50 interview questions with answers on Deductions under Income Tax

 Here are 50 interview questions with answers on Deductions under Income Tax (Chapter VI-A) of the Indian Income Tax Act, 1961.

🔹 Section 1: Basics of Deductions (Q1–Q10)

1.      Q: What is a tax deduction?
A: A deduction reduces the gross total income (GTI) of an assessee, lowering their taxable income.

2.      Q: Under which chapter are deductions provided?
A: Chapter VI-A (Sections 80C to 80U).

3.      Q: What is the maximum deduction limit under Section 80C?
A: ₹1,50,000 per financial year.

4.      Q: Who is eligible to claim 80C deductions?
A: Individuals and Hindu Undivided Families (HUFs).

5.      Q: Can a company claim deduction under 80C?
A: No, companies are not eligible.

6.      Q: What are some investments covered under Section 80C?
A: PPF, NSC, ELSS, 5-year FD, LIC premium, principal repayment of home loan.

7.      Q: What is the difference between exemption and deduction?
A: Exemption excludes income from taxation, while deduction reduces taxable income.

8.      Q: What is Gross Total Income (GTI)?
A: The total income before claiming deductions under Chapter VI-A.

9.      Q: What is the deduction for interest on savings bank account?
A: ₹10,000 under Section 80TTA (₹50,000 for senior citizens under 80TTB).

10.  Q: Can deductions be claimed under the new tax regime?
A: Most deductions are not allowed under the new regime except a few like 80CCD(2), 80JJAA, etc.

🔹 Section 2: Popular Deductions (Q11–Q30)

11.  Q: What is Section 80CCC?
A: Deduction for premium paid to annuity plans of LIC or other insurers.

12.  Q: What is Section 80CCD(1)?
A: Deduction for contribution to National Pension Scheme (NPS) by employee/self-employed (up to 10% of salary or ₹1.5 lakh).

13.  Q: What is Section 80CCD(1B)?
A: Additional deduction of ₹50,000 for NPS contributions (over and above ₹1.5 lakh of 80C).

14.  Q: What is Section 80CCD(2)?
A: Deduction for employer's contribution to NPS (up to 10% of salary; 14% for central govt employees).

15.  Q: What is the combined limit of deductions under 80C, 80CCC, and 80CCD(1)?
A: ₹1.5 lakh.

16.  Q: What is Section 80D?
A: Deduction for health insurance premium paid for self, family, and parents.

17.  Q: What is the maximum limit under 80D for senior citizens?
A: ₹50,000 for each – self/family and parents.

18.  Q: What is Section 80DD?
A: Deduction for maintenance including medical treatment of a dependent with disability.

19.  Q: What is the limit under Section 80DD?
A: ₹75,000 (disability ≥40%), ₹1,25,000 (severe disability ≥80%).

20.  Q: What is Section 80DDB?
A: Deduction for treatment of specified diseases for self/dependents.

21.  Q: Limit under 80DDB for senior citizens?
A: ₹1,00,000.

22.  Q: What is Section 80E?
A: Deduction for interest on education loan for higher education (no upper limit, up to 8 years).

23.  Q: What is Section 80EE?
A: Deduction for interest on home loan for first-time buyers (up to ₹50,000, subject to conditions).

24.  Q: What is Section 80EEA?
A: Additional deduction up to ₹1.5 lakh on home loan interest for affordable housing.

25.  Q: What is Section 80EEB?
A: Deduction up to ₹1.5 lakh for interest on loan for electric vehicle.

26.  Q: What is Section 80G?
A: Deduction for donations to certain funds/charitable institutions (50% or 100%, with or without qualifying limit).

27.  Q: Can cash donations be claimed under 80G?
A: Only up to ₹2,000.

28.  Q: What is Section 80GG?
A: Deduction for rent paid by those not receiving HRA.

29.  Q: What is the limit under 80GG?
A: Minimum of:

·         ₹5,000 per month,

·         25% of total income,

·         Rent paid – 10% of total income.

30.  Q: What is Section 80GGC?
A: Deduction for donations to political parties by individuals (not in cash).

🔹 Section 3: Special and Business-Related Deductions (Q31–Q45)

31.  Q: What is Section 80JJAA?
A: Deduction for additional employee cost (30% of additional wages for 3 years).

32.  Q: Who can claim deduction under 80JJAA?
A: Businesses subject to tax audit, hiring new employees.

33.  Q: What is Section 80IBA?
A: Deduction for profits from affordable housing projects.

34.  Q: What is Section 80IA?
A: Deduction for profits from infrastructure development businesses.

35.  Q: What is Section 80IAC?
A: Deduction for eligible start-ups (100% profits for 3 out of 10 years).

36.  Q: What is Section 80TTA?
A: Deduction up to ₹10,000 on savings account interest (non-senior citizens).

37.  Q: What is Section 80TTB?
A: Deduction up to ₹50,000 on bank/post office interest for senior citizens.

38.  Q: Can both 80TTA and 80TTB be claimed?
A: No. Only one applies depending on age (senior citizens get 80TTB).

39.  Q: What is Section 80U?
A: Deduction for taxpayers with disability: ₹75,000 (normal), ₹1,25,000 (severe).

40.  Q: Can both 80DD and 80U be claimed by the same person?
A: No, 80DD is for dependents, 80U is for the assessee themselves.

41.  Q: What is Section 80GGA?
A: Deduction for donations to scientific research or rural development.

42.  Q: Can companies claim 80GGA?
A: No, only non-business income persons can claim.

43.  Q: What is 80CCC contribution for?
A: LIC pension schemes and other approved annuity plans.

44.  Q: Are donations to political parties allowed in cash?
A: No, deduction under 80GGC/80GGB not allowed for cash donations.

45.  Q: Are deductions available for payment of municipal taxes?
A: No, not under Chapter VI-A. Municipal tax is allowed under House Property head.

🔹 Section 4: Miscellaneous & Advanced (Q46–Q50)

46.  Q: Can deductions exceed Gross Total Income?
A: No, deductions are allowed only up to the GTI.

47.  Q: Can an assessee claim both 80C and 80CCD(1B)?
A: Yes, up to ₹2 lakh (₹1.5 lakh under 80C + ₹50,000 under 80CCD(1B)).

48.  Q: Can non-residents claim deductions?
A: Yes, for specific deductions like 80C, 80D, 80G, etc., as applicable.

49.  Q: Are deductions available under the presumptive scheme (44AD/44ADA)?
A: No, only certain deductions like 80C, 80D, etc. are allowed; business expenses are deemed.

50.  Q: Is return filing mandatory to claim deductions?
A: Yes, to claim carry forward of losses and deductions, return must be filed within due date.

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