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Tax deduction under 80GGA allows any donation amount for scientific research or rural development to be claimed.
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Disability deduction: dependent relief under one provision versus taxpayer's own deduction under the other provision.
Section 80DD provides a deduction for maintenance, including medical treatment, of a handicapped dependent claimed by the taxpayer, whereas Section 80U provides a deduction available to the taxpayer who is himself or herself a person with disability; the key distinction is whether the deduction is for a dependent or for the disabled taxpayer.
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Section 80DD deduction applies only for maintenance of a disabled dependent, not for the taxpayer's own disability.
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Medical insurance premium deduction allowed when an individual pays for spouse, self and dependents under section 80D.
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Tax benefit under 80CCG: guardian may claim deduction for investments made in a minor's name, subject to individual limits.
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Non-resident individuals joining NPS: eligible to open accounts, but accounts close if citizenship changes under pension deduction rules.
Non resident individuals may join the National Pension System and make contributions eligible for pension contribution deduction under income tax provisions; however, an NPS account will be closed if the member's citizenship status subsequently changes, affecting continued participation and account maintenance.
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Deduction under section 80CCC can be claimed by non-resident individuals contributing to pension funds under the statute.
The provision permits a deduction for contributions to pension funds and does not impose a residency restriction, so non-resident individuals who make qualifying contributions to pension funds are eligible to claim the deduction under the section.
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Education loan interest deductible for borrower; tuition fee relief limited to two children under a separate deduction.
Only interest paid on an education loan for the taxpayer or a dependent qualifies under the education-loan interest deduction head, while tuition fees qualify under a separate tuition-fee deduction head and are restricted to tuition paid for a limited number of children; the two deductions are distinct and non-overlapping.
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Deduction under section 80C: Post Office five year time deposit qualifies as an eligible investment for deduction.
Contributions to the Post Office five year time deposit scheme are eligible to be claimed as a deduction under section 80C, and may be included among other specified investments such as life insurance premiums, deferred annuities and provident fund contributions, subject to the overall limits and conditions applicable to 80C deductions.
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Section 80C deduction excludes loan repayments for renovation or repair of residential property under income tax law.
Repayments of loans taken for renovation or repair of residential property are not eligible for deduction under deduction under section 80C, which is confined to specified savings and investment outlays such as life insurance premiums, deferred annuities and provident fund contributions and does not include repair or renovation costs of a dwelling.
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Deduction under section 80C: repayment of principal on housing loan qualifies, interest payments do not.
Payments toward the cost of purchase or construction of a new residential property qualify for deduction under the provision and expressly include repayment of the principal amount of a housing loan; interest paid on such a housing loan is not eligible for deduction under the same provision.
Manuals Income Tax
What kind of deduction is available for deduction u/s 80C?
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Deduction under section 80C covers life insurance, provident fund and deferred annuity contributions and limited tuition fees.
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Manuals Income Tax
Who can take the benefit u/s 80C?
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Deduction under section 80C available only to individuals and HUFs for life insurance and provident fund contributions.
The provision permits deduction for life insurance premia, deferred annuity premiums and contributions to provident funds, available exclusively to Individual and HUF taxpayers as the classes eligible to claim the tax benefit.
Manuals Income Tax
While clubbing income of minor with the parent's income, the investment made by the minor u/s 80C al...
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Clubbing of minor income: investments made by the minor qualifying for investment-based deductions may be claimed when income is clubbed.
When a minor's income is clubbed with a parent's income, investments made by the minor that qualify under the investment-based deduction framework-including life insurance premiums, provident fund contributions, and deferred annuity payments-may be considered as deductible in computing the parent's taxable income.
Manuals Income Tax
Can a self employed individual claim the benefit of HRA u/s 10(13A)?
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HRA exclusion for self-employed; rent deduction available under section 80GG if statutory eligibility conditions are met.
HRA under section 10(13A) is a salary-linked exemption not available to self-employed individuals; self-employed taxpayers may claim a deduction for rent paid under section 80GG, subject to the statutory eligibility conditions and limits governing that deduction.
Manuals Income Tax
Does actual payment of rent is required to claim HRA deduction u/s 10(13A)?
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Actual rent payment required for HRA deduction - absence of rent payment for any period disqualifies entitlement to deduction.
The House Rent Allowance deduction under section 10(13A) is conditional on actual rent payment for residential accommodation; if no rent is paid for any period, no deduction is allowable for that period, and entitlement to HRA or notional occupancy does not replace the need for real rent outgo.
Manuals Income Tax
Whether an employee is allowed deduction u/s 10(13A) even if he owns a house property?
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Deduction under section 10(13A) available despite house ownership when employee resides in rented accommodation.
An employee who actually resides in rented accommodation may claim the salary-specific exemption for rent allowance under section 10(13A) even if he owns a house property in the same or a different city; entitlement depends on factual occupancy of rented premises rather than mere ownership of residential property.

