in National Savings Certificates—VIlI Issue or IX issue. Amount invested in National Savings Certificates—VIII issue or IX issue full qualifies for deduction u/s 80C. Interest accrued on these certificates purchased earlier is deemed to be re-invested. hence such interest also fully qualifies for deduction every year.

(9) Amount invested in National Saving Scheme (NSS) 1992. Any amount invested in NSS1992 fully qualifies for deduction.

(10) Amount paid to LIC under Jeevan Dhara, Jeevan Akshay Policies. Any amount paid to LIC under Jeevan Dhara, New Jeevan Dhara I or New Jeevan Akshay, New Jeevan Akshay I, New Jeevan Akshay II plans fully qualify for this deduction. Investment in these plans can be made in name of assessee and in case of HUF, in the name of any of its members.

(11) Amount invested in notified Pension Funds set up by Mutual Funds or UTL Any amount invested by an individual in notified funds set up by Mutual Funds or UTI shall qualify for deduction u/s 80C.

(12) Amount deposited with National Housing Bank. Any amount deposited as subscription to Home Loan Account Scheme of the National Housing Bank or contribution to any notified pension fund set up by the National Housing Bank will qualify for deduction u/s 80C.

(13) Amount deposited with an authority engaged in Housing Development or Town or Rural Development. There are approved authorities which are engaged in the field of

Housing, Town, Cities and Rural development and any amount deposited with these authorities shall fully qualify for deduction u/s 80C.

Under this following subsciprions will qualify—Any sum paid as subscription to any scheme of

  1. a public sector company engaged in providing long term finance for purchase, or construction of residential houses in India.
  2. any authority like housing board constituted in India for the purposes of planning, development or improvement of cities/towns and villages.

(14) Any subscription in deposit scheme of Central Govt. Any subscription to any such security of the Central Government or any such deposit schemes as Central Government may notify in Official Gazettee, specify in this behalf will qualify for deduction u/s 80C.

(15) Term Deposits with Banks. Term deposits with certain scheduled banks of not less than 5 years duration as per scheme framed by Central Government shall also qualify for deduction u/s 80C.

(16) Amount deposited or invested in Equity Linked Saving Scheme (ELSS). Amount invested in Equity linked Savings Scheme fully qualify for this deduction.

(17) Repayment of house building loan. Any amount repaid under house building loan taken from Govt., LIC, Bank, HDFC, HUDCO or other housing finance institutions or employer [Not from friends or relatives]

OR

Amount repaid as full price or installment of price of a house purchased from Govt. or an approved agency up to actual amount repaid shall fully qualify for deduction u/s 80C.

The amount repaid must not include interest on loan or ground rent but shall include stamp duty and registration charges.

(18) Payment of Tuition fees. Any amount paid as tuition fees (excluding any payment towards any development fees or donation or payment of similar nature whether) at the time of admission or thereafter to

(a) any school, college or university or other educational institution situated in India,

(b) for the purpose of full time education of any two children of the individual.

The amount, which shall qualify under this section, shall not exceed actual amount paid as tuition fee for two children only.

(19) Amount paid as subscription to equity shares or debentures. Amount paid as subscription to equity shares or debentures of a public company or a public financial institution forming part of eligible issue of capital. In case such issue is notified by CBDT, the amount invested shall qualify for deduction u/s 80C. The amount so invested in on which deduction is claimed shall not qualify for exemption of capital gain uls 54EA or u/s 54EB or u/s 54EC.

(20) Amount paid as subscription to units of a mutual fund. Amount paid as subscription to any units of any mutual fund. In case such unit scheme of mutual funds is notified by CBDT, the amount so invested shall qualify for deduction u/s 80C. The amount so invested in on which deduction is claimed shall not qualify for exemption of capital gain u/s 54EA or u/s 54EB or u/s 54EC.

The shares, debentures or units acquired under (19) and (20) above cannot be converted into money for three years. In case such units or shares are converted into money before the expiry of three years the amount of rebate claimed shall become as tax payable of the year in which these are sold or otherwise transferred.

(21) Investment in Notified bonds issued by NABARD. Investment made by the assessee in notified bonds issued by National Bank for Agriculture and Rural Development will qualify for deduction. [u/s 80C]

(22) Deposit in Post Office Time Deposit and Senior Citizens Savings Scheme

1. Five year time deposit in an account under Post Office Time Deposit Rules 1981.

2. Deposit in an account under the Senior Citizens Savings Scheme Rules 2004.

These deposits are for 5 years and if withdrawn before the expiry of the period of 5 years,

the amount so withdrawn shall be deemed to be income of the assessee of the year in which withdrawn. Not taxable if withdrawn by legal heirers.

Other Points :

  • Deduction u/s 80C shall be allowed even if investment is made in these savings scheme out of assessee’s savings of past previous year or out of any other income which is otherwise exempt under Income-Tax Act.

