Section 80 Deductions – A summary of the activity

Through this activity, you can specify the deductions applicable to an assessee under section 80. These deductions reduce taxes by a fixed percentage or amount from the assessee’s gross total income. Section 80 specifies a list of deduction items in which if the assessee invests, avails deductions to a certain value. For example, contribution towards pension fund, medical premium etc.

A list of deduction items and the maximum amount that an assessee can avail as deduction for each item is issued by the Income Tax Authorities.

Note that assessee refers to a person who is liable to pay tax under the Income Tax Act. In our context, assessee refers to an employee and Gross total income is the total income earned by the employee for the tax year.

Specifying Section 80 deductions for a tax year involves:

• Selecting an year for which the deductions are applicable.

• Specifying the maximum deduction value permitted for each deduction item. This value is expressed either in amount or fixed percentage of investments made.

Getting familiar with the pages inside

Prerequisites

The tax year must have been defined in the “Create Tax Year” activity.

The various deduction items must be defined in the quick codes.

What you can do in this activity

Specify Section 80 Deductions

Section 80 deductions

You can specify the various deductions applicable to employees under section 80 in the “Section 80 Deductions page.

• Select the tax year for which the deductions are applicable.

• Specify the maximum limit applicable for each deduction item.

• Specify the percentage of investments applicable for deduction item if any.

• Save the details entered.