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Income Tax

Comparison of SCHEDULE II "INCOME NOT TO BE INCLUDED IN TOTAL INCOME" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

17 September, 2025

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SCHEDULE II INCOME NOT TO BE INCLUDED IN TOTAL INCOME

Income-tax Act, 2025

At a Glance

SCHEDULE II sets out classes of income that are excluded from "total income" for income-tax purposes. The Bill (Old Version) and the enacted Act differ in several material respects affecting life-insurance exclusions, pension/NPS entries, references to International Financial Services Centre (IFSC) entities, and the inclusion of equalisation-levy income. Affected parties include policyholders, insurers, employers, employees, pension subscribers, IFSC entities and tax authorities. Effective dates are stated within specific entries (for example, policy issue periods and 1 April 2002/2023) where provided; no single overarching commencement date for the Schedule is stated in the Bill text.

Background & Scope

Statutory hook: SCHEDULE II (See section 11) - "Income not to be included in total income." The Schedule lists categories of exempt income (column B) subject to conditions (column C). Definitions and notes at the end assign meanings to terms used in the table. The Bill (Old Version) is the source document for this commentary. Any differences vis-`a-vis the enacted Act are identified only insofar as both texts were provided; where a detail is absent in the Bill text, the phrase "Not stated in the document." has been used.

Statutory Provision Mode

Text & Scope

The Schedule enumerates 16 heads of income excluded from total income, including: agricultural income; sums under life-insurance policies (with sub-conditions tied to period of issue, premium-to-sum-assured ratios and aggregate premium ceilings); provident fund and recognised provident fund payments (with carve-outs for interest on large contributions on/after 1 April 2021); payments under Sukanya Samriddhi, National Pension System (NPS) Trust, Agniveer Corpus Fund, approved superannuation funds; scholarships; awards/rewards instituted or approved by government; interest or other receipts on specified government securities and deposits; interest on gold bonds/certificates; interest on bonds issued by local authorities or State Pooled Finance Entities; income on transfer of certain UTI units; income chargeable to equalisation levy (new insertion); and specific categories u/s 10(15) and related provisions of the 1961 Act as applicable.

Interpretation

The text frames exclusions as conditional: each head is subject to prescribed conditions and definitions in accompanying notes. Legislative intent, as discernible from the Bill text, is to preserve traditional exemptions (agriculture, certain pensions, scholarships, specified government securities) while tightening or clarifying tax-exempt treatment for life-insurance receipts and retirement/savings vehicles by reference to issue dates, premium ratios, aggregate premium ceilings and contribution thresholds. The insertion of equalisation-levy related exclusion (Sl. No. 15) signals explicit recognition of overlap between equalisation-levy chargeability and income-tax neutrality for certain cross-border digital services.

Exceptions/Provisos

Key carve-outs and conditions provided in the Bill include:

  • Life-insurance sums excluded only if policies meet period-specific premium-to-sum-assured ratios and, for certain periods, aggregate premium ceilings (Rs. 2,50,000 or Rs. 5,00,000) - and certain sums (section 127 receipts; Keyman policies) are expressly ineligible.
  • Portions of interest on provident fund/recognised provident fund balances attributable to contributions on/after 1 April 2021 are not eligible for exclusion where contributions exceed specified thresholds (Rs.5,00,000 / Rs.2,50,000) and the amount not excluded is to be computed as prescribed.
  • NPS payments excluded only to the extent they do not exceed 60% of the total amount payable on closure/opt-out.
  • Approved superannuation fund payments are exempt only in specified circumstances (death, commutation at retirement/age, refund in limited cases, transfer to specified pension schemes).
  • Equalisation-levy related incomes are excluded only where not chargeable as royalty/FTS in India under agreements notified u/s 159 (explicit exception in Sl. No. 15).

Illustrations

  • Example 1: A unit-linked life policy issued on 1 Oct 2023 with annual premium such that premium-to-sum-assured ratio is 12% and aggregate premium per tax year is Rs.2,00,000 - the Bill permits exclusion if it meets the Item 2 conditions (unit-linked post-1-April-2023: ratio <=15% for special, <=10% for others; aggregate <=Rs.2,50,000 for ULIP). Whether treated as "special policy" depends on disability/disease status u/rs - Not stated in the document.
  • Example 2: An employee receives accumulated recognised provident fund balance including interest attributable to contributions of Rs.6,00,000 made on/after 1 April 2021 in a year when no employer contribution was made - interest attributable to that contribution is not eligible for exclusion (threshold exceeded Rs.5,00,000); the portion not excluded to be computed as prescribed (procedure Not stated in the document).

Interplay

The Bill references other statutory instruments and provisions: Section 11 (hook), Section 127 (for life-insurance ineligibility), Schedule XI para 8, Schedule XV (definition of "actual capital sum assured"), Insurance Regulatory regulations, the Provident Funds Act, Government Savings Promotion Act (Sukanya Samriddhi), Dept. notifications regarding NPS (notifications not reproduced in the Bill text), Finance Act, 2016 (equalisation levy Chapter VIII) and section 159 agreements. The Bill contemplates Board guidelines for removal of difficulties. Where computation methods are required ("as prescribed"), the Bill defers to rules/regulations; these procedural details are Not stated in the document.

