80CCG Deduction in respect of investment made under an equity savings scheme as per section 80CCG, chapter via of Income Tax Act

Individual Assessee who has invested in equity savings scheme can claim deduction under section 80CCG of the Act. The assessee can claim deductions from Gross Total in respect of payments.

Total amount of deduction available is 50% of amount invested subject to maximum deduction of Rs. 25000/-.

Provisions in the Income Tax Act related to Section 80CCG are:

(1) Where an assessee, being a resident individual, has, in a previous year, acquired listed equity shares or listed units of an equity oriented fund in accordance with a scheme, as may be notified by the Central Government in this behalf, he shall, subject to the provisions of sub-section (3), be allowed a deduction, in the computation of his total income of the assessment year relevant to such previous year, of fifty per cent of the amount invested in such equity shares or units to the extent such deduction does not exceed twenty-five thousand rupees.

(2) Where an assessee has claimed and allowed a deduction under this section for any assessment year in respect of any amount, he shall not be allowed any deduction under this section for any subsequent assessment year.

The following sub-section (2) shall be substituted for the existing sub-section (2) of section 80CCG by the Finance Act, 2013, w.e.f. 1-4-2014 :

(2) The deduction under sub-section (1) shall be allowed in accordance with, and subject to, the provisions of this section for three consecutive assessment years, beginning with the assessment year relevant to the previous year in which the listed equity shares or listed units of equity oriented fund were first acquired.

(3) The deduction under sub-section (1) shall be subject to the following conditions, namely:-

(i) the gross total income of the assessee for the relevant assessment year shall not exceed [ten] lakh rupees;

(ii) the assessee is a new retail investor as may be specified under the scheme referred to in sub-section (1);

(iii) the investment is made in such listed equity shares 93c[or listed units of equity oriented fund] as may be specified under the scheme referred to in sub-section (1);

(iv) the investment is locked-in for a period of three years from the date of acquisition in accordance with the scheme referred to in sub-section (1); and
(v) such other condition as may be prescribed.

(4) If the assessee, in any previous year, fails to comply with any condition specified in sub-section (3), the deduction originally allowed shall be deemed to be the income of the assessee of such previous year and shall be liable to tax for the assessment year relevant to such previous year.

The following Explanation shall be inserted after sub-section (4) of section 80CCG by the Finance Act, 2013, w.e.f. 1-4-2014 :

Explanation.-For the purposes of this section, "equity oriented fund" shall have the meaning assigned to it in the Explanation to clause (38) of section 10.