Deductions from Gross Total Income

Are there any deductions available to NRI as per the Act?

Ans.

As per the Act, there are certain deductions available to NRI for certain payments made which are explained as under. Please note that these are illustrative and not an exhaustive list.

Section

Eligible Assessee

Eligible Payments

Permissible Deductions / Conditions

80C

Individual and HUF

Contribution to PPF, Payment of LIC premium, etc.

Sums paid or deposited in the previous year

-Life insurance premium paid

-Contribution to PPF, SPF, RPF and      superannuation fund

-Repayment of housing loan

-Payment of any tuition fees to any university, college, school etc. situated within India

-Investment in FDs with a maturity period of 5 years or more with a scheduled bank or Post office in India etc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rs. 1,50,000 (Maximum permissible deduction)

80CCC

Individual

Contribution to certain pension funds

Any amount paid or deposited to keep in force a contract for any annuity plan of LIC of India or any other insurer for receiving pension from the fund.

80CCD (1)

Individual

Contribution to pension scheme notified by Central Government

Any amount paid/deposited in his a/c under such Pension Scheme shall be allowed as deduction maximum of –

1. In case of an employee – 10% of his salary in relevant FY

2. Other case – 20% of Gross Total Income in relevant FY

80CCD (1B)

Individual

Contribution to pension scheme of Central Government / National Pension Scheme

Any amount paid or deposited in an account under Pension Scheme notified or as may be notified by the Central Government.

Not allowed for same payment for which 80CCD (1) is availed.

 

 

 

Maximum Rs. 50,000

80D

Individual and HUF

Medical Insurance Premium

 

 

(1)  Any premium paid, otherwise than by way of cash, to keep in force an insurance on the health of:

In case of individual- Self, spouse and dependent children

In case of HUF- Family member

(2)  Contribution to CGHS of such other scheme as notified by Central Government.

Maximum Rs.25,000 (Rs.50,000 in case individual or his/her spouse is a        senior citizen).

 

 

 

 

 

(3)  Payment, including cash payment, for preventive health check-up of himself.

Maximum Rs.5,000 (subject to overall limit of Rs.25,000/ 50,000)

   

 

(4) Any premium paid, otherwise than by way of cash, to keep in force an insurance on the health of parents, whether or not dependent on the individual.



(5)Payment, including cash payment, for preventive health checkup of parents

Maximum Rs.    25,000 (Rs.50,000, in case either or both of the parents are Senior Citizen)

80E

Individuals

Interest on loan taken for higher education

 

Interest on loan should be taken from any financial institution or approved charitable institution.

Such loan is taken for pursuing his higher education or higher education of his or her relative i.e., spouse or children of the individual.

The deduction is available for interest payment in the initial AY (year of commencement of interest payment) and seven AYs                      years immediately succeeding the initial assessment year

or

Until the interest is paid in full by the assessee, whichever is earlier

80G

All Assessees

Donation to certain funds, charitable institution etc.

Prime minister’s National Relief fund,

Prime minister’s Drought Relief fund,

National children fund,

Rajiv Gandhi Foundation,

Government or any approved local authority, institution for promotion of family planning certain funds/ institutions etc.

Qualifying amount is calculated as follows:

Step 1: Compute adjusted total income, i.e., the gross total income as reduced by the following:

There are four categories of deduction: No deduction shall be allowed in excess of Rs. 2,000 if paid in cash

 

 

1

100% deduction of amount donated without any qualifying limit

2

50% deduction of amount donated without any qualifying limit

1.

Deductions under chapter VI-A of the Act except under section 80G

3

100% deduction of amount donated subject  to qualifying limit

2.

STCG

taxable u/s 111A

3.

LTCG

taxable  u/s 112

4

50% deduction of amount donated subject to qualifying limit

Step 2: Calculate 10% of adjusted total income.

Step 3: Calculate the actual donation which is subject to qualifying limit

Step 4: Lower of step 2 or step 3 is the maximum permissible deduction.

Step 5: The said deduction is given first for donations qualifying for 100% deduction and thereafter the balance for donations qualifying for 50% deduction.

80GG

Individual  not in receipt of house rent allowance

Rent Paid:

Least of the following is allowable as deduction :

1.  25% of total income;

2.  Rent paid – 10% of total income

3.  Rs. 5,000 Per month

No deduction if any residential accommodation is owned by the assessee or his spouse or his  minor child or his HUF at  the place where he ordinarily resides or performs the duties of his office or employment or carries on his business or profession

 

80TTA

Individual or HUF

Interest on deposits in Saving a/c

Any income by way  of  interest on deposits in a savings a/c with a bank, a co-operative society or a post office (not  being time deposits, which are repayable on expiry of fixed periods)

Actual interest subject to maximum Rs. 10,000                            a                maximum                of10,000.

 


A NRI pays LIC premium of Rs. 90,000 and also he contributes in PPF for Rs. 70,000. Further, he also contributes in National Pension Scheme (NPS) of Rs. 45,000 then what shall be his eligible deduction?

Ans.

Computation of Eligible deduction

Particulars

Rs.

Rs.

LIC Premium paid

90,000

 

Contribution to PPF

70,000

 

Total

1,60,000

 

Deduction limited to Rs.  1,50,000

 

1,50,000

Deduction of Contribution in NPS

45,000

45,000

Total Deduction to be claimed

 

1,95,000


A NRI make payment of Medical insurance premium for self, wife and dependent children of Rs. 28,000 and also makes payment for mediclaim for parents (aged over 80 years) of Rs. 52,000, What shall be his eligible deduction under Chapter VI-A of the Act?

Ans.

Particulars

Rs.

Rs.

Payment of medical insurance premium Rs. 28,000 for self, wife and dependent children. Deduction limited to RS. 25,000

25,000

 

Payment of medical insurance premium Rs. 52,000 for parents. Deduction limited to Rs. 50,000

 

50,000

 

Eligible deduction

 

75,000

A NRI makes the following payments: (i) Stamp duty paid on acquisition of residential house (self-occupied) Rs.50,000 (ii) Five year time deposit in an account under Post Office Time Deposit Rules, 1981 Rs. 20,000. (iii) Donation to a recognized charitable trust Rs. 25,000 which is eligible for deduction under section 80G at the applicable rate. (iv) Interest on loan taken for higher education of spouse paid during the year Rs. 10,000.

Ans.

Particulars

Rs.

Rs.

Deduction under Sec 80C

Stamp duty paid on acquisition of residential house

Five year term deposit with post office

 

50,000

 

20,000

70,000

 

Under Sec 80E

Interest on loan taken for higher education of spouse being relative

 

 

10,000

 

Donation under sec 80G

Donation to recognized charitable trust(50% of Rs.25,000)

 

12,500

 

Total deduction

 

92,500

Can an Individual claim both Medical Insurance Premium and Medical Bills under Section 80D?

Ans. No, an Individual can claim only Medical Insurance premium. As per Preventive Health Check Up which is included Under Section 80D, i.e. Bills on Health Checkup alone can be included under Section 80D.