EDITORIAL NOTE — VOL VII

This Volume covers Chapter VIA of the 1961 Act — the entire deduction code: ss. 80A (general framework), 80AC (return-filing precondition), 80B (definitions), 80C (investments), 80CCC-80CCD (pension), 80D (medical insurance), 80DD-80DDB (disability/medical), 80E (education loan), 80EE-80EEB (home loan / electric vehicle), 80G-80GGC (donations), 80HH-80JJAA (industry-specific / employment-cost), 80LA (offshore banking units / IFSC), 80M (inter-corporate dividend), 80P (cooperative societies), 80QQB-80RRB (royalty), 80TTA-80TTB (interest), 80U (disability of self). The 2025 Act counterpart is Chapter VIII, ss. 122-154.

All Chapter VIA deductions are GATED through s. 115BAC (post FA 2023, default new regime) — most deductions are unavailable in default new regime; assessee must opt out via Form 10-IEA to claim. Exceptions available even in new regime: s. 80CCD(2) (employer NPS), s. 80CCH (Agnipath), s. 80JJAA (employment cost), s. 80LA (IFSC), s. 80M (inter-corporate dividend).

Section 80A / 80AC — GENERAL FRAMEWORK + RETURN-FILING PRECONDITION

Section 80A — General Cap

(1) The aggregate of deductions u/s 80C-80U cannot exceed the GROSS TOTAL INCOME (cannot create / increase loss). (2) Deduction is allowable only if claimed in return; once claimed, cannot be revised in subsequent years to alter c/f.

Section 80AC — Return-Filing Precondition

For specified profit-linked deductions (80-IA, 80-IAB, 80-IB, 80-IC, 80-ID, 80-IE, 80JJA, 80JJAA, 80LA, 80P, 80QQB, 80RRB), the return must be filed by the due date u/s 139(1) — failure FORFEITS the deduction. FA 2018 extended this rule to most profit-linked deductions; FA 2023 enlarged scope further.

PLANNING NOTES

(i) Track s. 80AC compliance for every profit-linked deduction client — late return filing automatically forfeits 80-IA/IB/IC/IE etc. (ii) For investments u/s 80C-80U (non-profit-linked), late return does NOT forfeit; only s. 80AC categories are gated.

Section 80C — DEDUCTION FOR INVESTMENTS / PAYMENTS

BLOCK 1 — KEY ELIGIBLE PAYMENTS u/s 80C(2)

• (i) Life insurance premium (≤ 10% sum assured for policies post 1-4-2012; was 20% earlier).
• (v) Contribution to Public Provident Fund (PPF), recognised PF, approved superannuation.
• (viii) Contribution to ELSS (Equity Linked Savings Scheme).
• (xi) Sukanya Samriddhi Account.
• (xiii) Contribution to NPS (subject to s. 80CCE aggregate).
• (xviii) Repayment of housing loan PRINCIPAL (interest is u/s 24).
• (xx) Stamp duty / registration charges on house property purchase.
• (xxiii) Tuition fees for children (max 2 children).
• (xviiia) National Savings Certificate (VIII Issue).
• (xxiv) Term deposit (5+ years) with scheduled bank.

BLOCK 2 — 2025 ACT COUNTERPART (Section 124 + Schedule VI)

Section 124 of the 2025 Act read with Schedule VI consolidates the 80C bouquet. ₹1,50,000 cap preserved.

BLOCK 3 — COMMENTARY

Section 80CCE — Aggregate Cap

The aggregate of 80C + 80CCC + 80CCD(1) cannot exceed ₹1,50,000. However, 80CCD(1B) [additional ₹50,000 NPS] and 80CCD(2) [employer NPS up to 14% govt / 10% private] are STANDALONE — do not count toward ₹1.5L cap.

PLANNING NOTES

(i) Annual review of regime election — under default new regime, s. 80C is unavailable. (ii) ELSS / PPF / Insurance / Children's tuition fees / Home-loan principal / Stamp-duty are the high-utility items; verify Schedule annually for additions. (iii) NPS additional ₹50,000 (s. 80CCD(1B)) — over and above ₹1.5L; standalone slot. (iv) For salaried individuals on new regime, NPS s. 80CCD(2) employer contribution remains the ONLY meaningful tax-saving avenue beyond standard deduction.

