Section 80G
For the Assessment Year 2009-10
Donations to electoral trusts to be allowed as a 100 percent deduction in the computation of the income of the donor.
For the Assessment Year 2006-07
Under this section deduction is made in respect of donations to certain funds, charitable institutions, etc. Deduction is not available for donations given in kind.
The deduction is available only for the entity to which donations is made is an approved charitable institution by the government. A receipt of the institute, in evidence made, should be attached to the return of income.
Section 80GG
Under this section a non-salaried person or a salaried person, if, not getting house rent allowance, he/she can claim to the deduction for the rent he pays for a residential accommodation. The deduction available is least of the following:
• Rent paid in excess of 10 per cent of total income.
• 25 per cent of total income.
• Rs 2,000 per month.
The total income of the individual is computed after reducing the amount deductible under other sections, receipts exempt from tax, and long-term &
short-term capital gains taxable at concessional rates.
The deduction is not available if the assessee or his spouse or minor child owns the accommodation in which he stays or works, or carries on his business or profession. Deduction is even not allowned, if the assessee owns a house in any other place, and the concession in respect of self-occupied house is claimed by him.
Section 80GGA
An individual, who is not engaged in any business or profession, is eligible for a deduction of the amount donated to certain institutions engaged in scientific
research, rural development, etc.
Section 80GGC
It is the deduction in respect of contributions given by any person to political parties. An individual shall be allowed to a deduction of any amount contributed by him to a political party.
Approved Entities Under Section 80G (Donation)
Particulars
Qualifying Amount (%
of
Contributi on)
Whether Restricted to 10% of Gross Total Income
Nationla Defence Fund 100 No
Jawaharlal Nehru Memorial Fund 50 No
Prime Minister's Drought Relief Fund 50 No
Prime Minister's National Relief Fund 100 No
Prime Minister's Armenia Earthquake Relief Fund 100 No Africa (Public Contributions-India) Fund 100 No
National Children's Fund 50 No
Indira Gandhi Memorial Trust 50 No
Rajiv Gandhi Foundation 50 No
National Foundation for Communal Harmony 100 No Approved university/educational institution 100 No
Chief Minister's Earthquake Relief Fund 100 No
Zila Saksharta Samiti 100 No
National Blood Transfusion Council 100 No
Medical Relief Funds of state govt. 100 No
Army Central Welfare Fund, Indian Naval Ben. Fund,
Air Force Central Welfare Fund 100 No
National Illness Assistance Fund 100 No
Chief Minister's or Lt. Governor's Relief Fund 100 No
National Sports Fund 100 No
National Cultural Fund 100 No
Donations to govt./ local authority for charitable
purposes (excluding family planning) 50 Yes
Authority/ corporation having income exempt under
erstwhile section or u/s 10(26BB) 50 Yes
Govt./ local authority/ institution/ association towards
promoting family planning 100 Yes
Donations for repair/ renovation of notified places of
worship 50 No
Central Govt.'s Fund for Technology Development &
Application 100 No
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities
100 No
Indian Olympic Association/ other such notified
association 100 No
Any other approved fund or institution 50 Yes
Andhra Pradesh Chief Minister's Cyclone Relied Fund 100 No
Taxation - Incentives, Rebates and Allowances - Relief for Foreign Nationals
Foreigners are entitled to certain special concessions as follows.
1. Remuneration received by a foreigner as an employee of a foreign
enterprise for services rendered in India is not subject to Indian income tax, provided :
o The foreign enterprise is not engaged in any trade or business in India;
o The foreigner is not present in India for more than 90 days in that year; and
o The remuneration is not liable to be deducted in computing the employer's taxable income in India.
Note: In a treaty situation, the 183-day rule applies.
2. A foreigner (including a nonresident Indian) who was not resident in India in any of the four financial years immediately preceding the year of arrival in India is entitled to a special tax concession, if :
o The foreigner has specialized knowledge and experience in construction or manufacturing operations, mining, generation of electricity or any other form of power, agriculture, animal husbandry, dairy farming, deep-sea fishing, shipbuilding, grading and evaluation of diamonds for diamond export or import trade, cookery, information technology (including computer architecture systems, platforms and associated technology), a software development process and tools, or such other fields as the central government may specify; and
The individual is employed in any business in India in a capacity in which specialized knowledge and experience are used.
Note: During the first 48 months commencing from the date of arrival in India, the remuneration will not be subject to any further tax in such a foreigner's hands if the employer bears the tax on the remuneration.
3. A visiting foreign professor who teaches in any university or educational institution in India land whose contact of service is approved by the central government is exempt from tax on remuneration received during the first 36 months from the date of arrival in India, provided the teacher was not resident in India in any of the four financial years immediately preceding the year of arrival in India. If the foreigner continues in employment in India thereafter, the remuneration of the following 24 months is taxable;
however, if the tax is paid by the university or education institution, there is no further tax liability.
