DEDUCTION OF INCOME TAX ACT ( U/S 80C TO 80U)

DEDUCTIONS U/S 80C TO 80U
 1. Sec 80C- For individuals and H.U.F (i) Regarding payment of LIP; contribution to PF, PPF, etc (ii) Deduction up to Rs. 100000
2. Sec 80CCC- for individual (i) Regarding contribution to Pension Fund. (ii) Deductions; Rs 100000 maximum
3. Sec 80CCD- for individual (i) Regarding contribution to pension scheme of central government. (ii) Deduction: up to 10% of salary contributed by employee = up to 10% of salary contributed by the employer
4. Sec 80CCE- for individual (i) Regarding deductions u/s 80C, 80CCC and 80CCD, (ii) Deduction; up to Rs 1,00,000
5. Sec 80D: for individual and H.U.F Medical insurance premium paid by any mode of payment other than cash for insurance of his health or health of his spouse or dependent children up to Rs 15000+ parent(s) up to Rs 15000, member of H.U.F up to 15000, in case of senior citizen deductable up to Rs 20000.

6. Sec 80DD: for individuals and H.U.F resident in India (i) Regarding (a) expenditure on medical treatment, training and rehabilitation of a disable dependent or/and (b) Amount paid under any scheme framed by the LIC or other insurer etc. (ii) Deduction: Disability Rs 50,000, (b) severe disability Rs 75,000. 7. Sec 80DDB- for individual and H.U.F resident in India (i) Regarding medical treatment. (ii) Deduction; (a) Amount paid or Rs 40,000, whichever is less; (b) For senior citizen- amount paid or Rs 60000, whichever is less. From the aforesaid amount, the amount received from an insurer or reimbursed by employer shall be deducted and the balance shall be allowed.
 8. Sec 80E; for individual (i) Regarding payment of interest on loan taken for higher studies of self, spouse or children. (ii) Deduction; amount paid.
9. Sec 80G: for all assesses (i) Regarding donation to approved funds or institutions in the form of a sum of money. (ii) Deduction: 50% and in certain cases 100% of the qualifying amount of donation.
10. Sec 80GG; for individuals (i) Regarding expenditure on house rent in excess of 10% of T.I, by self employed persons and salaried persons not getting H.R.A. (ii) Deduction; maximum 25% of total income or Rs 2000 pm., whichever is less.
11. Sec 80GGA: for all assesses (i) Regarding payment made to a Scientific Research Association or to a University or College etc. for scientific research or social or statistical research or to an association or institution engaged in any program or rural development or of training persons for such program (ii) Deduction: 100% of the amount paid.
 12. Sec 80GB: for Indian companies (i) Regarding contribution to political parties (ii) Deduction: 100% of sum paid
13. Sec 80GGC: for all assessee except local authority, juridical person and Indian company. (i) Regarding contribution to political parties. (ii) Deduction: 100% of sum paid.
14. Sec 80-1A (i) Regarding infrastructural facility. (ii) Deduction: 100% of profits up to first five assessment years and 305 of profits for the next five assessment years in case of telecommunication services, other 100% of profits for ten assessment years.
15. Sec 80IAB (i) Regarding profits from development of Special Economic Zone. (ii) Deduction: 100% of profits for ten consecutive assessment years.
 16. Sec 80-TB (i) Regarding profits of new industrial undertaking, ship or hotel business etc.
 17. Sec 80-IC (i) Regarding profits from enterprise in special category States. (ii) Deduction: in certain cases 100% of profits for initial ten assessment years:; (iii) In other cases: 100% of profits for initial five assessment years and next five assessment years- company @ 30% and other @ 25%.
18. Sec 80(II). (i) Regarding business of hotels and convention centres in specified area. (ii) Deduction: 100% of profits for five consecutive assessment years.
19. Sec-TE (i) Undertakings in North-Eastern States. (ii) Deduction: 100% of profits for ten consecutive assessment years.
20. Sec 80JJA : for any assessee (i) Regarding profits from business of collecting and processing of bio degradable waste etc. (ii) Deduction: 100% of such profits for initial five assessment years.
 21. Sec 80JJAA: for an Indian Company engaged in the manufacture or production of article or thing (i) Regarding employment of new workmen. (ii) Deduction: 30% of additional wages paid to the new regular workmen employed by the assessee during the previous year.
22. Sec 80LA: For a scheduled Bank etc. (i) Regarding income of offshore banking unit etc. (ii) Deduction: 100% of such income for five assessment years and thereafter 50% of such profits for five assessment years.
23. Sec 80QQB: individual (author) resident in India (i) Regarding royalty in respect of books. Deduction: Up to Rs 3,00,000
24. Sec 80RRB: Individual(patentee) resident in India (i) Regarding royalty in respect of patent. Deduction: up to 3,00,000
25. Sec 80U; for Resident individuals (i) From income of disable person (ii) Deduction: (a) Disability Rs. 50,000 (b) Severe disability Rs. 100000

