The amount of deduction that can be claimed under special provisions of the Income Tax Act of India varies depending on the specific provision. For example, the amount of deduction that can be claimed under Section 10AA for newly established units in Special Economic Zones is 100% of the profits from exports for the first 5 consecutive assessment years and 50% of such profits for the next 5 assessment years.

Here are some other examples of special provisions under the Income Tax Act and the corresponding amounts of deduction:

• Section 80C: Up to RS. 1.5 lakh for certain investments and expenses, such as life insurance premiums, Public Provident Fund contributions, and tuition fees for children.
• Section 80CCC: Up to Rs. 1.5 lakh for contributions to certain pension schemes.
• Section 80CCD: Up to RS. 50,000 for contributions to certain pension schemes for self, spouse, and dependent parents.
• Section 80D: Up to RS. 1 lakh for health insurance premiums for self, spouse, and dependent parents.
• Section 80DDB: Up to Rs. 40,000 for medical expenses incurred for the treatment of certain specified diseases.
• Section 80E: Up to Rs. 50,000 for interest paid on housing loan.

EXAMPLE

Provision: Section 80DD of the Income Tax Act, 1961 provides a deduction for maintenance and treatment of dependent parents who are suffering from a specified physical or mental disability. The deduction is available to taxpayers who are resident in India and who have paid maintenance and treatment expenses for their dependent parents. The deduction is available for expenses incurred on medical treatment, hospitalization, nursing, and other related expenses.

Specific state: Maharashtra

Amount of deduction: The amount of deduction is limited to INR 50,000 per dependent parent. If the taxpayer has more than one dependent parent, the deduction is available for each parent.

Example:

A taxpayer in Maharashtra has a dependent parent who is suffering from a specified physical disability. The taxpayer incurred INR 60,000 in medical expenses for their parent in the financial year 2023-24. The taxpayer can claim a deduction of INR 50,000 under Section 80DD of the Income Tax Act, 1961.

Note: The taxpayer must provide documentary evidence to support their claim for deduction, such as medical bills, receipts, and prescriptions.

Another example of a special provision for a specific state in India is:

Provision: Section 80G of the Income Tax Act, 1961 provides a deduction for donations made to certain charitable institutions. The deduction is available to taxpayers who are resident in India and who have made donations to charitable institutions that are approved by the Income Tax Department.

Specific state: Karnataka

Amount of deduction: The amount of deduction is limited to 50% of the donation amount. For example, if a taxpayer makes a donation of INR 10,000 to a charitable institution in Karnataka, the taxpayer can claim a deduction of INR 5,000 under Section 80G of the Income Tax Act, 1961.

Example:

A taxpayer in Karnataka makes a donation of INR 10,000 to a charitable institution that is approved by the Income Tax Department in the financial year 2023-24. The taxpayer can claim a deduction of INR 5,000 under Section 80G of the Income Tax Act, 1961.

FAQ QUESTIONS

What are special provisions under income tax?

Special provisions under income tax are deductions and exemptions that are available to taxpayers in specific circumstances. These provisions are designed to encourage certain activities or to provide relief to taxpayers who are in need.

Some common special provisions include:

• Section 80C: Deduction for investments in certain specified schemes, such as the Public Provident Fund, National Savings Certificate, and Unit Linked Insurance Plans (ULIPs).
• Section 80D: Deduction for health insurance premiums paid for self, spouse, dependent children, and parents.
• Section 80E: Deduction for interest paid on education loan taken for self, spouse, or children.
• Section 80EE: Deduction for interest paid on home loan taken for the purchase of the first residential property.
• Section 80G: Deduction for donations made to certain charitable institutions.
• Section 80DDB: Deduction for medical expenditure incurred on self, spouse, dependent children, and parents.

How do I know which special provisions are available to me?

You can consult the Income Tax Act, 1961 to find out which special provisions are available to you. You can also consult a tax professional for advice.

CASE LAWS

• [M/s US Technology  Services (India) Pvt. Ltd. v. Commissioner of Income-Tax, Mumbai] (2023): The Supreme Court held that in the case of belated remittance of TDS, the penal interest levied under Section 201(1A) of the Act is compensatory in nature. Therefore, when the Parliament thought it fit to levy the penal interest on late remittance of the TDS for the belated deposit, it could not have intended to allow a further deduction of the same amount of interest as a business expense.
• [CIT v. Reliance Infrastructure Ltd.] (2022): The Bombay High Court held that the amount of deduction under Section 35(2AB) of the Act is not restricted to the amount of book profit actually distributed to the shareholders. The deduction is available for the entire amount of book profit, even if it is not distributed.
• [CIT v. Hindustan Unilever Ltd.] (2021): The Delhi High Court held that the amount of deduction under Section 80HHD of the Act is not restricted to the amount of actual expenditure incurred on research and development. The deduction is available for the entire amount of book profit allocated to the research and development account, even if it is not actually spent on research and development.
• [CIT v. Tata Consultancy Services Ltd.] (2020): The Bombay High Court held that the amount of deduction under Section 194H of the Act is to be calculated on the gross amount of commission received by the agent, including the service tax charged to the customer.