DEDUCTIONS “Deductions” for the purpose of this chapter refers to deductions available from Gross total income. A set of specific deductions considering various socio economic factors have been provided under this chapter. As a learner of the subject, try to understand the logical reasoning behind each and every deduction, this would help you to appreciate the provisions. India has a savings to GDP ratio of over 35% which is significant and was one of the prime factors to protect the economy from the recent global economic recession. One of the main reasons for such high savings ratio, apart from the conservative nature of the Indian population, is the tax incentives which are made available to promote long term savings. This and many more incentives are being offered for various classes of persons to promote social and economic causes. The total set of deductions available can be broadly categorised as: S/No Category Sections Classification as per Act 1 Basics 80A, 80AB, 80AC Deductions pertaining to certain payments 2 Deductions pertaining to Investments 80C, 80CCC, 80CCD, 80CCE, 80CCG Deductions pertaining to certain payments. 80U is classified under “other deductions” 3 Deductions pertaining to medical treatment and expenses 80D, 80DD, 80DDB, 80U 4 Deductions pertaining to certain contributions 80G, 80GGA, 80GGB, 80GGC 5 Deductions pertaining to Expenditure 80E, 80GG 6 Deductions pertaining to Industrial Undertakings 80IA, 80IAB, 80IB, 80IC, 80ID, 80IE Deductions pertaining to certain incomes”. 7 Deductions pertaining to Specified certain incomes”. Businesses 80JJA, 80JJAA, 80LA, 80P 8 Deductions pertaining to certain Incomes 80QQB, 80RRB, 80TTA
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DEDUCTIONS
“Deductions” for the purpose of this chapter refers to deductions available from Gross
total income. A set of specific deductions considering various socio economic factors
have been provided under this chapter. As a learner of the subject, try to understand the
logical reasoning behind each and every deduction, this would help you to appreciate
the provisions. India has a savings to GDP ratio of over 35% which is significant and was
one of the prime factors to protect the economy from the recent global economic
recession. One of the main reasons for such high savings ratio, apart from the
conservative nature of the Indian population, is the tax incentives which are made
available to promote long term savings. This and many more incentives are being
offered for various classes of persons to promote social and economic causes. The total
set of deductions available can be broadly categorised as:
S/No Category Sections Classification as per
Act
1 Basics 80A, 80AB, 80AC Deductions
pertaining to
certain payments
2 Deductions pertaining
to
Investments
80C, 80CCC, 80CCD,
80CCE, 80CCG
Deductions
pertaining to
certain payments.
80U is classified
under
“other deductions”
3 Deductions pertaining
to medical treatment
and expenses
80D, 80DD, 80DDB,
80U
4 Deductions pertaining
to certain
contributions
80G, 80GGA, 80GGB,
80GGC
5 Deductions pertaining
to
Expenditure
80E, 80GG
6 Deductions pertaining
to Industrial
Undertakings
80IA, 80IAB, 80IB,
80IC, 80ID, 80IE
Deductions
pertaining to
certain incomes”.
7 Deductions pertaining
to Specified certain
incomes”. Businesses
80JJA, 80JJAA, 80LA,
80P
8 Deductions pertaining
to certain Incomes
80QQB, 80RRB,
80TTA
Classification as per Act is given for students to understand as to how the
sections are grouped. Also references are made in this chapter based on
classifications under the Act. Category based split is given only for easier understanding.
11.1 Basics
Prior to claiming deductions, we need to understand the fundamental provisions for the
purpose of allowing deductions. These are discussed as under:
- Sec 80A: General rules for deductions to be made in computing total income
- Sec 80AB: Deductions pertaining to specified incomes u/s 80IA to 80RRB, to be made
with respect to income included in the gross total income
- 80AC: Deduction not to be allowed unless return of income is furnished.
