Section 88 of ITA, 1961 : Section 88: Rebate On Life Insurance Premia, Contribution To Provident Fund, Etc

Explanation using Example

Imagine an individual, named Rohan, who works for a software company and earns a salary of ₹4,00,000 per year. He has made some investments and expenditures that qualify for deductions under Section 88 of the Income-tax Act, 1961. Here's how the law applies to him:

• Rohan has paid ₹50,000 as a premium for a life insurance policy on his own life.
• He has also contributed ₹30,000 to the Public Provident Fund (PPF).
• Additionally, he has paid ₹20,000 as tuition fees for his daughter's education in a school in India.

Rohan's gross total income is ₹4,00,000, which falls into the category where he can avail a deduction of 15% of the aggregate of the sums referred to in sub-section (2) since his income is more than ₹1,50,000 but does not exceed ₹5,00,000.

The total of his qualifying investments is ₹1,00,000 (₹50,000 + ₹30,000 + ₹20,000). Applying the 15% deduction rate, Rohan is entitled to a deduction of ₹15,000 (15% of ₹1,00,000) from his income-tax liability for the year.