TRANSFER PRICING

TRANSFER PRICING Overview The essential feature of decentralization in large firms is the creation of responsibility centers (e.g. cost, profit, or investment centers). The performance of these responsibility centers is evaluated on the basis of various accounting numbers, such as standard and actual cost, divisional profit or return on investment. A central role of the management accounting system therefore is to evaluate (i.e. attach a dollar figure to) the transactions between the different responsibility centers. Under the subject cost allocation we studied alternative methods to charge user departments for the services rendered by service departments (frequently cost centers). Transfer prices are used to evaluate the goods and services exchanged between profit centers (divisions) of a decentralized firm. Hence, the transfer price is the price that one division of a company charges another division of the same company for a product transferred between the two divisions. # There are no cash flows between the divisions. The transfer price is used only for accounting purposes. # The transfer price becomes an expense for the receiving manager and a revenue for the supplying manager. # If intra-company transfers are accounted for at prices in excess of cost, appropriate elimination entries have to be made for external reporting purposes. Examples of items to be eliminated for consolidated financial statements include: # Intra-company receivables and payables. # Intra-company sales and costs of goods sold # Intra-company profits in inventories. Purposes of Transfer Pricing There are two major reasons to operate a transfer pricing system: # Appropriate transfer prices help to coordinate the production, sales and pricing decisions of the different divisions. Transfer prices make managers aware of the value that the goods and services have to other segments of the firm. # The use of transfer prices allows the company to generate separate profit figures for each divisions and thereby to evaluate the performance of each division separately. Alternative Methods of Transfer Pricing Transfer pricing policies specify the rules that are being used to calculate the TP. In addition, a TP policy has to be specific about the sourcing question, i.e., are divisions free to buy/sell externally or is it the case that internal transfers are mandated. 1. Market based Transfer Pricing In the presence of competitive and stable external markets, many firms take the external market price as a benchmark for their internal transfer price. Generally, the external market price provides a ceiling not to be exceeded by the internal transfer price. Question: How would you argue that market price is the "correct" TP if the external market is perfectly competitive? Issues with market based TP: • Imperfect Competition • Distress Prices -Protecting "infant" segments 2. Negotiated Transfer Pricing Here, the firm does not specify rules for the determination of transfer prices. Divisional managers are encouraged to negotiate a mutually agreeable transfer price. Negotiated transfer pricing is typically combined with free sourcing. In some companies, though, H.Q. reserves the right to interfere in the negotiation process and impose an "arbitrated" solution. Question: What do you perceive to be the major advantages/disadvantages of negotiated transfer pricing? 3. Cost based Transfer Pricing In the absence of an established market price many companies base the TP on the production cost of the supplying division. 1. Full (absorption) cost; either standard or actual. Popular because of its simplicity and clarity. 2. Cost plus For transfers at full cost the buying division takes all the gains from trade while the supplying division receives none. To overcome this problem the supplying division is frequently allowed to add a mark up in order to make a "reasonable" profit. The transfer price may then be viewed as an approximate market price.

N.S.S. College, Pandalam

N.S.S. College, Pandalam is one of the premier institutions of higher education managed by Nair Service Society, a leading educational agency and a social organization. The founder of the N.S.S., Late Padmasree Mannathu Padmanabhan a great visionary and social reformer believed that education is the most effective means of social reforms. website http://nsscollegepandalam.ac.in

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