4. Salary received by a nonresident foreigner in connection with employment on a foreign ship is exempt from tax if the employee's stay in India during a year does not exceed 90 days.
5. Special exemptions under specified circumstances are available for the following :
o Amounts receivable from a foreign government or a foreign body by a foreigner for undertaking research in India under an approved scheme;
o Remuneration received by employees of a foreign government during training with the Indian government or in an Indian government
undertaking (applicable to individuals assigned to India under cooperative technical assistance programs in accordance with agreements between the Indian government and a foreign government); and
o Remuneration received by nonresident expatriates in connection with the filming of motion pictures by nonresident producers.
Exemptions and concessions for NRI's
All receipts which give rise to income are taxable unless they are specifically exempted from tax under the Act. Such exempted income are enumerated in section 10 of the Act. The same are summarised in the table below :
Section Nature of Income Exemption limit, if
any
1 2 3
10(1) Agricultural income
10(2) Share from income of HUF 10(2A) Share of profit from firm
10(3) Casual and non-recurring receipts
Winnings from races Rs.2500/- other receipts Rs.5000/-10(10D) Receipts from life Insurance Policy
10(16) Scholarships to meet cost of education
10(17) Allowances of MP and MLA. For MLA not exceeding Rs. 600/- per month 10(17A) Awards and rewards
(i) from awards by Central/State Government
(ii) from approved awards by others (iii) Approved rewards from Central &
State Governments
10(26)
Income of Members of scheduled tribes residing in certain areas in North Eastern States or in the Ladakh region.
Only on income arising in those areas or
interest on securities or dividends
10(26A) Income of resident of Ladakh
On income arising in Ladakh or outside India
10(30) (i) Subsidy from Tea Board under approved scheme of replantation
10(31) (ii) Subsidy from concerned Board under approved Scheme of replantation
10(32) Minor's income clubbed with individual Upto Rs.
1,500/-10(33)
Dividend from Indian Companies, Income from units of Unit Trust of India and
Mutual Funds, and income from Venture Capital Company/fund.
10(A)
Profit of newly established undertaking in free trade zones electronic hardware technology park on software technology park for 10 years (net beyond 10 year from 2000-01)
10(B)
Profit of 100% export oriented
undertakings manufacturing articles or things or computer software for 10 years (not beyond 10 years from 2000-01)
10(C)
Profit of newly established undertaking in I.I.D.C or I.G.C. in North-Eastern Region for 10 years
Income from interest
10(15)(i)(iib)(iic)
Interest, premium on redemption or other payments from notified securities, bonds, Capital investment bonds, Relief bonds etc.
To the extent mentioned in notification
10(15)(iv)(h)
Income from interest payable by a Public Sector Company on notified bonds or debentures
10(15)(iv)(i) Interest payable by Government on deposits made by employees of Central
or State Government or Public Sector Company of money due on retirement under a notified scheme
10(15)(vi) Interest on notified Gold Deposit bonds 10(15)(vii) Interest on notified bonds of local
authorities specialised knowledge and experience in specified fields (not resident in any of the four preceding financial years) whose services commence after 31.3.93 and tax on whose remuneration is paid by the employer
Allowances and perquisites by the government to citizens of India for services abroad
10(8)
Remuneration from foreign governments for duties in India under Cooperative technical assistance programmes.
Exemption is provided also in respect of any other income arising outside India provided tax on such income is payable to that Government.
10(10) Death-cum-retirement Gratuity-(i) from Government
(ii) Under payment of Gratuity Act 1972
Amount as per Sub-sections (2), (3) and (4) of the Act.
(iii) Any other Upto one-half months
salary for each year of
10(10AA) Encashment of unutilised earned leave (i) from Central or State government
(ii) from other employers
Upto an amount equal to 10 months salary or Rs. 1,35,360/- which
Amount received on voluntary retirement or termination of service or voluntary separation under the schemes prepared as per Rule 2BA from public sector companies, statutory authorities, local authorities, Indian Institute of
Technology, specified institutes of management or under any scheme of a company or Co-operative Society
Amount as per the Scheme subject to maximum of Rs. 5 lakh
10(11) Payment under Provident Fund Act 1925 or other notified funds of Central
Government
10(12) Payment under recognised provident funds
To the extent provided in rule 8 of Part A of Fourth Schedule 10(13) Payment from approved Superannuation
Fund
10(13A) House rent allowance least
of-(i) actual allowance
Prescribed [See Rule 2BB (1)] special allowances or benefits specifically granted to meet expenses wholly necessarily and exclusively incurred in the performance of duties
To the extent such expenses are actually incurred.
