Deductions from Gross Total Income — Overview
INCOME TAX ACT 2025 · CHAPTER VIII · SECTIONS 122–154
Deductions from Gross Total Income — Overview
Chapter VIII of the Income Tax Act 2025 consolidates all deductions from Gross Total Income into one chapter — from the everyday 80C investments to specialised business income deductions. This overview covers the framework, section map, and a complete at-a-glance table of every deduction.
📘 Chapter: VIII — Deductions to be Made in Computing Total Income · Sections 122–154
📖 Parts: A — General (122) · B — Payments (123–137) · C — Incomes (138–152) · D — Other Incomes (153) · E — Other (154)
🔄 Replaces: Chapter VIA (Sections 80A–80U) of the Income Tax Act 1961
📅 Effective: 1st April 2026 (Tax Year 2026-27 onwards)
📖 Parts: A — General (122) · B — Payments (123–137) · C — Incomes (138–152) · D — Other Incomes (153) · E — Other (154)
🔄 Replaces: Chapter VIA (Sections 80A–80U) of the Income Tax Act 1961
📅 Effective: 1st April 2026 (Tax Year 2026-27 onwards)
⚡ Jump to:
Section 122 — Framework for All Deductions
Section 122 is the gateway provision — it governs how all deductions in Chapter VIII operate. Four key rules:
① Deductions from Gross Total Income [122(1)]
All Chapter VIII deductions are computed from Gross Total Income — not from total income. Gross Total Income = sum of all heads of income before deductions.
② Aggregate Cap = Gross Total Income [122(2)]
The total of all deductions under Chapter VIII cannot exceed the Gross Total Income — i.e., deductions cannot create a negative total income.
③ No Double Deduction for AOP/BOI [122(3)]
If a deduction (Sections 133, 135, 137, 138, 141, 142, 143) is allowed at the AOP/BOI level, it is not allowed again for the individual member's share of income.
④ No Double Deduction for Part C [122(4)]
Where profits of an undertaking/unit are allowed as deduction under Part C, the same profits cannot be deducted again under any other provision. Also, Part C deductions cannot exceed the profits of that undertaking.
Key point on interaction with capital gains: Chapter VIII deductions (80C/80D etc.) cannot be set off against STCG under Section 196 or LTCG under Sections 197/198 — they apply only to income taxed at normal slab rates. This rule flows from Sections 196(4), 197(5), and 198(6).
New Tax Regime vs Old Tax Regime — Which Deductions Apply?
Under Section 202 (New Tax Regime / Section 115BAC equivalent), most Chapter VIII deductions are not available. This is the single most important practical distinction taxpayers must understand.
| Deduction | Old Regime (Default for Companies / Optional for Individuals) |
New Regime (Default for Individuals — Section 202) |
Section (2025) |
|---|---|---|---|
| 80C — LIC, PPF, ELSS, EPF, housing loan principal etc. (₹1.5L) | ✅ Available | ❌ Not available | Section 123 |
| NPS employer contribution (14%/10%) + employee (₹50K) | ✅ Available | ✅ Available | Section 124 |
| Agniveer Corpus Fund | ✅ Available | ✅ Available | Section 125 |
| Health Insurance Premium (₹25K + ₹25K parents) | ✅ Available | ❌ Not available | Section 126 |
| Disability — dependant (₹75K / ₹1.25L) | ✅ Available | ❌ Not available | Section 127 |
| Medical treatment — specified diseases (₹40K / ₹1L senior) | ✅ Available | ❌ Not available | Section 128 |
| Higher education loan interest | ✅ Available | ❌ Not available | Section 129 |
| Home loan interest — affordable housing (₹50K) | ✅ Available | ❌ Not available | Section 130 |
| 80EEA home loan interest (₹1.5L) | ✅ Available | ❌ Not available | Section 131 |
| Electric vehicle loan interest (₹1.5L) | ✅ Available | ❌ Not available | Section 132 |
| Donations — 80G (50%/100% of eligible amount) | ✅ Available | ❌ Not available | Section 133 |
| Rent paid — HRA for self-employed (₹5K/month) | ✅ Available | ❌ Not available | Section 134 |
| Scientific research / rural development donations | ✅ Available | ❌ Not available | Section 135 |
| Political party contributions — companies | ✅ Available | N/A (companies) | Section 136 |
| Interest on deposits — savings ₹10K / senior ₹50K | ✅ Available | ❌ Not available | Section 153 |
| Person with disability (₹75K / ₹1.25L) | ✅ Available | ❌ Not available | Section 154 |
Note: Part C income deductions (Sections 138–152 — infrastructure, SEZ, startup, North-East, etc.) are also generally not available under the new tax regime. However, some exceptions exist — notably Section 146 (additional employee cost) which is available, and Section 147 (IFSC/Offshore Banking Units) which is available. Always verify against Section 202 and Schedule VII for the specific deduction.
