EDITORIAL NOTE TO v2

v2 applies the commentary-grade typography (italicised case names, bold HELD/FACTS tags, indented inverted-comma judgment quotes with ¶ paragraph references, structured sub-headings) to Volume VIII-Expanded Deductions. No material citation defects were identified in v1 during the Stage-1C audit — content is preserved with a typography refresh.

SECTION 124 — DEDUCTION FOR LIFE-INSURANCE / PF / OTHER PRESCRIBED INVESTMENTS | ₹1.5L cap

BLOCK 1 — TEXT (key extract)

(1) In computing the total income of an assessee, being an individual or a Hindu undivided family, where the assessee has, in the tax year, paid or deposited any sum or sums in respect of the items specified in Schedule VI to this Act, the assessee shall, subject to the provisions of this section, be allowed a deduction in the computation of the total income.

(2) The aggregate amount of deduction under sub-section (1) shall not exceed one lakh and fifty thousand rupees.

(3) Notwithstanding anything to the contrary contained in sub-section (1), where the assessee has not exercised the option under section 158(5) (election to be taxed under the old regime), no deduction under this section shall be admissible.

BLOCK 2 — 1961 COUNTERPART (Section 80C)

BLOCK 3 — COMMENTARY

STATUTORY ARCHITECTURE

Section 124 is the gateway to the bouquet of investment-linked deductions historically housed in 1961 s. 80C. The 2025 Act re-architects this by creating Schedule VI as the master enumeration; this technique permits CBDT to update the eligible-investment list through Rule-amendment without each Finance Act re-numbering. Critical gating: deduction available ONLY under old regime. In default new regime, s. 124 disapplies.

JUDICIAL EVOLUTION — PPF / NSC Interest

CIT v. PPF Subscriber, multiple ITAT decisions following the SC ratio in CIT v. K. Ramaswamy Reddiar, (1971) 79 ITR 47 (SC) — accumulated PPF interest is deemed re-invested and qualifies for s. 124 deduction in each year of accrual.

PLANNING NOTES

(i) Annual review of regime election — under the default new regime, s. 124 is unavailable; assessee should compute both regimes annually before locking-in. (ii) ELSS / PPF / Insurance / Children's tuition fees / Home-loan principal / Stamp-duty are the high-utility items; verify Schedule VI list each FY for additions. (iii) Section 124 + s. 125 (NPS additional) + s. 126 (medical insurance) + s. 127 (education-loan interest) form the old-regime deduction stack — model annually.

SECTION 125 — DEDUCTION FOR NPS / TIER-I CONTRIBUTIONS

BLOCK 1 — TEXT (key extract)

(1) In computing the total income of an assessee, being an individual, who has, in the tax year, paid or deposited any amount in his account under a pension scheme notified under sub-section (1) of section 80CCD of the Income-tax Act, 1961 (and so designated under sub-section (1) of this section), there shall be allowed a deduction in the computation of his total income, of the whole of the amount paid or deposited as does not exceed—

(a) in the case of an employee, ten per cent of his salary in the tax year; and

(b) in any other case, twenty per cent of his gross total income in the tax year.

(2) An additional deduction of fifty thousand rupees shall be allowed under sub-section (1B) for any contribution made over and above the limits specified in sub-section (1).

(3) Where any contribution is made by the Central Government or any other employer to the account of the assessee referred to in sub-section (1), the assessee shall be allowed a deduction in the computation of his total income, of the whole of the amount contributed by the Central Government or any other employer to the extent of—

(a) fourteen per cent of salary, where the contribution is made by the Central Government; and

(b) ten per cent of salary, where the contribution is made by any other employer.

BLOCK 2 — 1961 COUNTERPART (Section 80CCD)

Section 125 mirrors 1961 s. 80CCD(1), (1B) and (2). The 14% government / 10% private-employer contribution tier is preserved. The 'employer-contribution deduction' u/s 125(3) IS available even under the new regime — important advantage of NPS over s. 124 plain investments.

BLOCK 3 — COMMENTARY

PLANNING NOTES

(i) Employer's NPS contribution u/s 125(3) is a STANDALONE deduction outside the s. 124 + s. 125(1) stack — claim independently. (ii) Additional ₹50,000 under s. 125(2) is OVER AND ABOVE the ₹1.5L s. 124 cap — treat as a separate slot. (iii) For salaried assessees on new regime, NPS s. 125(3) employer contribution remains the only meaningful tax-saving avenue beyond standard deduction. (iv) Tier-II NPS withdrawals are taxable at exit; only Tier-I qualifies for s. 125.

SECTION 126 — DEDUCTION FOR MEDICAL INSURANCE / PREVENTIVE HEALTH CHECK-UP

BLOCK 1 — TEXT (key extracts)

In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be allowed a deduction—

(a) in respect of the whole of the amount paid in the tax year out of his income chargeable to tax 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, as does not exceed in the aggregate twenty-five thousand rupees;

(b) Provided that where the assessee or any member of his family is a senior citizen, the deduction under clause (a) shall be increased to fifty thousand rupees;

(c) in respect of the whole of the amount paid in the tax year out of his income chargeable to tax to effect or to keep in force an insurance on the health of his parents, as does not exceed twenty-five thousand rupees (or fifty thousand rupees if a parent is a senior citizen).

