List of Income Tax Deduction under section 80C, 80CCG, 80D, 80DD, 80E,80G, 80GG to 80U

Summary and List of Income Tax Deductions under Section 80C, 80CCA, 80CCC, 80CCD,  80CCF, 80CCG, 80D, 80DD, 80DDB, 80E, 80EE, 80G, 80GG, 80GGB, 80GGC, 80JJAA, 80QQB, 80RRB, 80TTA to 80U of Income Tax Act, 1961. There are different tax saving options i.e. Allowable Deductions/Exemption under Income Tax, are given under chapter VIA of the Income Tax Act, 1961. Summary of different tax saving section under which person can claim deduction or exemption from total Income are given below.

  1. Deduction under section 80C for investment in various financial instrument, insurance policy, fixed deposits, etc. Maximum Deduction under Section 80C, 80CCC and 80CCD is Rs.100,000/-   Click to Read further Income Tax 80C Deduction for life insurance, provident fund, ULIP, Mutual Fund, tuition fees, Housing Installment, Term Deposit, NSC
  2. Deduction under section 80CCA: Discontinued from April, 1992 Income Tax Deduction under section 80CCA for investment in National Savings Scheme or payment to a deferred annuity plan
  3. Deduction under section 80CCC for Contribution to pension scheme Maximum Deduction under Section 80C, 80CCC and 80CCD is Rs.100,000/-  Click to Read further Income Tax Deduction under section 80CCC for Deduction in respect of contribution to certain pension funds
  4. Deduction under section 80CCD for Contribution to pension scheme of Central Government Click to Read further Deduction in Respect of Contribution to Pension Scheme of Central Government or Any Other Employer under Section 80CCD
  5. Deduction under section 80CCF: Discontinued from AY 2013-14 Deduction in Respect of Subscription to Long Term Infrastructure Bonds under section 80CCF of Income Tax Act and maximum deduction under section 80CCF was Rs 20000/-.Click to Read further Deduction in Respect of Subscription to Long Term Infrastructure Bonds under section 80CCF of Income Tax Act, 1961.
  6. Deduction under section 80CCG for Contribution to equity shares or equity mutual fund under Rajiv Gandhi Equity Saving Scheme and maximum deduction under Section 80CCG is Rs.50,000/-  Click to Read further  How to Invest in Rajiv Gandhi Equity Savings Scheme under Section 80CCG
  7. Deduction under section 80D for Contribution to medical premium and maximum deduction under Section 80D is Rs.15,000/-  Click to Read further Deduction in Respect of Medical Insurance Premia Section 80D of the Income Tax Act
  8. Deduction under section 80DD for Contribution to medical treatment and maintenance of handicapped dependent and Maximum Deduction under Section 80DD is Rs.100,000/- & Rs 50,000/- Click to Read further Deduction in Respect of Maintenance Including Medical Treatment of a Handicapped Depended under Section 80DD
  9. Deduction under section 80DDB for Contribution to medical treatment of specified diseases and maximum deduction under Section 80DDB is Rs.60,000/- and Rs 40,000/- Click to Read further Deduction in Respect of Expense done for Medical Treatment of Specified Disease under Section 80DDB of the Income Tax Act
  10. Deduction under section 80E for interest payment of loan taken for higher education and there is no maximum Deduction under Section 80E so individual can total interest paid on education loan. Click to Read further Deduction in Respect of Repayment of Loan Taken for Higher Education under Section 80E
  11. Deduction under section 80EE for interest payment of loan taken for new home for home loan amount of Rs 25 Lakhs and maximum Deduction under Section 80EE is Rs.100,000/- Click to Read further Additional Deduction on Home Loan under section 80EE of Income Tax Act
  12. Deduction under section 80G for Contribution/Donation to charitable organization and maximum deduction under Section 80G is 100% of contribution amount to 10% of 10% of adjusted gross total income of the taxpayer. Click to Read further Deduction in Respect of Donation under Section 80G
  13. Deduction under section 80GG for payment of rent by individual salaried taxpayer who is not receiving House rent allowance (HRA) and should not own any residential accommodation and maximum deduction under Section 80GG is Rs 2000/- per Month. Click to Read further Deduction in Respect of Rent paid under section 80GG
  14. Deduction under section 80GGB for Contribution/ Donation to political parties by Indian Company and there is no maximum deduction limit under Section 80GGB so assessee can claim whatever donation he made to political party as deduction u/s 80GGB. Click to Read further Section 80GGB: Deduction in Respect of Contributions Given to Political Parties or Electoral Trust
  15. Deduction under section 80GGC for Contribution/ Donation to political parties by tax payer other than Indian Company and there is no maximum deduction limit under Section 80GGC so assessee can claim whatever donation he made to political party as deduction u/s 80GGC. Click to Read further Income Tax Deduction for Contribution to Political Parties under Section 80GGC of Income Tax Act
  16. Deduction under section 80JJAA for additional wages paid to new workmen in factory and maximum deduction under Section 80JJAA is 30% of additional wages paid to new workmen in factory. Click to Read further Section 80JJAA: Deduction in Respect of Employment Generation
  17. Deduction under section 80QQB for income from royalty to author for lump sum consideration for the assignment or grant of any of his interests in the copyright of any book being a work of literary, artistic or scientific nature, or of royalty or copyright fees in respect of such book and maximum deduction under Section 80QQB is Rs.300,000/- Click to Read further Deduction in Respect of Royalty Income of Authors under section 80QQB
  18. Deduction under section 80RRB Any individual who is resident in India having a patent and receiving any income by way of royalty for that registered patent can claim maximum deduction of Rs 300,000/- from his gross total income for that royalty income.Click to Read further Income Tax Deduction in respect of royalty on patents under Section 80RRB of Income Tax Act, 1961.
  19. Deduction under section 80U for disable person. Individual can claim deduction from taxable income based on his physical disability and amount of deduction is dependent on percentage of disability  and maximum deduction under Section 80U is Rs.50,000/- and Rs 100,000/-. Click to Read further Deduction to a Disable Assessee under section 80U of the Income Tax Act 
  20. Deduction under section 80TTA on interest on saving bank account and maximum deduction under Section 80TTA is Rs.10,000/- Click to Read further Income Tax Deduction in respect of interest on deposits in savings account under Section 80TTA of Income Tax Act, 1961.

Additional Deduction on Home Loan under section 80EE of Income Tax Act

Finance Bill of 2013 (Subject to approval by Parliament of India)  has inserted the new section 80EE in the Income Tax Act, 1961 for giving additional deduction benefits for interest payable on loan, taken between 1.04.2013 to 31.03.2014 for new house and maximum allowable deduction is Rs 1 lakh to individual assessee as their house warming gift but this additional deduction of subject to certain conditions.  Like Loan take between 1.04.2013 to 31.03.2014, Loan Amount of cannot exceed Rs 25 Lakhs, Value of House must be less than Rs 40 Lakhs and person should not own other house property. Read Investment Option for Claiming Deduction under Income Tax

  1. The loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2013 and ending on the 31st day of March, 2014;
  2. The amount of loan sanctioned for acquisition of the residential house property does not exceed twenty-five lakh rupees;
  3. The value of the residential house property does not exceed forty lakh rupees;
  4. The assessee does not own any residential house property on the date of sanction of the loan.