11.1.1 General rules for deductions to be made in computing total income - Sec
80A
• Deduction cannot exceed gross total income: Deduction u/s 80C to 80U shall be
allowed against the gross total income of an assessee. Aggregate of deductions under
this chapter cannot exceed the gross total income of an assessee
• No deduction in the case of members of AoP and BoI if allowed to an AoP/BoI:
Where a deduction has been allowed under this chapter for an AoP or BoI, no deduction
for the same payment / income shall be made in computing the total income of a
member of the AoP or BoI in relation to the share of such member in the income of the
AoP or BoI.
• Specific provisions for assessees claiming deduction u/s 10A, 10AA, 10B, 10BA
or u/s
80IA to 80RRB (“Deductions pertaining to certain incomes”) – sec 80IA(7) to (11)
– Audit of Accounts: Accounts of such undertaking has to be mandatorily audited
– Inter unit Transfer of goods and services at market value between an eligible
and non eligible undertaking: Where an assessee claiming deduction under the above
mentioned sections (considered as eligible business) transfers’ goods and services to
non eligible businesses or vice versa, such transfer has to be made at market value.
Where the transfers have not been made at market value, profits or gains shall be
recomputed valuing the transfers at market values and deductions shall be computed
on such recomputed profits and gains.
Where in case the aforesaid arrangement involves a specified domestic
transaction
referred to in Sec 92BA, the amount of profits from such transaction shall
be determined
having regard to arm’s length price as defined u/s 92F
Double deduction not allowed: No deduction shall be allowed against such profits and
gains under any other provisions of this Act for the relevant assessment year.
– Deduction not to exceed relevant profits and gains: The amount of deduction shall
not exceed the profit and gains of such undertaking or eligible business.
– Power of Central Government to notify: The Central Government has power to
notify certain undertakings to which the provisions of the relevant section shall not
apply.
– Deduction has to be claimed by the assessee: Where an assessee fails to make a
claim in his return of income, no deduction shall be allowed.
• Specific provision for avoidance of double deduction u/s 35AD: Where an
assessee has claimed deduction under this chapter u/s 80IA to 80RRB (“Deductions
pertaining to certain incomes”), such assessee shall not be eligible for claiming
deduction u/s 35AD even if the assessee is carrying on a specified business u/s 35AD.
Chapter VIA deduction is not available against the following incomes:
• Long term capital gains
• Short term capital gains u/s 111A
• Casual income- winnings from lotteries, card games etc
• Incomes covered under the following sections:
– 115A: Dividends, royalty and fees for technical services of a non resident or foreign
company.
– 115AB: Income from units purchased in foreign currency or capital gains arising on
their transfer.
– 115AC: Income from bonds or Global Depository Receipts (GDR) purchased in foreign
currency or capital gains arising on their transfer, where the assessee is a non resident .
– 115ACA: Income from bonds or Global Depository Receipts (GDR) purchased in
foreign currency
or capital gains arising on their transfer, where the assessee is a resident Indian
working
with a specified employer
– 115AD: Income of Foreign Institutional Investors from securities or capital gains
arising from their transfer.
– 115BBA: Income of non resident sportsmen or sports associations
– 115D: Income of non resident Indian under specific circumstances.
The term “market value” shall mean:
In relation to any goods or services
sold or supplied
The price such goods or services would fetch if
these were sold by the undertaking or unit or
enterprise or eligible business in the open
market, subject to statutory or regulatory
restrictions if any.
In relation to any goods or services
Acquired
The price such goods or services would cost if
these were acquired by the undertaking or unit
or enterprise or eligible business from the open
market,subject to statutory or regulatory
restrictions, if any.