Part B — Deductions in Respect of Certain Payments (Sections 123–137)
Part B covers payments made by the taxpayer — investments, insurance, loan interest, donations, rent. These are the deductions most relevant to individual taxpayers.
| Section | Deduction | Limit | Who Can Claim | Old Section |
|---|---|---|---|---|
| 123 | LIC premium, PPF, EPF, ELSS, NSC, home loan principal, tuition fees, Sukanya Samridhi etc. (Schedule XV) | ₹1,50,000 | Individual, HUF | 80C |
| 124 | NPS — employer contribution (14%/10% of salary) + employee own contribution | Employer: 14%/10% of salary; Employee: ₹50,000 | Individual (employed) | 80CCD |
| 125 | Agniveer Corpus Fund — own subscription + Central Government matching contribution | Whole amount | Individual (Agniveer) | 80CCH |
| 126 | Health insurance premium — self/family (₹25K), parents (₹25K), senior citizen medical expenses (₹50K) | Up to ₹25K + ₹25K = ₹50K; senior parents: ₹1,00,000 total | Individual, HUF | 80D |
| 127 | Medical treatment and maintenance of dependant with disability | ₹75,000 (disability); ₹1,25,000 (severe disability) | Individual, HUF (resident) | 80DD |
| 128 | Medical treatment of specified diseases (cancer, neurological, etc.) — actual paid or prescribed limit | ₹40,000 (₹1,00,000 for senior citizens) | Individual, HUF (resident) | 80DDB |
| 129 | Interest on education loan for higher education — self or relative (8 years deduction period) | Whole interest amount (no upper cap) | Individual | 80E |
| 130 | Home loan interest — affordable housing (loan sanctioned Apr 2016–Mar 2017; loan ≤ ₹35L; property ≤ ₹50L) | ₹50,000 per year | Individual | 80EE |
| 131 | Home loan interest — (loan sanctioned Apr 2019–Mar 2022; stamp duty value ≤ ₹45L; first-time buyer) | ₹1,50,000 per year | Individual | 80EEA |
| 132 | Electric vehicle loan interest (loan sanctioned Apr 2019–Mar 2023) | ₹1,50,000 per year | Individual | 80EEB |
| 133 | Donations to specified funds and institutions (PM Relief Fund 100%; others 50% of qualifying amount with 10% of Adjusted GTI cap) | 100% or 50% (qualifying donation capped at 10% of AGTI) | Any assessee | 80G |
| 134 | Rent paid for own residence — where HRA is not received (no house owned at place of work) | ₹5,000/month or 25% of total income, whichever is less (above 10% of total income) | Any assessee | 80GG |
| 135 | Donations to scientific research associations, universities, colleges (100% deduction) | Whole amount (not for those with business income; no cash >₹2K) | Any assessee (non-business) | 80GGA |
| 136 | Political party contributions — Indian companies (non-cash only) | Whole amount | Indian company | 80GGB |
| 137 | Political party contributions — any person (non-cash only; not local authority or govt-funded body) | Whole amount | Any assessee | 80GGC |
Part C — Deductions in Respect of Certain Incomes (Sections 138–152)
Part C covers profit-linked deductions for specific businesses and undertakings. Most are transitional provisions that preserve deductions available under the 1961 Act for existing eligible entities.