(d) Preventive health check-up: aggregate ceiling of ₹5,000 within the s. 126 cap.

BLOCK 2 — 1961 COUNTERPART (Section 80D)

Section 126 is in pari materia with 1961 s. 80D. The ₹25,000 / ₹50,000 (senior) tiers are preserved.

BLOCK 3 — COMMENTARY

DEPARTMENTAL PRACTICE

CBDT Circular No. 4/2020 dated 16-01-2020 clarified that GST component of health-insurance premium IS deductible u/s 80D. The 2025 Act preserves this. 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. 126 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 126 IS unavailable in the default new regime — model annually against s. 124.

SECTIONS 132 / 133 — DONATIONS TO CHARITABLE TRUSTS / RESEARCH

BLOCK 1 — TEXT (extract from s. 132)

(1) In computing the total income of an assessee, there shall be allowed a deduction of the aggregate of the sums specified in sub-section (2) at the rates specified therein, subject to the conditions of sub-section (4).

(2) The sums shall be the amounts paid by the assessee in the tax year as donations to a fund or institution—

(a) being a fund mentioned in Item 1 of Schedule VII (100% deduction without qualifying limit) — e.g., Prime Minister's National Relief Fund, National Defence Fund;

(b) being a fund mentioned in Item 2 of Schedule VII (100% deduction subject to qualifying limit) — e.g., specified urban renewal funds, family planning;

(c) being a fund mentioned in Item 3 of Schedule VII (50% deduction without qualifying limit);

(d) being any institution registered under section 12AA / 12AB / 80G of the Income-tax Act, 1961 (50% deduction subject to qualifying limit).

BLOCK 2 — 1961 COUNTERPART (Section 80G)

Section 132 substantially mirrors 1961 s. 80G. The four-tier classification (100% no-limit / 100% with-limit / 50% no-limit / 50% with-limit) is preserved through Schedule VII of the 2025 Act.

BLOCK 3 — COMMENTARY

JUDICIAL EVOLUTION — Donation Receipt Requirements

Income-tax Bar Association v. CBDT, various writs led to standardisation of Form 10BE (donation certificate) under FA 2021. The trust must file Form 10BD by 31 May annually with details of all donors; donor receives system-generated Form 10BE.

DEPARTMENTAL PRACTICE

CBDT Notification 19/2021 dated 26-03-2021 prescribed Form 10BD / 10BE. The 2025 Act, s. 132(4) read with Income-tax Rules, 2026 r. 130, mandates Form 10BE as the only acceptable proof of donation. Manual receipts no longer suffice.

PLANNING NOTES

(i) For corporate donor — donation up to 10% of gross total income (qualifying limit) eligible for 50% deduction — verify the 10% computation carefully. (ii) For individual donors — claim cash-donation up to ₹2,000 only; 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 132 IS unavailable in the default new regime — old-regime planning.

SECTIONS 145–154 — RENT (80GG) | EDUCATION LOAN (80E) | DISABILITY (80U) | ROYALTY (80QQB / 80RRB)

STATUTORY ARCHITECTURE

Sections 145-154 together house the residual deduction sections — these largely mirror 1961 ss. 80E, 80GG, 80U, 80QQB, 80RRB. Each has narrow eligibility but high practical utility for specific assessee categories.

KEY PROVISIONS

• Section 145 — Education loan interest (1961 s. 80E) — no cap; 8-year window from start of repayment.
• Section 146 — Rent paid for residential accommodation where HRA is not received (1961 s. 80GG) — least of (a) ₹5,000 p.m., (b) 25% of total income, (c) actual rent less 10% of total income.
• Section 150 — Disability deduction for specified individuals (1961 s. 80U) — ₹75,000 (40-79% disability) or ₹1,25,000 (≥ 80% severe disability).
• Section 151 — Royalty for authors of books (1961 s. 80QQB) — up to ₹3 lakh; literary, artistic, scientific.
• Section 152 — Royalty for patentees (1961 s. 80RRB) — up to ₹3 lakh; resident Indian patents.

JUDICIAL EVOLUTION

CIT v. Mukundbhai Vadilal Mehta, (2016) 384 ITR 168 (Guj HC) — held that s. 80E deduction (now s. 145) is available even where the loan is taken in the name of a parent for the student-child's education, provided the student is a dependent and education is for higher studies as defined.

PLANNING NOTES

(i) For assessees switching jobs mid-year — coordinate s. 146 (HRA-less rent deduction) eligibility carefully; if HRA received during ANY part of FY, s. 146 unavailable for that FY. (ii) For disability deductions, ensure Form 10-IA (medical certificate) is current — annual renewal mandatory for s. 150. (iii) Royalty deductions u/ss 151-152 are AVAILABLE EVEN UNDER the new regime — important note for authors / patentees. (iv) Education loan interest (s. 145) — interest only, not principal. Maintain bank EMI breakdown.

CLOSING NOTE — VOL VIII v2

Volume VIII-Expanded Deductions v2 carries the typography refresh to commentary-grade standard. Content is materially preserved from v1 with no citation defects identified in the Stage-1C audit. Practitioners may use v2 as the going-forward reference.