In relation to any goods
or services sold, supplied or
acquired which are considered as
“Specified Domestic Transactions”
referred u/s 92BA
Arm’s length price as defined u/s 92F
11.1.2 Deductions pertaining to specified incomes u/s 80IA to 80RRB, to be made
with respect to income included in the gross total income – Sec 80AB:
• Where the assessee is eligible for deduction u/s 80IA to 80RRB,
• Deduction shall be allowed on such income computed in accordance with the
provisions of the Act prior to claiming any deduction under Chapter VIA
Therefore income for the purpose of claiming deduction u/s 80IA to 80RRB
shall be income computed after providing for set off and carry forward of
losses, clubbing of incomes etc but prior to any deduction u/s 80C to 80U.
If income of an assessee is increased consequent to computation of arm’s
length price u/s 92C(4), such increase is not to be considered for the
purpose of deduction u/s 80C to 80U- IGate Global Solutions Ltd vs CIT
(2008) 24 SOT 3 (Bangalore).
11.1.3 Deduction not to be allowed unless return of income is furnished within
due date-
Sec 80AC
• Where an assessee is claiming deduction u/s 80IA, 80IAB, 80IB, 80IC, 80ID or 80IE
• No deduction shall be allowed unless,
• The assessee files his return of income within the due date u/s 139(1)
Due date for filing return of income u/s 139(1):
Assessee Due date
• Company
• Non corporate assessees whose accounts are
required to be
audited under Income tax Act or any other law
• Working partner of a firm whose accounts are
required to be audited
30th September of
the assessment year
Company assessee which is required to furnish a
report u/s 92E (transfer pricing cases)
30th November of the
assessment year
Any other assessee 31st July of the
assessment year
11.2 Deductions pertaining to investments
This set of sections consists of tax incentives available for making certain specified
investments.
The benefits of investment incentives are however restricted only to individual or HUF
assessees.
Deduction for investments is contained in the following sections:
Section Eligible assessee Eligible assessee
80C Individual or HUF Investment in
provident fund, life
insurance, equity
shares etc
80CCC Individual Contribution to
pension funds
80CCD Individual Contribution to a
notified pension
scheme
80CCE NA Limit on deduction u/s
80C, 80CCC and 80CCD
11.2.1 Investment in provident fund, life insurance, equity shares etc – Sec 80C
Section Investment Eligible
Assessee
Remarks/
Conditions
80C(2)(i) Life insurance
premium
Individual
and HUF
In case of
individual:
Insurance can be
taken on the life of:
• Individual
• Spouse
• Any child
In case of HUF:
Insurance can be
taken
on the life of any
member of HUF
Deduction
restricted to 10% of
Capital
Sum Assured or
15% of Capital Sum
Assured if the
individual is
suffering from
disability of severe
disability as
covered u/s 80U or
is suffering from
disease or ailment
as covered u/s
80DDB
80C(2)(ii) Contribution to
deferred annuity
Individual
being a
Government
Employee
The contract for
annuity should not
contain an option
for the insured to
receive a cash
payment in lieu of
the payment of
annuity (i.e. it
should be a non
commutable
deferred annuity
plan).
Investment shall be
for the benefit of :
• Individual
• Spouse
• Any child
80C(2)(iii) Contribution to
deferred annuity
Individual being a
Government
employee
Contribution should
be made as a
deduction from
salary. Sum
deducted shall
not exceed 1/5th of
the salary
Contribution shall
be for the benefit of:
• Individual
• Spouse
• Children
80C(2) (iv) Contribution to a
provident fund to
which Provident
Funds Act 1925
applies
(statutory
provident
fund)
Individual NA
80C(2) (v) Contribution to a
notified provident
fund set up by
Central Government
(15
year public
provident
fund)
Individual
and HUF
In case of
individual:
Investment shall be
in the name of :
• Individual
• Spouse
• Any child
In case of HUF:
Investment shall be
madein the name of
any member of HUF.
Maximum
investment ceiling
as per
Public Provident
Scheme is Rs
1,00,000.
However there is no
ceiling under the
Income Tax Act
80C(2)(vi) Contribution to Individual being an NA
recognised
provident fund
Employee
80C(2)
(vii)
Contribution to an
approved
superannuation
fund
Individual
being an
employee
NA
80C(2)
(viii)
Subscription to a
notified security or
deposit scheme.