10(18) Pension including family pension of recipients of notified gallantry awards
(i) passage money from employer for the employee and his family for home leave outside India
(ii) Passage money for the employee and his family to 'Home country' after
retirement/termination of service in India.
10(6)(ii)
Remuneration of members of diplomatic missions in India and their staff, provided the members of staff are not engaged in any business or profession or another employment in India.
10(6)(vi)
Remuneration of employee of foreign enterprise for services rendered during his stay in India in specified
circumstances provided the stay does not exceed 90 days in that previous year.
10(6)(xi)
Remuneration of foreign Government employee on training in certain
establishments in India.
Public Financial Institution from exchange risk premium received from person
borrowing in foreign currency if the amount of such premium is credited to a fund specified in section 10(23E)
10(15)(iii) Central Bank of Ceylon from interest on securities
10(15)(v)
Securities held by Welfare
Commissioners Bhopal Gas Victims, Bhopal from Interest on securities held in Reserve Bank's SGL Account No. SL/DH-048
10(20) any local Authority (a) Business income
derived from Supply of
10(20A) Housing or other Development authorities
10(21) Approved Scientific Research Association
10(23)
Notified Sports Association/ Institution for control of cricket, hockey, football, tennis or other notified games. 10(23AA) Regimental fund or Non-public fund
10(23AAA) Fund for welfare of employees or their dependents.
10(23AAB) Fund set up by LIC of India under a pension scheme
10(23B)
Public charitable trusts or registered societies approved by Khadi or Village Industries commission
10(23BB) Any authority for development of khadi or village industries
10(23BBA) Societies for administration of public, religious or charitable trusts or
endowments or of registered religious or
charitable Societies.
10(23BBB)
European Economic Community from Income from interest, dividend or capital gains
10(23BBC) SAARC Fund
10(23C)
Certain funds for relief, charitable and promotional purposes, certain
educational or medical institutions 10(23D) Notified Mutual Funds
10(23E) Notified Exchange Risk Administration Funds
10(23EA) Notified Investors Protection Funds set up by recognised Stock Exchanges
10(23FB)
Venture capital Fund/ company set up to raise funds for investment in venture Capital undertaking
Income from invest-ment in venture capital undertaking
10(23G) Infrastructure capital fund, or infrastructure capital company
10(26B)(26BB) Corporation or any other body set up or
and (27)
financed by and government for welfare of scheduled caste/ scheduled
tribes/backward classes or minorities communities
10(29) Marketing authorities
Income from letting of godown and
warehouses 10(29A) Certain Boards such as coffee Board and
others and specified Authorities
Tax Rebates for Corporate Sector
The classical system of corporate taxation is followed
• Domestic companies are permitted to deduct dividends received from other domestic companies in certain cases.
• Inter Company transactions are honored if negotiated at arm's length.
• Special provisions apply to venture funds and venture capital companies.
• Long-term capital gains have lower tax incidence.
• There is no concept of thin capitalization.
• Liberal deductions are allowed for exports and the setting up on new industrial undertakings under certain circumstances.
• There are liberal deductions for setting up enterprises engaged in developing, maintaining and operating new infrastructure facilities and power-generating units.
• Business losses can be carried forward for eight years, and unabsorbed depreciation can be carried indefinitely. No carry back is allowed.
• Specula tax provisions apply to activities carried on by nonresidents.
• A minimum alternative tax (MAT) on corporations has been proposed by the Finance Bill 1996.
• Dividends, interest and long-term capital gain income earned by an infrastructure fund or company from investments in shares or long-term finance in enterprises carrying on the business of developing, monitoring and operating specified infrastructure facilities or in units of mutual funds involved with the infrastructure of power sector is proposed to be tax exempt.
Concessions Offered to Specific Sectors
Oil Companies
The taxable income of all oil companies which are engaged in petroleum exploration and production is taxed favourably and the following
expenses/allowances are deductible:
• Infructuous or abortive exploration expenses incurred in areas surrendered prior to the commencement of commercial production.
• All expenses incurred for drilling or exploration activities, whether before or after commencement of commercial production, including the cost of
physical assets used. These are deductible after the commercial production.
The allowances are calculated according to the agreement reached between the oil company and the Government.
Oil and Gas Services
All revenues of non-resident oil service companies (excluding royalties and
technical service fees), earned in connection with providing services and facilities (e.g. hire of plant and machinery) to be used in extraction or production of
mineral oils, are taxed at a deemed profit.
Power Projects
Foreign companies engaged in constructing, erecting, testing or commissioning of plant and machinery for turnkey power projects approved by the Government and financed by an international aid programme are taxed on a deemed profit.