Reference: Section 80EE of the Income Tax Act, 1961

Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year.

‘80EE. (1) In computing the total income of an assessee, being an individual, there shall be
deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property.
(2) The deduction under sub-section (1) shall not exceed one lakh rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2014 and in a case where the interest payable for the previous year relevant to the said assessment year is less than one lakh rupees, the balance amount shall be allowed in the assessment year beginning on the 1st day of April, 2015.
(3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—
(i) the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2013 and ending on the 31st day of March, 2014;
(ii) the amount of loan sanctioned for acquisition of the residential house property does not
exceed twenty-five lakh rupees;
(iii) the value of the residential house property does not exceed forty lakh rupees;
(iv) the assessee does not own any residential house property on the date of sanction of the loan.
(4) Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year.
(5) For the purposes of this section,—
(a) “financial institution” means a banking company to which the Banking Regulation Act, 1949 applies including any bank or banking institution referred to in section 51 of that Act or a housing finance company;
(b) “housing finance company” means a public company formed or registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes.’.

Income Tax Deduction for Contribution to Political Parties under Section 80GGC of Income Tax Act

Income Tax Deduction for Contribution/Donation to Political Parties under Section 80GGC of Income Tax Act. Any person other than local authority and every artificial juridical person wholly or partly funded by the Government can claim unlimited deduction for contribution, donation made to political parties in India. Political parties for section 80GGC means political party registered with registered with election commission of India under section 29A of Representation of the People Act,1951. For Donation by Indian Company to political party deduction can be claimed under section 80GGB (Read Section 80GGB: Deduction in Respect of Contributions Given to Political Parties or Electoral Trust)

Meaning of Person as per section 2(31) of Income Tax Act.

Person includes— (i)  an individual,(ii)  a Hindu undivided family, (iii)  a company, (iv)  a firm, (v)  an association of persons or a body of individuals, whether incorporated or not,(vi)  a local authority, and (vii)  every artificial juridical person, not falling within any of the preceding sub-clauses. Explanation.—For the purposes of this clause, an association of persons or a body of individuals or a local authority or an artificial juridical person shall be deemed to be a person, whether or not such person or body or authority or juridical person was formed or established or incorporated with the object of deriving income, profits or gains

 Reference: Section 80GGC for Deduction in respect of contributions given by any person to political parties.

80GGC. In computing the total income of an assessee, being any person, except local authority and every artificial juridical person wholly or partly funded by the Government, there shall be deducted any amount of contribution made by him, in the previous year, to a political party.

Explanation.—For the purposes of sections 80GGB and 80GGC, “political party” means a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951).

Representation of the People Act,1951: REGISTRATION OF POLITICAL PARTIES
29A. Registration with the Commission of associations and bodies as political parties.
29B. Political parties entitled to accept contribution.
29C. Declaration of donation received by the political parties

29A. Registration with the Election Commission of associations and bodies as political parties.— (1) Any association or body of individual citizens of India calling itself a political party and intending to avail itself of the provisions of this Part shall make an application to the Election Commission for its registration as a political party for the purposes of this Act.

(2) Every such application shall be made,—
(a) if the association or body is in existence at the commencement of the Representation of the People (Amendment) Act, 1988 (1 of 1989), within sixty days next following such commencement;

(3) Every application under sub-section (1) shall be signed by the chief executive officer of the association or body (whether such chief executive officer is known as Secretary or by any other designation) and presented to the Secretary to the Commission or sent to such Secretary by registered post.

(4) Every such application shall contain the following particulars, namely:—
(a) the name of the association or body;
(b) the State in which its head office is situate;
(c) the address to which letters and other communications meant for it should be sent;
(d) the names of its president, secretary, treasurer and other office-bearers;
(e) the numerical strength of its members, and if there are categories of its members, the numerical strength in each category;
(f) whether it has any local units; if so, at what levels;
(g) whether it is represented by any member or members in either House of Parliament or of any State Legislature; if so, the number of such member or members.
(5) The application under sub-section (1) shall be accompanied by a copy of the memorandum or rules and regulations of the association or body, by whatever name called, and such memorandum or rules and regulations shall contain a specific provision that the association or body shall bear true faith and allegiance to the Constitution of India as by law
established, and to the principles of socialism, secularism and democracy, and would uphold the sovereignty, unity and integrity of India.
(6) The Commission may call for such other particulars as it may deem fit from the association or body.
(7) After considering all the particulars as aforesaid in its possession and any other necessary and relevant factors and after giving the representatives of the association or body reasonable opportunity of being heard, the Commission shall decide either to register the association or body as a political party for the purposes of this Part, or not so to register it;
and the Commission shall communicate its decision to the association or body:
Provided that no association or body shall be registered as a political party under this sub—section unless the memorandum or rules and regulations of such association or body conform to the provisions of sub—section (5).
(8) The decision of the Commission shall be final.
(9) After an association or body has been registered as a political party as aforesaid, any change in its name, head office, office-bearers, address or in any other material matters shall be communicated to the Commission without delay.

29B. Political parties entitled to accept contribution.—Subject to the provisions of the Companies Act, 1956 (1 of 1956), every political party may accept any amount of contribution voluntarily offered to it by any person or company other than a Government company:
Provided that no political party shall be eligible to accept any contribution from any foreign source defined under clause (e) of section 2 of the Foreign Contribution (Regulation) Act, 1976 (49 of 1976).

(b) “Government company” means a company within the meaning of section 617; and
(c) “contribution” has the meaning assigned to it under section 293A, of the Companies Act, 1956 (1 of 1956) and includes any donation or subscription offered by any person to a political party; and (d) “person” has the meaning assigned to it under clause (31) of section 2 of the Income-tax Act, 1961 (43 of 1961), but does not include Government company, local authority and every artificial juridical person wholly or partially funded by the Government.

29C. Declaration of donation received by the political parties.—(1) The treasurer of a political party or any other person authorised by the political party in this behalf shall, in each financial year, prepare a report in respect of the following, namely:
(a) the contribution in excess of twenty thousand rupees received by such political party from any person in that financial year;
(b) the contribution in excess of twenty thousand rupees received by such political party from companies other than Government companies in that financial year.
(2) The report under sub-section (1) shall be in such form as may be prescribed.
(3) The report for a financial year under sub-section (1) shall be submitted by the treasurer of a political party or any other person authorised by the political party in this behalf before the due date for furnishing a return of its income of that financial year under section 139 of the Income-tax Act, 1961 (43 of 1961), to the Election Commission.
(4) Where the treasurer of any political party or any other person authorised by the political party in this behalf fails to submit a report under sub-section (3) then, notwithstanding anything contained in the Income-tax Act, 1961 (43 of 1961), such political party shall not be entitled to any tax relief under that Act.