| Section | Deduction | Rate | Period | Old Section |
|---|---|---|---|---|
| 138 | Infrastructure development (power, telecom, roads, ports, airports etc.) | As per old Sec 80-IA | Balance eligible years | 80-IA |
| 139 | SEZ developer — profits from developing a notified SEZ (notified on/after 1 Apr 2005) | As per old Sec 80-IAB | Balance eligible years | 80-IAB |
| 140 | Eligible start-up — 100% deduction for 3 consecutive years out of 10 years from incorporation | 100% | 3 of 10 years | 80-IAC |
| 141 | Certain industrial undertakings (hospitals, cold chains, scientific research, agri processing etc.) | As per old Sec 80-IB | Balance eligible years | 80-IB |
| 142 | Housing projects (affordable housing / rental housing) — builders and developers | As per old Sec 80-IBA | Balance eligible years | 80-IBA |
| 143 | Undertakings in North-Eastern States — manufacturing commenced Apr 2007–Mar 2017 | 100% | 10 consecutive years | 80-IE |
| 144 | SEZ units (entrepreneurs) — new manufacturing/service units in SEZ; export profits | As per old Sec 10AA | Balance eligible years | 10AA |
| 145 | Bio-degradable waste processing — power, bio-fertiliser, bio-gas, pellets/briquettes | 100% | 5 consecutive years | 80JJA |
| 146 | Additional employee cost — 30% of additional employee cost for new employment created | 30% of additional employee cost | 3 consecutive years | 80JJAA |
| 147 | Offshore Banking Units in SEZ + IFSC units — interest/other income | 100% | 10 out of 15 years | 80LA |
| 148 | Inter-corporate dividends received by domestic company — passed through to shareholders | Amount distributed as dividend to shareholders (no double taxation) | Annual | 80M |
| 149 | Co-operative societies — income from banking, cottage industry, agri marketing, processing etc. | ₹1 lakh or 100% of profits (varies by category) | Annual | 80P |
| 151 | Royalty income of resident authors — literary, artistic, scientific books (not textbooks) | Whole of income or ₹3,00,000, whichever is less | Annual | 80QQB |
| 152 | Royalty income of resident patentees — patents registered after 1 Apr 2003 | Whole of income or ₹3,00,000, whichever is less | Annual | 80RRB |
Parts D & E — Interest on Deposits & Disability Deductions
Section 153 — Interest on Deposits [Old: 80TTA / 80TTB]
| Assessee | Deposit Type | Limit |
|---|---|---|
| Individual (non-senior) | Savings account only (no FD) | ₹10,000 |
| Senior citizen (60+) | Any deposit incl. FD | ₹50,000 |
| HUF | Savings account only | ₹10,000 |
Covers: banks, co-operative banks, Post Office deposits
Section 154 — Person with Disability [Old: 80U]
| Category | Deduction |
|---|---|
| Person with disability (40%+ impairment) | ₹75,000 |
| Person with severe disability (80%+ impairment) | ₹1,25,000 |
Certificate from medical authority required. Available only to resident individuals.
Full Section Map — Chapter VIII (2025 Act vs 1961 Act)
| 2025 Act | Subject | 1961 Act |
|---|---|---|
| PART A — GENERAL | ||
| 122 | Framework — deductions from GTI, aggregate cap, no double deduction | 80A |
| PART B — PAYMENTS | ||
| 123 | LIC/PPF/EPF/ELSS/NSC/housing loan principal/tuition (₹1.5L cap) — Schedule XV | 80C |
| 124 | NPS — employer (14%/10%) + employee own (₹50K) | 80CCD |
| 125 | Agniveer Corpus Fund contributions | 80CCH |
| 126 | Health insurance premium + preventive health check-up | 80D |
| 127 | Dependant with disability — maintenance (₹75K/₹1.25L) | 80DD |
| 128 | Medical treatment — specified diseases (₹40K / ₹1L senior) | 80DDB |
| 129 | Education loan interest (8 years; self or relative) | 80E |
| 130 | Home loan interest — affordable housing 2016–17 (₹50K) | 80EE |
| 131 | Home loan interest — affordable housing 2019–22 (₹1.5L) | 80EEA |
| 132 | Electric vehicle loan interest (₹1.5L) | 80EEB |
| 133 | Donations — 80G (100%/50%) | 80G |
| 134 | Rent paid (₹5K/month cap) | 80GG |
| 135 | Scientific research / rural development donations | 80GGA |
| 136 | Political contributions — companies | 80GGB |
| 137 | Political contributions — any person | 80GGC |
| PART C — INCOMES | ||
| 138 | Infrastructure development | 80-IA |
| 139 | SEZ developer | 80-IAB |
| 140 | Eligible start-up (100% for 3 of 10 years) | 80-IAC |
| 141 | Certain industrial undertakings (hospitals, cold storage etc.) | 80-IB |
| 142 | Housing projects (affordable / rental) | 80-IBA |
| 143 | North-Eastern States undertakings (100% for 10 years) | 80-IE |
| 144 | SEZ units — export profits | 10AA |
| 145 | Bio-degradable waste processing (100% for 5 years) | 80JJA |
| 146 | Additional employee cost (30% for 3 years) | 80JJAA |
| 147 | Offshore Banking Units + IFSC (100% for 10 years) | 80LA |
| 148 | Inter-corporate dividends — domestic companies | 80M |
| 149–150 | Co-operative societies income deduction | 80P |
| 151 | Authors' royalty income (₹3L cap) | 80QQB |
| 152 | Patent royalty — resident patentee (₹3L cap) | 80RRB |
| PARTS D & E | ||
| 153 | Interest on deposits — savings ₹10K / senior ₹50K | 80TTA / 80TTB |
| 154 | Person with disability — self (₹75K / ₹1.25L) | 80U |
📖 Deductions & Exemptions — Deep Dives
📌 Source: Income Tax Act 2025, Act No. 30 of 2025 — Chapter VIII, Sections 122–154 (pages 158–192), as published in the Gazette of India Extraordinary dated 21st August 2025. Use the Section Cross-Reference tool to map 1961 Act sections to 2025 Act equivalents.