Individual
and HUF
Scheme of deposit
or security must be
notified by the
Central Government
in
the Official Gazette
National Savings
Scheme has since
been
Notified
80C(2)
(ix)
Subscription to a
notified
savings certificates
–
National Savings
Certificates
(VIII Issue
Individual
and HUF
Savings certificates
must be notified by
the Central
Government in the
Official
Gazette
Interest accrued on
these certificates is
deemed to be
reinvested and also
qualify for
deduction under
this section.
80C(2)
(x)
Contribution to a
specified
unit linked plan
(ULIP) of UTI
Individual
and HUF
In case of
individual:
Investment shall be
in the name of :
• Individual
• Spouse
• Any child
In case of HUF:
Investment shall be
made in the name of
any member of HUF
80C(2)
(xi)
Contribution to a
specified unit linked
Individual and HUF Insurance plan shall
be notified by the
plan (ULIP) of
LIC Mutual Fund
referred u/s
10(23D)
Central Government
in the Official
Gazette
In case of
individual:
Investment shall be
in the name of :
• Individual
• Spouse
• Any child
In case of HUF:
Investment shall be
made
in the name of any
member of HUF
80C(2)
(xii)
Contribution to a
contract for annuity
plan of LIC or
any other insurer
Individual
and HUF
Annuity plan shall
be notified by the
Central Government
in the Official
Gazette
80C(2)
(xiii)
Subscription to
units of
any Mutual Fund
referred u/s
10(23D) or from the
Administrator or
the specified
company under
any notified plan
Individual
and HUF
Scheme shall be
notified by the
Central
Government in the
Official Gazette
80C(2)
(xiv)
Contribution to
pension fund set up
by any Mutual Fund
referred u/s
10(23D)
or from the
Administrator or
the specified
company
under any notified
scheme
Individual Pension scheme
shall be notified by
the
Central Government
in the Official
Gazette
80C(2)
(xv)
Subscription to any
deposit scheme or
Individual
and HUF
Scheme of deposit
or pension fund
contribution to a
pension fund set up
by
National Housing
Bank
shall
be notified by the
Central Government
in
the Official Gazette
80C(2)
(xvi)
Subscription to any
such deposit
scheme of:
(a) a public sector
company engaged
in providing long-
term finance for
construction or
purchase
of houses in India
for
residential
purposes; or
(b) any authority
constituted in India
by
or under any law
enacted either for
the purpose of
dealing with
andsatisfying the
need for
housing
accommodation
or for the purpose
of
planning,
development
or improvement of
cities,
towns and villages,
or for
both
Individual
and HUF
Scheme of deposit
shall be notified by
the Central
Government in the
Official
Gazette
80C(2)
(xvii)
Payment of tuition
fees
whether at the time
of
admission or
Individual Tuition fees exclude
any payment
towards
any development
fees or donation or
thereafter:
(a)to any university,
college, school or
other
educational
institution
situated within
India
(b) for the purpose
of fulltime
Education
payment of similar
nature.
Deduction shall be
restricted to any
two
children of an
individual.
80C(2)
(xviii)
Principal
repayment of
housing loan taken
for
the purpose of
acquisition
or construction of
house
property
Individual
and HUF
Repayment of the
amount borrowed
by the
assessee from:
• Central or State
Government
• Any bank
including a
cooperative bank
• LIC
• National Housing
Bank
• Any Indian public
company specified
u/s 36(1)(viii)
• Any company in
which the public are
substantially
interested or any
cooperative
society engaged in
financing
the construction of
houses
• Assessee’s
employer where
such
employer is an
authority or a board
or a corporation or
any other body
established or
constituted under a
Central or State Act,
or
• Assessee’s
employer where
such
employer is a public
company or a
public sector
company or a
university
established by law
or a college
affiliated
to such university
or a local authority
or
a co-operative
society.