Income Tax Deduction on Interest on Saving Bank Account, Section 80TTA of Income Tax Act

Income Tax Deduction in respect of interest on deposits in savings account under Section 80TTA of Income Tax Act, 1961. For giving additional income tax deduction on Interest on Saving Bank Account  new section 80TTA under Income Tax Act,1961 was  introduced through Finance Act, 2012. This additional deduction u/s 80TTA is applicable only to individual and HUF on interest income from bank saving account .i.e this deduction is not applicable on interest received on time deposit/term deposit.

Eligible Assessee for section 80TTA: only Individual and HUF are elegible under this section, so a firm, an association of persons or a body of individuals will not get the benefit of this section.

Deduction Limit/ Maximum Deduction under Section 80TTA:  Rs 10,000/- or actual interest receipt from saving bank account , which ever is lower. Example1. if person receive interest of Rs 15000/- from saving bank account then he has to pay tax on Rs 5000/- and Rs 10,000/- he can claim as deduction u/s 80TTA. Example2. if person receive interest of Rs 9000/- from saving bank account then he don’t have to pay tax on Rs 9000/- and Rs 9,000/-  can be claimed as deduction u/s 80TTA.

Meaning of Term Deposit: The deposits under the Scheme mean “term deposits” received by the bank for a fixed period and withdrawable only after the expiry of the said fixed period and includes Reinvestment Deposits and Cash Certificates or other deposits of similar nature.

Reference: Section 80TTA  

Deduction in respect of interest on deposits in savings account.

80TTA. (1) Where the gross total income of an assessee, being an individual or a Hindu undivided family, includes any income by way of interest on deposits (not being time deposits) in a savings account with—

 (a) a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);

 (b) a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or

 (c) a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 1898),

there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee a deduction as specified hereunder, namely:—

  (i) in a case where the amount of such income does not exceed in the aggregate ten thousand rupees, the whole of such amount; and

 (ii) in any other case, ten thousand rupees.

(2) Where the income referred to in this section is derived from any deposit in a savings account held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.

Explanation.—For the purposes of this section, “time deposits” means the deposits repayable on expiry of fixed periods.

For definition of “Post Office” as defined in section 2(k) of the Indian Post Office Act, 1898

How to Invest in Rajiv Gandhi Equity Savings Scheme under Section 80CCG

Eligible securities: New investment made in the BSE-100 or CNX-100 by the Bombay Stock Exchange and the National Stock Exchange, equity shares of public sector enterprises, Units of Exchange Traded Funds (ETFs), Mutual Fund Scheme those investing into Initial Public Offer of a public sector undertaking wherein the government shareholding is at least fifty-one per cent and Public offer of BSE-100 or CNX-100 & public sector enterprisesInvestment in Top ELSS (Tax Saving/Equity Linked Saving Scheme) Mutual Funds

Eligible Investor: Any individual who has not opened a demat account and has not made any transactions in the derivative segment as on the date of notification of the Scheme and whose gross total income for the financial year in which the investment is made under the Scheme is less than or equal to ten lakh rupees.Check Your Mutual Fund KYC Status using PAN Number

Eligible Amount: The new retail investor may make any amount of investment in the demat account but the amount eligible for deduction, under the Scheme shall not exceed fifty thousand rupees.  Check the List of Best Large Cap Mutual Fund for Investment

Holding Period of Securities: The period of holding for eligible securities shall be three years. First Year of the holding period is fixed lock-in period and the period of two years will be the flexible lock-in period in which retail investor shall be permitted to trade the eligible securities but demat account under the Scheme is compliant for a cumulative period of a minimum of two hundred and seventy days during each of the two years, the demat account shall be considered compliant for the number of days where value of the investment portfolio of eligible securities , within the flexible lock-in period, is equal to or higher than the amount claimed as investment for the purposes of deduction under section 80CCG of the Act 

Income Tax Deduction in respect of royalty on patents under Section 80RRB

Income Tax Deduction in respect of royalty on patents under Section 80RRB of Income Tax Act, 1961. Any individual who is resident in India having a patent and receiving any income by way of royalty for that registered patent can claim maximum deduction of Rs 300,000/- from his gross total income for that royalty income.

Conditions for Claiming Deduction u/s 80RRB

  • Only Individual Assessee can claim this deduction
  • Deduction is respect of any income by way of royalty in respect of a patent registered
  • Deduction from total Income will be amount of royalty receipt or Rs 3 lakhs whichever is less.
  • For Royalty outside India, deduction for only that amount which was bought into India within a period of six months from the end of the previous year in which such income is earned.
  • Deduction under this section shall be allowed only when assessee furnishes a certificate in the prescribed form .i.e Income Tax Form 10CCE and signed by  Prescribed authority .i.e  Controller General of Patents, Designs & Trade Marks as per rule 19AD(1)
  • Deduction under this section shall be allowed in respect of any income earned from any source outside India only when assessee furnishes a certificate in the prescribed form .ie. Form No. 10H, duly signed by prescribe authority. As per Rule 29A prescribed authority shall be the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange.

Reference: Section 80RRB for Deduction in respect of royalty on patents

80RRB. (1) Where in the case of an assessee, being an individual, who is—

(a)    resident in India;

(b)    a patentee;

(c)    in receipt of any income by way of royalty in respect of a patent registered on or after the 1st day of April, 2003 under the Patents Act, 1970 (39 of 1970), and

his gross total income of the previous year includes royalty, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction, from such income, of an amount equal to the whole of such income or three lakh rupees, whichever is less:

Provided that where a compulsory licence is granted in respect of any patent under the Patents Act, 1970 (39 of 1970), the income by way of royalty for the purpose of allowing deduction under this section shall not exceed the amount of royalty under the terms and conditions of a licence settled by the Controller under that Act :

Provided further that in respect of any income earned from any source outside India, so much of the income, shall be taken into account for the purpose of this section as is brought into India by, or on behalf of, the assessee in convertible foreign exchange within a period of six months from the end of the previous year in which such income is earned or within such further period as the competent authority referred to in clause (c) of the Explanation to section 80QQB may allow in this behalf.

(2) No deduction under this section shall be allowed unless the assessee furnishes a certificate in the prescribed form, duly signed by the prescribed authority, along with the return of income setting forth such particulars as may be prescribed.

(3) No deduction under this section shall be allowed in respect of any income earned from any source outside India, unless the assessee furnishes a certificate in the prescribed form, from the authority or authorities, as may be prescribed, along with the return of income.

(4) Where a deduction for any previous year has been claimed and allowed in respect of any income referred to in this section, no deduction in respect of such income shall be allowed, under any other provision of this Act in any assessment year.