  • Deduction u/s 80C shall be allowed Out of assessees Gross Total Income. This deduction is not allowed out of assessee’ s income of Long Term Capital Gain and income from gambling etc.

  • Deduction u/s 80C shall be allowed only if amount has been actually deposited or paid in these savings schemes up to 31st March. So any amount due but not paid up to 31st March shall not qualify for this deduction.

 
More.. Topics ... @ ' SALARY'
Salary-Definition & Meaning

Computation of Salary Income

Definition of Word ‘Salary’ [ Section 17(1)]

Section-15 : List of Incomes Chargeable to Income Tax under the head ‘ SALARIES’

Important Points / Characteristics for Computing Salary Income

Provident Fund

Treatment of Provident Funds (PF) for Computing Salary Income

Taxable Portion of annual accretion to RPF [Section 17(1)(vii)]. for Computing Salary Income

Transferred Balance from URPF to RPF [Section 17(1)(vii] for Computing Salary Income

Refund from Provident Fund [Section 17(3)(ii)] for Computing Salary Income

New Pension Scheme [ NPS] for Central Government and other Employees joining new jobs on or after 1-1-2004 for Computing Salary Income

 
Allowance [ Section 17(3)]

Allowance [ Section 17(3)] – for Computing ‘Salary’ Income

Fully Exempted Allowances for Computing ‘Salary’ Income

Fully Taxable Allowances for Computing ‘Salary’ Income

House Rent Allowance (HRA) for Computing ‘Salary’ Income

Allowances covered u/s 10 (14) for Computing ‘Salary’ Income

Meaning Of Salary For Different Purposes
PERQUISITES [Section 17(2)]

Meaning and Types of Perquisites [ Section 17(2)]

Taxability of Perquisites for Computing Salary Income

Perks Exempted From Tax for all Employees and not added in Salary Income

Rent Free House [Section 17(2)(i) Rule 3(1)]

Rules Regarding Calculation Of Value Of Rent Free House

Valuation Of Rent Free Accomodation (Unfurnished & Furnished)

Valuation of Rent Free Accommodation Provided as Concessional Rent [Sec. 17(2)ii)]

Obligation of Employee of Rent Free House met by Employer [Section 17(2)(iv)]

Sum payable by the Employer directly or through a fund to effect an assurance / an annuity [Section 17(2)(v)]

Any specified security or sweat equity shares allotted or transferred to employee [Section 17(2)(vi)] [ w.e.f. 1-4-2009]

Contribution to an Approved Superannuation Fund by the Employer [Sec. 17(2)(vii)]

Interest free or Concessional loan from employer [Rule 3(7)(i)]

Valuation of Perk in respect of Travelling, Touring, Accommodation

Food or Beverages Facility by Employer to Employee

Valuation of Perquisite in respect of Gift Voucher or Token

Valuation of Perquisite in respect of Credit Card

Valuation of Perquisite in respect of Club Facility

Use of Moveable Assets by Employer to Employee

Transfer Of Moveable Assets to the employee

Meaning of Specified Employee for Taxable Perquisites [Section 17(2)(iii) Rule 3]

Valuation of Perquisite of Motor Car or any Other Automotive Conveyance [Rule 3(2)]

Perquisite of Free domestic servants [Rule 3(3)]

Perquisite in respect of free supply of gas, electric energy, water supply [Rule 3(4)]

Free Educational Facilities to Children of Employee’s Household [Rule 3(5)]

Facility of Free or Concessional Private Journey to an employee by the employer engaged in the carriage of passengers or goods [Rule 3(6)]
PROFITS IN LIEU OF SALARY [17(3)]

Receipts treated as Profit in Lieu of Salary [ Section 17(3)]

Leave Travel Concessional (LTC) Assistance [Section 10(5)]

Death-Cum-Retirement Gratuity [Section 10(10)]

Non-Government employees receiving gratuity under payment of Gratuity Act, 1972 [POGA]

Non-Government Employees receiving gratuity (Not covered under payment of Gratuity Act)

PENSION [Monthly and Commuted] for Computing Salary Income

Leave Encashment [Section 10(10AA)] for Computing Salary Income

Any amount received as compensation on termination of employment [Section-10B]

Any amount received on voluntary retirement [Section 10(10C)]

Payment received from Recognised Provident Fund [Section 10(12)]

Any payment from Superannuation Fund [Section 10(13)]

 
DEDUCTIONS OUT OF GROSS SALARY [ Section-16]

Entertainment Allowance to Government Employees [Section-16(ii)]

Tax on Employment Under Section - 16(iii)

 
DEDUCTIONS U/S 80C OUT OF GROSS TOTAL INCOME

Section - 80C : Deductions from Gross Total Income (GTI) in case of Individual and HUF

Qualifying Amount ( Q.A.) for Deduction U/s 80C

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