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Unit 4: Exemptions and Deductions - I

(not time deposits) with a bank, co-operative society or post office, is allowable w.e.f. Notes
01.04.2012 (Assessment Year 2013–14).
17. Section 80U - Deduction in respect of Person suffering from Physical Disability: Deduction
of ` 50,000 to an individual who suffers from a physical disability (including blindness) or
mental retardation. Further, if the individual is a person with severe disability, deduction
of ` 1,00,000 shall be available u/s 80U. Certificate should be obtained from a Govt.
Doctor. The relevant rule is Rule 11D.
18. Deductions Allowable under Section 24 of Income Tax Act: Where a housing property has
been acquired or constructed or repaired or renewed with borrowed capital, the amount
of interest payable yearly on such capital is allowed as deduction under Section 24 of
Income Tax Act, subject to the limits stated below. Penal interest on housing loan is not
eligible for deduction. If a fresh loan has been raised to repay the original loan and the
new loan has been used only for the purpose of repaying the original loan then, the
interest accrued on such fresh loan is allowed for deduction.
If the property is acquired or constructed with the capital borrowed on or after 01-04-1999 and
such acquisition or construction is completed within 3 years of the end of the financial year in
which capital was borrowed then the actual interest payable is allowed as deduction subject to
a maximum ` 1,50,000. In other case interest up to maximum `.30, 000 is deductible. The ceiling
of `.1,50,000 or ` 30,000 is only in case the property is self occupied. There is no limit on
deduction of interest if the property is let out.

Self Assessment

Fill in the blanks:
30. There are different tax saving options i.e. Allowable Deductions or Exemption under
Income Tax, are given under ……………………..of the Income Tax Act, 1961.
31. ………………………..section has been introduced by the Finance Act 2005.
32. Payment of premium for annuity plan of LIC or any other insurer Deduction is available
upto a maximum of ` …………………………
33. The various donations specified in Sec. 80G are eligible for deduction upto either
…………………….with or without restriction as provided in Sec. 80G.

Case Study Should Agricultural Income be Taxed in India?

or the last so many decades the agricultural income derived in India by tax payers
of India is completely exempt from income-tax. A question now crops up in our
Fminds are whether such agricultural income should be taxed right now. Those who
are deriving the agricultural income will surely not like this income to be a part of the
taxable income. But the fact remains that in a country like India where huge expenditure
is still required for the development of the infrastructure and also because of the fact that
the GDP ratio is not in tune with the desired benchmark and keeping all these factors in
view, we can say that it is time now to tax the agricultural income of the agriculturists in
India.
Substantial revenue will be collected by the Tax Department in case agricultural income is
subjected to income-tax. However, the problem in India is that because of the politics of
Contd...

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