Explanation.—For the purposes of this section,—

(a)    “Controller” shall have the meaning assigned to it in clause (b) of sub-section (1) of section 2 of the Patents Act, 1970 (39 of 1970);

(b)    “lump sum” includes an advance payment on account of such royalties which is not returnable;

(c)    “patent” means a patent (including a patent of addition) granted under the Patents Act, 1970 (39 of 1970);

(d)    “patentee” means the person, being the true and first inventor of the invention, whose name is entered on the patent register as the patentee, in accordance with the Patents Act, 1970 (39 of 1970), and includes every such person, being the true and first inventor of the invention, where more than one person is registered as patentee under that Act in respect of that patent;

(e)    “patent of addition” shall have the meaning assigned to it in clause (q) of sub-section (1) of section 2 of the Patents Act, 1970 (39 of 1970);

(f)    “patented article” and “patented process” shall have the meanings respectively assigned to them in clause (o) of sub-section (1) of section 2 of the Patents Act, 1970 (39 of 1970);

(g)    “royalty”, in respect of a patent, means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head “Capital gains” or consideration for sale of product manufactured with the use of patented process or of the patented article for commercial use) for—

(i)   the transfer of all or any rights (including the granting of a licence) in respect of a patent; or

(ii)   the imparting of any information concerning the working of, or the use of, a patent; or

(iii)   the use of any patent; or

(iv)   the rendering of any services in connection with the activities referred to in sub-clauses (i) to (iii);

(h)             “true and first inventor” shall have the meaning assigned to it in clause (y) of sub-section (1) of section 2 of the Patents Act, 1970 (39 of 1970)

Income Tax 80C Deduction for life insurance, provident fund, ULIP, Mutual Fund,tuition fees, Housing Installment, Term Deposit, NSC

Income Tax Deduction under section 80C of the Income Tax Act, 1961, to individual and HUF for making investment in different tax saving investments. This Income Tax Deduction under section 80C cannot exceed Rs 100000/-(Rs1Lakhs). So Individual can save upto Rs 1 Lakhs by making investment in tax saving schemes given in section 80C of the Income Tax Act. One has to plan Income Tax saving Investment for year from starting of the year. So Tax Planning for Year 2013-14 or AY 2014-15 can be done in the Year 2013-14 and time period for Tax Planning Investment for Year 2012-13 is over on 31st March 2013. So any investment made after 31st March 2012 will be take for Year 2013-14 for Income tax benefit.

Eligible Persons: Individual and HUF (Hindu Undivided Family)

Maximum Deduction: Rs 1 Lakhs only (Rs 100,000/-)

Different Tax Saving Investment for Income Tax Saving and conditions for claiming these income tax benefits.

  1. Life Insurance and Premium thereof for in the case of an individual, the individual, the wife or husband and any child of such individual, and in the case of a Hindu undivided family, any member thereof.
  2. Deferred annuity for an individual, the individual, the wife or husband and any child of such individual
  3. Deduction for Deferred Annuity for Government Employee only and maximum sum is 1/5th or 20% of salary
  4. contribution/investment to Provident fund, recognised provident fund, approved superannuation fund
  5. contribution/investment Unit-linked Insurance Plan
  6. Investment in Tax Saving Mutual Fund Plan or contribution by an individual to any pension fund set up by any Mutual Fund.
  7. Investment in pension fund set up by, the National Housing Bank
  8. Payment of 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 any university, college, school or other educational institution situated within India for the purpose of full-time education of any of in the case of an individual, any two children of such individual.
  9. Repayment of loan or borrowed money taken for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head “Income from house property” and Deduction amount include payment of stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee but exclude the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property or any part thereof has either been occupied by the assessee or any other person on his behalf or been let out.
  10. Term Deposit for 5  year with with a scheduled bank  and scheduled bank” means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), or a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank, being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934);
  11. Investment in the Bonds of National Bank for Agriculture and Rural Development (NABARD)
  12. Investment in an account under the Senior Citizens Savings Scheme Rules, 2004
  13. Investment in 5 year term deposit by Post Office .i,.e NSC by Indian Post.  If any amount, including interest accrued thereon, is withdrawn by the assessee from his account from Senior Citizen scheme or NSC, before the expiry of the period of five years from the date of its deposit, the amount so withdrawn shall be deemed to be the income of the assessee of the previous year in which the amount is withdrawn and shall be liable to tax in the assessment year relevant to such previous year: Provided that the amount liable to tax shall not include the following amounts, namely:—  (i)  any amount of interest, relating to deposits referred to SCS and NSC, which has been included in the total income of the assessee of the previous year or years preceding such previous year; and (ii)  any amount received by the nominee or legal heir of the assessee, on the death of such assessee, other than interest, if any, accrued thereon, which was not included in the total income of the assessee for the previous year or years preceding such previous year.

Meaning of insurance” shall include—

 (a)  a policy of insurance on the life of an individual or the spouse or the child of such individual or a member of a Hindu undivided family securing the payment of specified sum on the stipulated date of maturity, if such person is alive on such date notwithstanding that the policy of insurance provides only for the return of premiums paid (with or without any interest thereon) in the event of such person dying before the said stipulated date;

(b)  a policy of insurance effected by an individual or a member of a Hindu undivided family for the benefit of a minor with the object of enabling the minor, after he has attained majority to secure insurance on his own life by adopting the policy and on his being alive on a date (after such adoption) specified in the policy in this behalf;

Reference Section 80C of Income Tax Act,1961

Deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc.

80C. (1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year, being the aggregate of the sums referred to in sub-section (2), as does not exceed one lakh rupees.

(2) The sums referred to in sub-section (1) shall be any sums paid or deposited in the previous year by the assessee—

 (i)  to effect or to keep in force an insurance on the life of persons specified in sub-section (4);

(ii)  to effect or to keep in force a contract for a deferred annuity, not being an annuity plan referred to in clause (xii), on the life of persons specified in sub-section (4):

Provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity;

(iii) by way of deduction from the salary payable by or on behalf of the Government to any individual being a sum deducted in accordance with the conditions of his service, for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum so deducted does not exceed one-fifth of the salary;

(iv) as a contribution by an individual to any provident fund to which the Provident Funds Act, 1925 (19 of 1925) applies;

(v) as a contribution to any provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of any person specified in sub-section (4);

(vi) as a contribution by an employee to a recognised provident fund;

(vii)  as a contribution by an employee to an approved superannuation fund;

(viii) as subscription to any such security of the Central Government or any such deposit scheme as that Government may, by notification in the Official Gazette, specify in this behalf;

(ix) as subscription to any such savings certificate as defined in clause (c) of section 2 of the Government Savings Certificates Act, 1959 (46 of 1959), as the Central Government may, by notification in the Official Gazette, specify in this behalf;

(x) as a contribution, in the name of any person specified in sub-section (4), for participation in the Unit-linked Insurance Plan, 1971 (hereafter in this section referred to as the Unit-linked Insurance Plan) specified in Schedule II of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);

(xi) as a contribution in the name of any person specified in sub-section (4) for participation in any such unit-linked insurance plan of the LIC Mutual Fund referred to in clause (23D) of section 10, as the Central Government may, by notification in the Official Gazette, specify in this behalf;

(xii) to effect or to keep in force a contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify;