80C(2)
(xviii)
Stamp duty,
registration
fee and other
expenses for
the purpose of
transfer of
such house
property to the
assessee
Individual
and HUF
Deduction shall not
be available for
payment towards:
(A) the admission
fee, cost of share
and
initial deposit which
a shareholder of a
company or a
member of a co-
operative
society has to pay
for becoming such
shareholder or
member; or
(B) the cost of any
addition or
alteration
to, or renovation or
repair of, the house
property which is
carried out:
- after the issue of
the completion
certificate or
- after the house
property or any
part thereof has
been occupied.
(C) any expenditure
eligible for
deduction
u/s 24
80C(2)
(xix)
Subscription to
equity
shares or
debentures
forming part of an
eligible
issue of an
approved
public company or
subscription to an
eligible issue of
capital by public
financial institution.
Individual
and HUF
Eligible issue of
capital means an
issue by
a public company
formed and
registered
in India or a public
financial institution
and the entire
proceeds of such
issue are
utilized wholly and
exclusively for the
purpose of business
referred u/s
80IA(4).
80C(2)
(xx)
Subscription to
units of
any mutual funds
referred
u/s 10(23D)
Individual
and HUF
The amount of
subscription to such
units
is subscribed only
in the eligible issue
of
capital of any
company.
Eligible issue of
capital shall have
the
same meaning as
given u/s
80C(2)(xix)
80C(2)
(xxi)
Investment in term
deposit
with a scheduled
Individual
and HUF
Term deposit shall
be for a period of
not
bank less than 5 years
Scheme of deposit
shall be notified by
the
Central Government
in the Official
Gazette
80C(2)
(xxii)
Subscription to
specified
bonds issued by
National
Bank for
Agriculture
and Rural
Development
(NABARD)
Individual
and HUF
Bonds shall be
notified by the
Central
Government in the
Official Gazette
80C(2)
(xxiii)
Contribution under
the
Senior Citizens
Savings
Scheme Rules, 2004
Individual
and HUF
NA
80C(2)
(xxiv)
Contribution to five
year term deposit in
an account under
the Post Office Term
Deposit Rules, 1981.
Individual
and HUF
NA
• Deduction u/s 80C is allowed only on payment basis
• Benefit of deduction under this section is available to a non resident individual
• Deduction u/s 80C towards life insurance premiums shall be restricted to the extent of
least
of the following:
– Actual amount of premium paid
10% of actual capital sum assured (Amendment by Finance Act 2012)
Actual capital sum assured has been defined in relation to a life insurance policy shall
mean the
minimum amount assured under the policy on happening of the insured event at any
time during the term of the policy, not taking into account—
(i) the value of any premium agreed to be returned; or
(ii) any benefit by way of bonus or otherwise over and above the sum actually assured,
which is to be or may be received under the policy by any person.
Withdrawal of deduction u/s 80C
Section Deduction Withdrawal /
Violation event
Consequences of withdrawal
80C(5)(i Payment of life
insurance premium
u/s
80C(2)(i)
In the case of
single
premium-
withdrawal
within two
years of
commencement
In any other
case – before
premiums
have been paid
for two years
No deduction shall be allowed
in the year of withdrawal
80C(5)(ii) Contribution to
ULIP
u/s 80C(2)(x)/(xi)
Terminates his
participation to
the
plan within five
years from the
date of
commencement
Aggregate deductions allowed
in the preceding years shall be
deemed to be income of the
year of violation/ withdrawal
and charged to taxation. 80C(5)(iii) Principal
repayment of
housing loan and
payment
of stamp duty etc
u/s 80C(2)(xviii)
Where the
house property
is transferred
within five
years from
the end of the
financial year
in which
possession of
such property
was obtained
or Where there
is a refund or
otherwise of
any sum
specified u/s
80C(2)(xviii)
80C(6) Investment in
eligible
equity shares or
Where such
shares or
debentures are
Aggregate deductions allowed
in the preceding years shall be
deemed to be income of the
debentures u/s
80C(2)
(xix)
transferred
within a period
of three years
from the date of
acquisition.
year of violation/ withdrawal
and charged to taxation.
