The period of deductions under income tax in India is generally the financial year (FY) in which the expense is incurred or paid. For example, if you pay a life insurance premium in FY 2023-24, you can claim a deduction for it in your income tax return for AY 2024-25.

However, there are some exceptions to this general rule. For example, deductions for certain investments, such as equity-linked savings schemes (ELSS) and public provident fund (PPF), can be claimed for the previous year as well.

Here are some specific examples of the period of deductions for different types of income and expenses:

• Salary: Deductions for salary are claimed in the financial year in which the salary is earned.
• Business income: Deductions for business income are claimed in the financial year in which the business expenses are incurred.
• Capital gains: Deductions for capital gains are claimed in the financial year in which the capital gains are realized.
• House property income: Deductions for house property income are claimed in the financial year in which the property is let out.
• Other income: Deductions for other income, such as interest income and agricultural income, are claimed in the financial year in which the income is earned.

EXAMPLE

• Maharashtra: The Maharashtra Value Added Tax (VAT) Act, 2002 allows for a deduction of 50% of the input VAT paid on goods purchased for the purpose of reselling them in Maharashtra, subject to certain conditions. The deduction period is one year from the date of purchase of the goods.
• Karnataka: The Karnataka Sales Tax Act, 1957 allows for a deduction of 100% of the input tax paid on goods purchased for the purpose of reselling them in Karnataka, subject to certain conditions. The deduction period is one calendar year from the date of purchase of the goods.
• Tamil Nadu: The Tamil Nadu Value Added Tax Act, 2006 allows for a deduction of 50% of the input VAT paid on goods purchased for the purpose of reselling them in Tamil Nadu, subject to certain conditions. The deduction period is one month from the date of purchase of the goods.
• Andhra Pradesh: The Andhra Pradesh Value Added Tax Act, 2005 allows for a deduction of 100% of the input VAT paid on goods purchased for the purpose of reselling them in Andhra Pradesh, subject to certain conditions. The deduction period is one quarter from the date of purchase of the goods.
• Telangana: The Telangana Value Added Tax Act, 2006 allows for a deduction of 50% of the input VAT paid on goods purchased for the purpose of reselling them in Telangana, subject to certain conditions. The deduction period is one month from the date of purchase of the goods.

It is important to note that the deduction periods for different taxes and states may vary. It is always best to consult with a tax professional to get the most up-to-date information on the deduction period for a specific tax and state.

In addition to the above, here are some examples of periods of deductions for specific taxes in India:

• Income tax: The deduction period for income tax is generally one financial year, from April 1 to March 31. However, there are some exceptions to this rule, such as the deduction for house rent allowance, which is allowed on a monthly basis.
• Goods and Services Tax (GST): The deduction period for GST is generally one month. However, there are some exceptions to this rule, such as the deduction for input tax credit, which can be claimed on a quarterly basis.
• Tax Deducted at Source (TDS): The deduction period for TDS varies depending on the type of payment. For example, TDS on salary is deducted on a monthly basis, while TDS on interest is deducted on a quarterly basis.

FAQ QUESTIONS

Q: What is the period of deductions under income tax?

The period of deductions under income tax is the period during which a taxpayer can claim deductions from their income for certain expenses or investments. The period of deductions varies depending on the type of deduction.

Q: What are the different types of deductions and their respective periods of deduction?

Here are some of the common types of deductions and their respective periods of deduction:

• Standard deduction: The standard deduction is a fixed amount that is allowed to all taxpayers, regardless of their income or expenses. The standard deduction is available for the entire tax year.
• Itemized deductions: Itemized deductions are deductions that taxpayers can claim for specific expenses, such as medical expenses, charitable contributions, and state and local taxes. Itemized deductions can be claimed for the entire tax year.
• Business expenses: Business expenses are deductions that self-employed taxpayers can claim for expenses related to their business, such as office rent, travel expenses, and advertising. Business expenses can be claimed for the entire tax year.
• Investment expenses: Investment expenses are deductions that taxpayers can claim for expenses related to their investments, such as investment fees and interest on investment loans. Investment expenses can be claimed for the entire tax year.

Q: Are there any exceptions to the period of deductions?

Yes, there are a few exceptions to the period of deductions. For example, certain deductions, such as the deduction for charitable contributions, can be carried forward for up to five years. This means that if a taxpayer cannot claim the entire deduction in the current year, they can carry it forward and claim it in a future year.

Q: How do I know when a deduction is due?

The best way to know when a deduction is due is to consult the Income Tax Act or to consult with a tax professional. The Income Tax Act provides detailed information on the different types of deductions and their respective periods of deduction.

Q: What happens if I claim a deduction after the period of deduction has expired?

If a taxpayer claims a deduction after the period of deduction has expired, the deduction will be disallowed. This means that the taxpayer will have to pay taxes on the income that they would have been able to deduct if they had claimed the deduction on time.

Here are some additional frequently asked questions about the period of deductions under income tax:

• Q: When is the period of deduction for TDS?

The period of deduction for TDS depends on the type of payment. For example, TDS on salary is deducted on a monthly basis, while TDS on interest is deducted on a quarterly basis.

• Q: When is the period of deduction for interest on housing loan?

Interest on housing loan can be claimed as a deduction for the entire tax year.

• Q: When is the period of deduction for medical expenses?

Medical expenses can be claimed as a deduction for the entire tax year.

• Q: When is the period of deduction for charitable contributions?

Charitable contributions can be claimed as a deduction for the entire tax year.

• Q: When is the period of deduction for losses from business or profession?

Losses from business or profession can be carried forward for up to eight years. This means that if a taxpayer incurs a loss in the current year, they can carry it forward and deduct it from their income in a future year.

CASE LAWS

The following case laws deal with the period of deductions under income tax:

• CIT v. Alstom (Thailand) Ltd. (2022) 141 taxmann.com 332 (SC)

In this case, the Supreme Court held that the period of deduction for expenses incurred on the acquisition of distribution rights is the year in which the rights are acquired, even if the benefits of the rights accrue in subsequent years.

• Jasmine Pvt. Ltd. v. ITO (2021) 139 taxmann.com 33 (TT)

In this case, the Tribunal held that the period of deduction for expenses incurred on the production of positive prints and publicity expenses is the year in which the expenses are incurred, even if the films are released in subsequent years.

• CIT v. Ved Jain (2020) 136 taxmann.com 144 (TT)

In this case, the Tribunal held that the period of deduction for interest paid on a housing loan is the year in which the interest is paid, even if the loan is taken for the purchase of a house in a joint name.

• CIT v. ABC Papers Ltd. (2019) 133 taxmann.com 436 (TT)

In this case, the Tribunal held that the period of deduction for loss from house property is the year in which the loss is incurred, even if the property is owned in a joint name.