(xiii)  as subscription to any units of any Mutual Fund [referred to in] clause (23D) of section 10 or from the Administrator or the specified company under any plan formulated in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf;

(xiv) as a contribution by an individual to any pension fund set up by any Mutual Fund referred to in] clause (23D) of section 10 or by the Administrator or the specified company, as the Central Government may, by notification in the Official Gazette, specify in this behalf;

(xv) as subscription to any such deposit scheme of, or as a contribution to any such pension fund set up by, the National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987) (hereafter in this section referred to as the National Housing Bank), as the Central Government may, by notification in the Official Gazette, specify in this behalf;

(xvi) as subscription to any such deposit scheme of—

 (a) a public sector company which is engaged in providing long-term finance for construction or purchase of houses in India for residential purposes; or

(b)  any authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both,

as the Central Government may, by notification in the Official Gazette, specify in this behalf;

(xvii) 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,—

(a)  to any university, college, school or other educational institution situated within India;

(b)  for the purpose of full-time education of any of the persons specified in sub-section (4);

(xviii) for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head “Income from house property” (or which would, if it had not been used for the assessee’s own residence, have been chargeable to tax under that head), where such payments are made towards or by way of—

(a)  any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or

(b)  any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him; or

(c)  repayment of the amount borrowed by the assessee from—

(1)  the Central Government or any State Government, or

(2)  any bank, including a co-operative bank, or

(3)  the Life Insurance Corporation, or

(4)  the National Housing Bank, or

(5) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction under clause (viii) of sub-section (1) of section 36, or

(6) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or

(7)  the assessee’s employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or

(8)  the assessee’s employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society; or

(d)  stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee,

but shall not include any payment towards or by way of—

(A)  the admission fee, cost of share and initial deposit which a shareholder of a company or a member of a co-operative society has to pay for becoming such shareholder or member; or

(B)  the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property or any part thereof has either been occupied by the assessee or any other person on his behalf or been let out; or

(C)  any expenditure in respect of which deduction is allowable under the provisions of section 24;

(xix) as subscription to equity shares or debentures forming part of any eligible issue of capital approved by the Board on an application made by a public company or as subscription to any eligible issue of capital by any public financial institution in the prescribed form.

Explanation.—For the purposes of this clause,—

(i)  “eligible issue of capital” means an issue made by a public company formed and registered in India or a public financial institution and the entire proceeds of the issue are utilised wholly and exclusively for the purposes of any business referred to in sub-section (4) of section 80-IA;

(ii)  “public company” shall have the meaning assigned to it in section 3 of the Companies Act, 1956 (1 of 1956);

(iii) “public financial institution” shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956);

(xx) as subscription to any units of any mutual fund referred to in clause (23D) of section 10 and approved by the Board on an application made by such mutual fund in the prescribed form:

Provided that this clause shall apply if the amount of subscription to such units is subscribed only in the eligible issue of capital of any company.

Explanation.—For the purposes of this clause “eligible issue of capital” means an issue referred to in clause (i) of the Explanation to clause (xix) of sub-section (2);

(xxi) as term deposit—

(a)  for a fixed period of not less than five years with a scheduled bank; and

(b)  which is in accordance with a scheme framed and notified, by the Central Government, in the Official Gazette for the purposes of this clause.

Explanation.—For the purposes of this clause, “scheduled bank” means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), or a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank, being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934);]

[(xxii) as subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by notification in the Official Gazette, specify in this behalf;]

[(xxiii) in an account under the Senior Citizens Savings Scheme Rules, 2004;

(xxiv) as five year time deposit in an account under the Post Office Time Deposit Rules, 1981.]

(3) The provisions of sub-section (2) shall apply only to so much of any premium or other payment made on an [insurance policy other than a contract for a deferred annuity] as is not in excess of twenty per cent of the actual capital sum assured.

Explanation.—In calculating any such actual capital sum assured, no account shall be taken—

 (i)  of the value of any premiums agreed to be returned, or

(ii)  of any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person.

The following sub-section (3A) shall be inserted after sub-section (3) of section 80C by the Finance Act, 2012, w.e.f. 1-4-2013 :

(3A) The provisions of sub-section (2) shall apply only to so much of any premium or other payment made on an insurance policy, other than a contract for a deferred annuity, issued on or after the 1st day of April, 2012 as is not in excess of ten per cent of the actual capital sum assured.

Explanation.—For the purposes of this sub-section, “actual capital sum assured” in relation to a life insurance policy shall mean the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account—

(i)  the value of any premium agreed to be returned; or

(ii) any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person.

(4) The persons referred to in sub-section (2) shall be the following, namely:—

(a)  for the purposes of clauses (i), (v), (x) and (xi) of that sub-section,—

 (i)  in the case of an individual, the individual, the wife or husband and any child of such individual, and

(ii)  in the case of a Hindu undivided family, any member thereof;

(b)  for the purposes of clause (ii) of that sub-section, in the case of an individual, the individual, the wife or husband and any child of such individual;

(c)  for the purposes of clause (xvii) of that sub-section, in the case of an individual, any two children of such individual.

(5) Where, in any previous year, an assessee—

(i)  terminates his contract of insurance referred to in clause (i) of sub-section (2), by notice to that effect or where the contract ceases to be in force by reason of failure to pay any premium, by not reviving contract of insurance,—

(a)  in case of any single premium policy, within two years after the date of commencement of insurance; or

(b)  in any other case, before premiums have been paid for two years; or

(ii)  terminates his participation in any unit-linked insurance plan referred to in clause (x) or clause (xi) of sub-section (2), by notice to that effect or where he ceases to participate by reason of failure to pay any contribution, by not reviving his participation, before contributions in respect of such participation have been paid for five years; or

(iii) transfers the house property referred to in clause (xviii) of sub-section (2) before the expiry of five years from the end of the financial year in which possession of such property is obtained by him, or receives back, whether by way of refund or otherwise, any sum specified in that clause,

then,—

 (a)  no deduction shall be allowed to the assessee under sub-section (1) with reference to any of the sums, referred to in clauses (i), (x), (xi) and (xviii) of sub-section (2), paid in such previous year; and

(b)  the aggregate amount of the deductions of income so allowed in respect of the previous year or years preceding such previous year, shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to such previous year.

(6) If any equity shares or debentures, with reference to the cost of which a deduction is allowed under sub-section (1), are sold or otherwise transferred by the assessee to any person at any time within a period of three years from the date of their acquisition, the aggregate amount of the deductions of income so allowed in respect of such equity shares or debentures in the previous year or years preceding the previous year in which such sale or transfer has taken place shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to such previous year.

Explanation.—A person shall be treated as having acquired any shares or debentures on the date on which his name is entered in relation to those shares or debentures in the register of members or of debenture-holders, as the case may be, of the public company.