Differences between the Bill (Old Version) and the Enacted Act - Practical Impact

Topic Bill (Old Version) Act (2025) - Differences & Practical Impact
Reference to IFSC in life-insurance entry Exclusion clause expressly excludes policies issued by "International Financial Services Centre insurance intermediary office" from the general test; IFSC office language appears within clause (a).

The Act broadens IFSC coverage differently (references to "International Financial Services Centre Insurance Office") and later adds a special carve-out that aggregate premium conditions do not apply to policies issued on or after 1 April 2025 by the IFSC Insurance Office.

Practical impact: IFSC-issued policies post-1-Apr-2025 enjoy relaxed aggregate-premium limits under the Act versus the Bill - this benefits IFSC policyholders and insurers.
Section reference for ineligible insurance sums Ineligibility lists section 127 (no subsection reference) and Keyman policies.

The Act specifies "section 127(4)" as ineligible; this narrows or clarifies which portion of section 127 is meant.

Practical impact: narrower/clearer exclusion scope for section 127 receipts, reducing interpretive ambiguity.
Aggregate premium thresholds for policies issued on/after 1-Apr-2023 ULIPs: aggregate <=Rs.2,50,000; other policies: aggregate <=Rs.5,00,000.

The Act restates these ceilings but then adds the IFSC carve-out for policies issued on/after 1-Apr-2025.

Practical impact: domestic policyholders unchanged, IFSC policyholders gain advantage.
NPS-related entries (Sl. Nos. 15 & 16) The Bill lacks specific entries for "lump sum amount" defined by a particular notification and for Unified Pension Scheme subscriber-specific references.

The Act adds two discrete entries (Sl. Nos. 15 and 16) dealing with NPS payments to Unified Pension Scheme subscribers and "lump sum amount" per a departmental notification dated 24 Jan 2025.

Practical impact: greater specificity and targeted exemption for Unified Pension Scheme subscribers under NPS, linking to a concrete notification (FX-1/3/2024-PR). This reduces uncertainty for affected NPS subscribers.
Equalisation levy income Bill includes Sl. No. 15 addressing income chargeable to equalisation levy.

The Act omits the Bill's Sl. No. 15 equalisation-levy entry or shifts numbering; comparison shows the Act instead includes other NPS-related items.

Practical impact: the treatment of equalisation-levy incomes requires reconciliation between Act text and prior Bill; taxpayers relying on the Bill's exclusion must verify the final Act wording (Not stated in the document).

Practical Implications

  • Compliance and risk areas: Life-insurance exclusions carry detailed temporal and quantitative conditions (period of issue, premium-to-sum-assured ratio, aggregate premium ceilings). Insurers and policyholders must verify issue date classifications and compute premium ratios and aggregate premiums across the policy term. The explicit ineligibility for keyman policies and section 127 receipts increases scrutiny over policy ownership and assignment.
  • NPS and provident fund entries impose record-keeping obligations: authorities and subscribers must track contributions made on or after 1 April 2021 separately, and identify portions of interest attributable to contributions exceeding thresholds. The method of computing the amount not excluded is left to prescribed rules - until rules are notified, potential uncertainty persists.
  • Equalisation-levy clause (Sl. No. 15): taxpayers and digital service providers should reconcile equalisation-levy exposure and Income-tax chargeability; the clause excludes income chargeable to equalisation levy except where the income is otherwise taxable in India as royalty/FTS under notified agreements (thus creating an interplay with tax treaty determinations and notifications u/s 159).
  • IFSC references: the Bill treats certain IFSC insurance intermediary office receipts differently in the life-insurance entry (exclusion/inclusion language differs versus the Act). Parties operating within IFSCs should note the special treatment and any administrative guidance forthcoming.
  • Procedural uncertainty: multiple entries defer to "as prescribed" computations and to notifications by the Central Government; until those are issued, taxpayers face interpretation and compliance risk. The Board's power to issue binding guidelines (with Central Government approval) is preserved, indicating administrative rule-making will shape practical application.

Key Takeaways

  • The Bill retains traditional exemptions (agriculture, scholarships, certain pension/retirement receipts) while imposing quantified tests on insurance exclusions (period-specific ratios and aggregate premium ceilings).
  • Interest on provident fund balances attributable to large post-1-April-2021 contributions is explicitly excluded from exemption, with thresholds (Rs.5,00,000 / Rs.2,50,000) and prescribed computation methods.
  • Equalisation-levy related income is newly addressed - excluded except where taxable in India as royalty/FTS under notified agreements.
  • Certain specific sums are expressly excluded from insurance exemption (section 127 receipts; Keyman insurance), tightening the prior broader language.
  • Several entries defer key operational questions to rules/notifications; substantial administrative guidance is required to operationalise the Schedule.

Full Text:

SCHEDULE II INCOME NOT TO BE INCLUDED IN TOTAL INCOME

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Acts Income Tax
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