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Deductions Under Section 80LA

Last Update Date : April 29, 2019
Estimated Read Time: 3 min

deductions under section 80la

In India, only 3% of the population pays taxes. Those who pay taxes take advantage of the deductions and exemptions provided in the Income Tax Act by the Income Tax Department(ITD).. However, if every individual/business, who was liable to pay tax paid tax, then India would be much more developed and the government would provide a lot more benefits to its citizens. Banks play an important role in the economy. Few banks extend their territory by establishing their units out of the country for the avoidance of tax. This guide discusses the tax deductions under section 80LA, available for banks having units offshore.

What is Section 80LA

Under this section deductions in respect of certain income for Offshore Banking Units and International Financial Services Centre are available.


  • Scheduled bank having banking units offshore in a SEZ (specific economic zone)
  • Scheduled banks which are not incorporated by or under the laws of a country outside India.
  • Units of International Financial Service Centre.

Conditions to Claim Deductions u/s 80LA

Where the gross total income of an assessee:

  • being a scheduled bank (not being a bank incorporated by or under the laws of a country outside India);
  • owning an offshore banking unit in a special economic zone, includes any income referred to in sub-section (2), there shall be allowed, in accordance with and subject to the provisions of this section, a deduction from such income, of an amount equal to—
    1. one hundred per cent of such income for three consecutive assessment years beginning with the assessment year relevant to the previous year in which the permission, under clause (a) of sub-section (1) of section 23 of the Banking Regulation Act, 1949 (10 of 1949), was obtained, and thereafter;
    2. fifty per cent of such income for two consecutive assessment years.

Deductions Allowed

  • 100% on such income for first 5 years relevant to the previous year in which permission under Banking Regulation Act, 1949 or SEBI or under any other law obtained.
  • 50% on income for next 5 years.

Documents to File Income Tax Return

  • An approval from the Chartered Accountant certifying the deduction, claimed in accordance with the provisions of section 80LA.
  • A copy of permission approved under section 23(1)(a) of Banking Regulation Act, 1949.
  • These documents should be submitted along with the return on income.

To know how to maximize the tax saving options available to you for better tax saving and planning, consult your personal tax expert at H&R Block India.

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Niteesh Singh
Niteesh is a Tax Researcher and Content Lead at H&R Block (India). He holds an MBA with a specialisation in BFSI domain. In his career spanning over six years, he has helped thousands of people understand taxes in a simple and effective manner. Outside work, Niteesh is an astronomy geek who is also involved in wildlife conservation activities.

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