(6A) If any amount, including interest accrued thereon, is withdrawn by the assessee from his account referred to in clause (xxiii) or clause (xxiv) of sub-section (2), before the expiry of the period of five years from the date of its deposit, the amount so withdrawn shall be deemed to be the income of the assessee of the previous year in which the amount is withdrawn and shall be liable to tax in the assessment year relevant to such previous year:

Provided that the amount liable to tax shall not include the following amounts, namely:—

 (i)  any amount of interest, relating to deposits referred to in clause (xxiii) or clause (xxiv) of sub-section (2), which has been included in the total income of the assessee of the previous year or years preceding such previous year; and

(ii)  any amount received by the nominee or legal heir of the assessee, on the death of such assessee, other than interest, if any, accrued thereon, which was not included in the total income of the assessee for the previous year or years preceding such previous year.]

(7) For the purposes of this section,—

(a)  the insurance, deferred annuity, provident fund and superannuation fund referred to in clauses (i) to (vii);

(b)  unit-linked insurance plan and annuity plan referred to in clauses (xii) to (xiiia);

(c)  pension fund and subscription to deposit scheme referred to in clauses (xiiic) to (xiva);

(d)  amount borrowed for purchase or construction of a residential house referred to in clause (xv),

of sub-section (2) of section 88 shall be eligible for deduction under the corresponding provisions of this section and the deduction shall be allowed in accordance with the provisions of this section.

(8) In this section,—

(i)  “Administrator” means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);

(ii)  “contribution” to any fund shall not include any sums in repayment of loan;

(iii) “insurance” shall include—

 (a)  a policy of insurance on the life of an individual or the spouse or the child of such individual or a member of a Hindu undivided family securing the payment of specified sum on the stipulated date of maturity, if such person is alive on such date notwithstanding that the policy of insurance provides only for the return of premiums paid (with or without any interest thereon) in the event of such person dying before the said stipulated date;

(b)  a policy of insurance effected by an individual or a member of a Hindu undivided family for the benefit of a minor with the object of enabling the minor, after he has attained majority to secure insurance on his own life by adopting the policy and on his being alive on a date (after such adoption) specified in the policy in this behalf;

(iv) “Life Insurance Corporation” means the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956);

(v) “public company” shall have the same meaning as in section 34 of the Companies Act, 1956 (1 of 1956);

(vi) “security” means a Government security as defined in clause (2) of section 25 of the Public Debt Act, 1944 (18 of 1944);

(vii) “specified company” means a company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);

(viii) “transfer” shall be deemed to include also the transactions referred to in clause (f) of section 269UA.

Income Tax Deduction under section 80CCA for investment in National Savings Scheme or payment to a deferred annuity plan

Income Tax Deduction under section 80CCA for investment in National Savings Scheme or payment to a deferred annuity plan.

No deduction under this sub-section shall be allowed in relation to any amount deposited or paid under clauses (i) and (ii) on or after the 1st day of April, 1992.

Read Income Tax Planning for Income Tax Deduction

Deduction in respect of deposits under National Savings Scheme or payment to a deferred annuity plan.

80CCA. (1) Where an assessee, being—

(a)  an individual, or

(b)  a Hindu undivided family,

has in the previous year—

(i)  deposited any amount in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf ; or

(ii) paid any amount to effect or to keep in force a contract for such annuity plan of the Life Insurance Corporation as the Central Government may, by notification in the Official Gazette, specify,

out of his income chargeable to tax, he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income of the whole of the amount deposited or paid (excluding interest or bonus accrued or credited to the assessee’s account, if any) as does not exceed the amount of twenty thousand rupees in the previous year :

Provided that in relation to—

(a)  the assessment years commencing on the 1st day of April, 1989 and the 1st day of April, 1990, this sub-section shall have effect as if for the words “twenty thousand rupees”, the words “thirty thousand rupees” had been substituted;

(b)  the assessment year commencing on the 1st day of April, 1991 and subsequent assessment years, this sub-section shall have effect as if for the words “twenty thousand rupees”, the words “forty thousand rupees” had been substituted:]

Provided further that no deduction under this sub-section shall be allowed in relation to any amount deposited or paid under clauses (i) and (ii) on or after the 1st day of April, 1992.]

(2) Where any amount—

(a) standing to the credit of the assessee under the scheme referred to in clause (i) of sub-section (1)] in respect of which a deduction has been allowed under sub-section (1) together with the interest accrued on such amount is withdrawn in whole or in part in any previous year, or

(b)  is received on account of the surrender of the policy or as annuity or bonus in accordance with the annuity plan of the Life Insurance Corporation in any previous year,

an amount equal to the whole of the amount referred to in clause (a) or clause (b) shall be deemed to be the income of the assessee of that previous year in which such withdrawal is made or, as the case may be, amount is received, and shall, accordingly, be chargeable to tax as the income of that previous year :

Provided that nothing contained in this sub-section shall apply to any amount received by the assessee on account of the surrender of the policy in accordance with the terms of the annuity plan of the Life Insurance Corporation where the assessee elects to surrender before the 1st day of October, 1992, the said annuity plan in respect of which he had paid any amount under clause (ii) of sub-section (1) before the 1st day of April, 1992.

(3) Notwithstanding anything contained in any other provision of this Act, where a partition has taken place among the members of a Hindu undivided family or where an association of persons has been dissolved after a deduction has been allowed under sub-section (1), the provisions of sub-section (2) shall apply as if the person in receipt of income referred to therein is the assessee.

Explanation I.—For the removal of doubts, it is hereby declared that interest on the deposits made under the scheme referred to in clause (i) of sub-section (1)] shall not be chargeable to tax except in the manner and to the extent specified in sub-section (2).

Explanation II.—For the purposes of this section, “Life Insurance Corporation” shall have the same meaning as in clause (a) of sub-section (8) of section 80C.

Investment in Top ELSS (Tax Saving/Equity Linked Saving Scheme) Mutual Funds


Meaning of Equity Linked Saving Scheme or Tax Saving Mutual Fund: ELSS Mutual Fund (also known as Tax Saving Mutual Fund) means Mutual Fund Scheme investing in the stocks listed on the stock exchanges. Objective of ELSS Mutual Fund Scheme is to invest atleast 60% of their AUM in companies which are listed on recognized stock exchange in India. Check List of Best Performing Large Cap Mutual Fund Schemes for Investment in Mutual Fund

Investor get the benefit of Income Tax Deduction of Rs 100,000/- (Maximum Deduction) under section 80C of the Income Tax Act, 1961. But Redemption of units under the Scheme available only after a three year lock-in period from the date of allotment of units.