Section 80D — MEDICAL INSURANCE PREMIA

(1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted such sum, as specified in sub-section (2), payable in the previous year out of his income chargeable to tax to effect or to keep in force an insurance on the health of any person specified in sub-section (2) and which is in accordance with a scheme made by—

(2) The sum referred to in sub-section (1) shall be the aggregate of the following, namely:—

(a) the whole of the amount paid to effect or to keep in force an insurance on the health of the assessee or his family or any contribution made to the Central Government Health Scheme or any payment made on account of preventive health check-up of the assessee or his family as does not exceed in the aggregate twenty-five thousand rupees; and

(b) the whole of the amount paid to effect or to keep in force an insurance on the health of the parent or parents of the assessee or any payment made on account of preventive health check-up of the parent or parents of the assessee as does not exceed in the aggregate twenty-five thousand rupees:

Provided that the aggregate of the sum specified under clauses (a) or (b) shall not exceed fifty thousand rupees in respect of insurance / health of senior citizen (60+ years).

DEPARTMENTAL PRACTICE

CBDT Circular No. 4/2020 dated 16-01-2020 clarified that GST component of health-insurance premium IS deductible u/s 80D. Practitioners should claim premium-inclusive-of-GST.

PLANNING NOTES

(i) Senior-citizen parent — claim ₹50,000 separate slot in addition to self-family ₹25,000. (ii) Preventive health check-up of ₹5,000 within the s. 80D cap — ensure documented through formal lab invoice. (iii) Top-up health-insurance / family-floater premium qualifies; cash-payment of premium (over ₹5,000) is ineligible — pay via cheque / electronic mode. (iv) Section 80D IS unavailable in the default new regime — model annually against s. 80C.

Section 80G — DEDUCTION FOR DONATIONS

STATUTORY ARCHITECTURE

Section 80G provides four-tier donation deduction: (a) 100% no-limit — PM National Relief Fund, National Defence Fund, etc. (s. 80G(2)(a)); (b) 100% subject to qualifying limit (10% of GTI) — specified urban renewal / family planning funds (s. 80G(2)(b)); (c) 50% no-limit — Jawaharlal Nehru Memorial Fund, Indira Gandhi Memorial Trust, etc.; (d) 50% subject to qualifying limit (10% of GTI) — donations to charitable institutions registered u/s 12AA / 12AB / 80G(5).

DEPARTMENTAL PRACTICE

CBDT Notification 19/2021 dated 26-03-2021 prescribed Form 10BD / 10BE — the trust must file Form 10BD by 31 May annually with details of all donors; donor receives system-generated Form 10BE. Manual receipts no longer suffice; Form 10BE is mandatory proof of donation for s. 80G claim.

PLANNING NOTES

(i) For corporate donor — donation up to 10% of GTI (qualifying limit) eligible for 50% deduction — verify the 10% computation carefully. (ii) Cash donations — capped at ₹2,000; above this threshold, electronic / cheque mode mandatory. (iii) Verify the recipient trust's 80G registration (now 80G(5) and Form 10BE-issuing capability) BEFORE donation. (iv) Section 80G IS unavailable in the default new regime.

SECTIONS 80-IA, 80-IB, 80-IC, 80-IE — INDUSTRY-SPECIFIC PROFIT-LINKED

Section 80 — IA — Infrastructure / Power

100% deduction of profits for 10 consecutive years out of 15-year window from year of commencement, for: infrastructure facilities, telecommunication services, industrial parks, power generation/distribution/transmission, water-supply, etc. Sunset for new claims: most sub-sectors closed by FA 2017 / FA 2020.

Section 80 — IB — Industrial Undertakings (small-scale)

Profit-linked deduction (varying percentages) for industrial undertakings in backward areas, hotels, multiplex theatres, hospitals (rural/Tier-2 cities), housing projects (s. 80-IB(10)). Most sunset by 2017.

Section 80 — IC / 80-IE — North-East / Hill State

Special profit-linked deductions for industrial undertakings set up in Sikkim, Himachal Pradesh, Uttarakhand (80-IC) and North-East States (80-IE). FA 2017 sunset for new claims.

Section 80 — IBA — Affordable Housing Project

100% deduction for profits from affordable housing projects approved between 1-6-2016 and 31-3-2022 (extended to 31-3-2024). Stringent conditions on carpet area / unit price / metro vs. non-metro thresholds.