Investment made in the ELSS Mutual Fund scheme will qualify for a deduction from Gross Total Income upto Rs.100,000/- (along with other prescribed investments) under section 80 C of the Income Tax Act, 1961 to the eligible investors under the Income Tax Act, 1961. Generally ELSS scheme would be benchmarked against BSE 100. List of best tax saving mutual fund schemes based on AUM, last 1 Year Return and Last 3 Year return of these tax saving mutual fund scheme as on 1st April 2013. Check Your Mutual Fund KYC Status online Before Investing in Mutual Fund using your PAN Card

 

Equity Linked Tax Saving Funds

NAV as on

Launch

Corpus

Point to Point Return

P2P Compound Annualized (%)

28-Mar-2013

Date

Feb-13

3 Month

6 Month

1 Year

3 Year

Top Mutual Fund Tax Scheme by AUM       
SBI Magnum Tax Gain Scheme 93

62.61

Mar-93

4381.91

-6.42

-2.28

9.94

2.64

HDFC Taxsaver

225.33

Jun-96

3359.98

-7.46

-2.37

3.22

2.94

Reliance Tax Saver (ELSS) Fund

21.42

Sep-05

1944.69

-12.74

-7.87

3.50

4.58

Birla Sun Life Tax Relief 96

11.00

Mar-08

1415.57

-7.09

-0.63

11.68

0.21

ICICI Prudential Taxplan

144.94

Aug-99

1392.13

-8.17

-1.50

8.53

4.61

        
Top Mutual Fund Tax Scheme by 1 Year Return       
Axis Long Term Equity Fund

14.16

Dec-09

478.06

-4.18

-0.69

15.43

9.51

IDFC Tax Advantage (ELSS) Fund

21.04

Dec-08

151.09

-4.81

1.39

15.35

5.14

HSBC Tax Saver Equity Fund

15.67

Jan-07

185.89

-6.33

0.33

14.81

4.38

Principal Tax Savings Fund

77.61

Mar-96

204.60

-8.41

-0.01

14.30

1.92

IDFC Tax Saver (ELSS) Fund

15.33

Mar-07

34.52

-3.03

1.53

13.78

4.24

        
Top Mutual Fund Tax Scheme by 3 Year Return       
Axis Long Term Equity Fund

14.16

Dec-09

478.06

-4.18

-0.69

15.43

9.51

Quantum Tax Saving Fund

24.02

Dec-08

10.33

-3.32

0.41

11.56

8.02

Franklin India Taxshield

228.71

Apr-99

896.18

-4.80

0.68

9.61

6.76

BNP Paribas Tax Advantage Plan

15.76

Jan-06

120.33

-6.11

0.70

11.70

6.70

Canara Robeco Equity Taxsaver

27.89

Feb-09

544.33

-5.75

-0.85

9.42

6.28

 

Mutual Fund Investment is subject to market risk, please read the offer documents before investing in mutual fund scheme.

Rajiv Gandhi Equity Savings Scheme (Rgess), Mutual Fund Notification

Notification Dated 23rd November, 2012

Summary And Details of  Rajiv Gandhi Equity Saving Scheme (RGESS)

Eligible securities: New investment made in the BSE-100 or CNX-100 by the Bombay Stock Exchange and the National Stock Exchange, equity shares of public sector enterprises, Units of Exchange Traded Funds (ETFs), Mutual Fund Scheme those investing into Initial Public Offer of a public sector undertaking wherein the government shareholding is at least fifty-one per cent and Public offer of BSE-100 or CNX-100 & public sector enterprises

Eligible Investor: Any individual who has not opened a demat account and has not made any transactions in the derivative segment as on the date of notification of the Scheme and whose gross total income for the financial year in which the investment is made under the Scheme is less than or equal to ten lakh rupees.

Eligible Amount: The new retail investor may make any amount of investment in the demat account but the amount eligible for deduction, under the Scheme shall not exceed fifty thousand rupees

Holding Period of Securities: The period of holding of eligible securities shall be three years. First Year of the holding period is fixed lock-in period and the period of two years will be the flexible lock-in period in which retail investor shall be permitted to trade the eligible securities but demat account under the Scheme is compliant for a cumulative period of a minimum of two hundred and seventy days during each of the two years, the demat account shall be considered compliant for the number of days where value of the investment portfolio of eligible securities , within the flexible lock-in period, is equal to or higher than the amount claimed as investment for the purposes of deduction under section 80CCG of the Act

 

 

Details about Rajiv Gandhi Equity Savings Scheme, 2012

In exercise of the powers conferred by sub-section (1) of section 80CCG of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following Scheme, namely Rajiv Gandhi Equity Savings Scheme, 2012.:-

 

Objective of Scheme.-The objective of the Scheme is to encourage the savings of the small investors in domestic capital market.

Eligible securities means any of the following :-

(a) equity shares, on the day of purchase, falling in the list of equity declared as “BSE-100″ or ” CNX-100″ by the Bombay Stock Exchange and the National Stock Exchange, as the case may be;

(b) equity shares of public sector enterprises which are categorised as Maharatna, Navratna or Miniratna by the Central Government;

(c) Units of Exchange Traded Funds (ETFs) or Mutual Fund (MF) schemes with Rajiv Gandhi Equity Savings Scheme (RGESS) eligible securities as underlying, as mentioned in sub-clause (i) or sub-clause (ii) above, provided they are listed and traded on a stock exchange and settled through a depository mechanism;

(d) Follow on Public Offer of sub-clauses (i) and (ii) above;

(e) New Fund Offers (NFOs) of sub-clause (iii) above;

Initial Public Offer of a public sector undertaking wherein the government shareholding is at least fifty-one per cent. which is scheduled for getting listed in the relevant previous year and whose annual turnover is not less than four thousand crore rupees during each of the preceding three years; (vi) ” financial year” means a year commencing on the 1st day of April and ending on the 31stday of March;

New Retail Investor” means the following resident individuals:-

(a) any individual who has not opened a demat account and has not made any transactions in the derivative segment as on the date of notification of the Scheme;

(b) any individual who has opened a demat account before the notification of the Scheme but has not made any transactions in the equity segment or the derivative segment till the date of notification of the Scheme,

and any individual who is not the first account holder of an existing joint demat account shall be deemed to have not opened a demat account for the purposes of this Scheme

Eligibility .- The deduction under the Scheme shall be available to a new retail investor who complies with the conditions of the Scheme and whose gross total income for the financial year in which the investment is made under the Scheme is less than or equal to ten lakh rupees.

5. Procedure at time of opening demat account.-The new retail investor shall follow the following procedure at the time of opening or designating a demat account :-

 

(a) the new retail investor shall open a new demat account or designate his existing demat account for the purpose of availing the benefit under the Scheme;

(b) the new retail investor shall submit a declaration in Form A to the depository participant who will forward the same to the depository for verifying the status of the new retail investor;

(c) the new retail investor shall furnish his Permanent Account Number (PAN) while opening the demat account or designating the existing account as a Rajiv Gandhi Equity Savings Scheme eligible account, as the case may be.

 

6. Procedure for investment under Scheme.- A new retail investor shall make investments under the Scheme in the following manner :-

(a) the new retail investor may make investment in eligible securities in one or more than one transactions during the year in which the deduction has to be claimed;

 

(b) the new retail investor may make any amount of investment in the demat account but the amount eligible for deduction, under the Scheme shall not exceed fifty thousand rupees;

 

(c) the eligible securities brought into the demat account, as declared or designated by the new retail investor, will automatically be subject to lock-in during its first year, as per the provisions of paragraph 7, unless the new retail investor specifies otherwise and for such specification, the new retail investor shall submit a declaration in Form B indicating that such securities are not to be included within the above limit of investment;

 

(d) the new retail investor shall be eligible for a deduction under sub-section (1) of section 80CCG of the Act in respect of the actual amount invested in eligible securities , in the first financial year in respect of which a declaration in Form B has not been made, subject to the maximum investment limit of fifty thousand rupees;

 

(e)the new retail investor who has claimed a deduction under sub- section (1) of section 80CCG of the Act, in any assessment year, shall not be allowed any deduction under the Scheme for any subsequent assessment year;

 

(f) the new retail investor shall be permitted a grace period of three trading days from the end of the financial year so that the eligible securities purchased on the last trading day of the financial year also get credited in the demat account and such securities shall be deemed to have been purchased in the financial year itself;

 

(g) the new retail investor may also keep securities other than the eligible securities covered under the Scheme in the demat account through which benefits under the Scheme are availed;

 

(h) the new retail investor can make investments in securities other than the eligible securities covered under the Scheme and such investments shall not be subject to the conditions of the Scheme nor shall they be counted for availing the benefit under the Scheme;

 

(i) the investment under the Scheme shall consist of all eligible securities covered under the Scheme that are initially bought by the investor under the Scheme or that are bought subsequently by the investor as per the provisions of the Scheme;

 

(j) the deduction claimed shall be withdrawn if the lock-in period requirements of the investment are not complied with or any other condition of the Scheme is violated.

 

7. Period of holding requirements. –

(1) The period of holding of eligible securities shall be three years to be counted in the manner detailed hereunder.

(2) All eligible securities are required to be held for a period called the fixed lock-in period which shall commence from the date of purchase of such securities in the relevant financial year and end one year from the date of purchase of the last set of eligible securities (in the same financial year) on which deduction is claimed under the Scheme.

(3) The new retail investor shall not be permitted to sell, pledge or hypothecate any eligible security during the fixed lock-in period.

(4) The period of two years beginning immediately after the end of the fixed lock-in period shall be called the flexible lock-in period.

(5) The new retail investor shall be permitted to trade the eligible securities after the completion of the fixed lock-in period subject to the following conditions:-

(a) the new retail investor shall ensure that the demat account under the Scheme is compliant for a cumulative period of a minimum of two hundred and seventy days during each of the two years of the flexible lock-in period as laid down hereunder:-

 

(A) the demat account shall be considered compliant for the number of days where value of the investment portfolio of eligible securities , within the flexible lock-in period, is equal to or higher than the amount claimed as investment for the purposes of deduction under section 80CCG of the Act;

(B) in case the value of investment portfolio in the demat account falls due to fall in the market rate of eligible securities in the flexible lock-in period, then notwithstanding sub clause(A), –

(i) the demat account shall be considered compliant from the first day of the flexible lock-in period to the day any such eligible securities are sold during this period;

(ii) where the assessee sells the eligible securities mentioned in sub-clause (B) from his demat account, he shall have to purchase eligible securities and the said demat account shall be compliant from the day on which the value of the investment portfolio in the account becomes –

(I) at least equivalent to the investment claimed as eligible for deduction under section 80CCG of the Act or;

(II) the value of the investment portfolio under the Scheme before such sale,

whichever is less.

(6) The new retail investor’s demat account created under the Scheme shall, on the expiry of the period of holding of the investment, be converted automatically into an ordinary demat account.

(7) For the purpose of valuation of investment during the flexible lock-in period, the closing price as on the previous day of the date of trading, shall be considered.

(8) While making the initial investments upto fifty thousand rupees, the total cost of acquisition of eligible securities shall not include brokerage charges, Securities Transaction Tax, stamp duty, service tax and all taxes, which are appearing in the contract note.

(9) Where the investment of the new retail investor undergoes a change as a result of involuntary corporate actions like demerger of companies, amalgamation, etc. resulting in debit or credit of securities covered under the Scheme, the deduction claimed by such investor shall not be affected.

(10) In case of voluntary corporate actions like buy-back, etc. resulting only in debit of securities, where new retail investor has the option to exercise his choice, the same shall be considered as a sale transaction for the purpose of the Scheme.

(11) The Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) shall notify the corporate actions, referred to in sub-paragraph (9), allowed under the Scheme in this regard.

8. If the new retail investor fails to fulfil any of the provisions of the Scheme, the deduction originally allowed to him under sub-section (1) of section 80CCG of the Act for any previous year, shall be deemed to be the income of the assessee of such previous year and shall be liable to tax for the assessment year relevant to such previous year.

 

9.     (1) The depository shall certify the new retail investor status of the assessee at the time of designating his demat account as demat account for the purpose of the Scheme.

(2) The depository participant shall furnish an annual statement of the eligible securities invested in or traded through the demat account to the demat account holder.

10. The depository shall provide a consolidated statement of details in the electronic format, as specified in Form C, on all the Rajiv Gandhi Equity Savings Scheme beneficiaries to the Director General of Income Tax (Systems) or any other person authorised by him, within a period of thirty days from the end of the relevant financial year.

 

11. For the purpose of paragraph 10, the Director General of Income Tax (Systems) shall determine the procedures, formats and standards for furnishing of the report in electronic format in Form C by the depositories.

 

12. Assessees shall be liable to submit the relevant records to the income-tax authorities for verification, as and when required.

Form A

[See paragraph 5(b)]

Declaration to be submitted by the investors to the depository participants for availing the benefits under the Rajiv Gandhi Equity Savings Scheme.

Name of the Investor:

(first holder)

Address of the investor:

Permanent Account Number (PAN):

1. It is hereby certified that* —

 

(a) I do not have a demat account and I have not traded in any derivatives.

(b) I have demat account no _________________ in ____________________ depository participant but I have not traded in any equity shares or derivatives in this account.

(c) I have a joint demat account no _________________ in ____________________ depository participant but I am not the first account holder.

2. I hereby declare that I have read and understood all the terms and conditions of the Rajiv Gandhi Equity Savings Scheme.

3. It is hereby verified that I am an eligible new retail investor for availing the benefits under the Rajiv Gandhi Equity Savings Scheme.

4. I undertake to abide by all the requirements and fulfill all obligations under the Scheme, and will comply with all the terms and conditions of the Scheme.

5. I understand that, in case I fail to comply with any condition specified in the Scheme, the benefits availed there under will be withdrawn and the tax shall be payable by me accordingly.

 

Signature of the Investor

Place:

Date:

* Tick which ever is appropriate.

Form B

[See paragraph 6(c) and (d)]

Declaration to be submitted by the new retail investor to the depository participant on purchase of eligible securities.

To

Depository participant

Address

It is hereby informed that I have demat account no _________________ in ____________________ depository participant and the following securities

(a)

 

(b)

(c)

(d)

(e) purchased in the aforesaid demat account on ______________are not to be included as investment for the purpose of the Rajiv Gandhi Equity Savings Scheme.

 

Signature

Name of the Investor:

(first holder)

Address of the investor:

Permanent Account Number (PAN):

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