PLANNING NOTES

(i) For all profit-linked deductions, s. 80AC return-filing-by-due-date is mandatory — late filing forfeits. (ii) Tax audit u/s 44AB for these undertakings; Form 10CCB / 10CCBA / 10CCBBA reports required. (iii) Eligibility audit annually — sunset clauses leave many old undertakings still claiming for legacy AYs; verify which AY first claim was made and the 10/15/20-year window.

Section 80JJAA — DEDUCTION FOR ADDITIONAL EMPLOYEE COST

(1) Where the gross total income of an assessee to whom section 44AB applies, includes any profits and gains derived from business, there shall, subject to the conditions specified in sub-section (2), be allowed a deduction of an amount equal to thirty per cent of additional employee cost incurred in the course of such business in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided.

KEY CONDITIONS

• (2)(i) — net addition to employee count of at least the number of new employees added.
• Employee monthly emoluments ≤ ₹25,000.
• Employee employed for at least 240 days in the year (150 days for apparel / footwear / leather).
• Employee enrolled in Recognised PF.

DEPARTMENTAL PRACTICE

Form 10DA — CA certificate for s. 80JJAA — annual filing required. CBDT Circular 11/2019 clarified the 'additional employee cost' computation methodology.

PLANNING NOTES

(i) AVAILABLE EVEN IN NEW REGIME — major advantage; track meticulously for medium / large employers. (ii) For seasonal businesses (apparel/footwear/leather), 150-day threshold instead of 240. (iii) Maintain employee-wise PF enrolment + monthly emoluments + days-worked ledger — auditor's certificate (Form 10DA) requires this.

Section 80M — INTER-CORPORATE DIVIDEND | SECTION 80P — COOPERATIVES

Section 80M (Reintroduced FA 2020 post — DDT abolition)

100% deduction of dividend received by a domestic company from another domestic company / foreign company / business trust, to the extent re-distributed within prescribed window (1 month before due-date u/s 139(1) of receiving company). Cascade-relief mechanism. AVAILABLE EVEN IN NEW REGIME (s. 115BAA / 115BAB).

Section 80P — Cooperative Societies

100% deduction of profits from specified activities (banking with members, agricultural produce supply, cottage industries) for cooperative societies — except cooperative banks (excluded post FA 2006).

PLANNING NOTES

(i) For corporate dividend pass-through, structure timing of redistribution within 80M window. (ii) For cooperative societies, ensure proper member-vs-non-member classification; banking with non-members forfeits 80P.

OTHER OPERATIVE SECTIONS — SHORT NOTES

• 80E — Education loan interest: no cap on amount; 8 years from start of repayment OR till interest is paid, whichever earlier.
• 80EE / 80EEA — Home loan interest (additional): 80EEA up to ₹1.5L for affordable housing loans sanctioned 1-4-2019 to 31-3-2022 — sunset; 80EE legacy.
• 80EEB — Electric vehicle loan interest: up to ₹1.5L for loans sanctioned 1-4-2019 to 31-3-2023 — sunset for new loans.
• 80GG — Rent paid (no HRA received): least of (a) ₹5,000 p.m., (b) 25% of total income, (c) actual rent less 10% of total income; subject to Form 10BA filing.
• 80TTA — Savings bank interest (resident not senior citizen): up to ₹10,000 deduction; not available in new regime.
• 80TTB — Senior citizen interest: up to ₹50,000 (FD + savings bank + post office); not available in new regime.
• 80U — Disability of self: flat ₹75,000 (40-79% disability) or ₹1,25,000 (≥ 80% severe disability); Form 10-IA medical certificate required, annual renewal.
• 80QQB / 80RRB — Royalty (authors of books / patentees): up to ₹3 lakh; AVAILABLE EVEN UNDER new regime — note for authors / patentees.

RULES 1962 CROSS-REFERENCE

Rule 11A — Form 10BA for s. 80GG. Rule 11DD — diseases for s. 80DDB. Form 10-IA — medical certificate for s. 80U / 80DD. Form 10BD / 10BE — donations under s. 80G. Form 10DA — additional employee cost for s. 80JJAA.

CLOSING NOTE — VOL VII (DEDUCTIONS)

Volume VII covers Chapter VIA (ss. 80A-80U) — the deduction code. The s. 115BAC default new regime forecloses most deductions; only s. 80CCD(2) / 80CCH / 80JJAA / 80LA / 80M survive in new regime. Practitioners should annually model both regimes.