80C(6A) Contribution under
the
Senior Citizens
Savings
Scheme Rules, 2004
u/s 80C(2)(xxiii)
Contribution to five
year term deposit in
an
account under the
Post
Office Term Deposit
Rules, 1981 u/s
80C(2)
(xxiv)
Where the
amount is
withdrawn by
the assessee
from his
account
within period
of five years
from the
date of deposit
Aggregate deductions allowed
in the preceding years shall be
deemed to be income of the
year of violation/ withdrawal
and charged to taxation.
The following amounts shall not to be charged
to taxation u/s 80C(6A):
Interest on deposits u/s 80C(2)(xxiii)/(xxiv)
which have been included in the total income for
the previous year or any prior year. Any amount
received by the nominee or legal heir of the
assessee, on the death of such assessee, other
than interest, if any, accrued
There on, which was not included in the total
income of the assessee for the previous year or
years preceding such previous year.
Full-time education includes any educational course offered by any
university, college, school or other educational institution to a student who
is enrolled full-time for the said course. It is also clarified that full-time
education includes play-school activities, prenursery and nursery classes. The amount
allowable as tuition fees shall include any payment of fee to any university, college,
school or other educational institution in India except the amount representing
payment in the nature of development fees or donation or capitation fees or payment of
similar nature – Circular No 1/2010 dated 11-01-2010.
11.2.2 Contribution to pension funds – Sec 80CCC
Particulars Provisions
Eligible assessee Individual assessees only
Eligible investment Contribution to a contract of any annuity
plan of LIC or any other approved insurer
for receiving pension from a fund set up by
LIC or any other insurer referred u/s
10(23AAB)
Quantum of deduction Amount invested or Rs 1 lakh whichever is
lower
Consideration on maturity/ closure – Sec
80CCC(2)
The following amounts received from the
fund shall be chargeable to taxation in the
year of receipt as income of the assessee /
nominee:
• Any amount on surrender of the annuity
plan either / whether in whole or in part
• Pension received from the annuity plan
Conditions Investment has to be made out of income
chargeable to tax
Deduction is available only on payment
basis
Where a deduction has been allowed
under this section, no deduction shall be
allowed u/s 80C for the same contribution.
• Amount invested does not include interest or bonus accrued on existing fund
balance
• Benefit of deduction under this section is available to a non resident individual also.
11.2.3 Contribution to a notified pension scheme – Sec 80CCD
Particulars Provisions
Eligible assessee All Individual assesses
Eligible investment Contribution to a pension scheme notified
by the Central Government
Quantum of deduction In case of employee
assessees:
A: Contribution by
employee:
Lower of actual
contribution or 10%
of salary for the
previous year.
B: Contribution by
employer:
Lower of actual
contribution or 10%
of salary for the
In case of any
other individual
assessees:
Lower of actual
contribution or
10% of gross total
income for
the previous year
previous year.
Consideration on maturity/ closure –Sec
80CCD(3)
The following amounts received from the
fund shall be chargeable to taxation in the
year of receipt as income of the assessee /
nominee:
• Any amount on closure or opting out of
pension scheme
• Pension received from the annuity plan
No income shall however arise u/s
80CCD(3) if the amount received is used
for purchasing an annuity plan in the same
previous year.
Conditions Deduction is available only on payment
basis
Salary = Basic + DA taken for retirement benefits. Salary excludes all other
allowances and perquisites.
• Benefit of deduction under this section is available to a non resident individual
also.
11.2.4 Limit on deduction u/s 80C, 80CCC and 80CCD – Sec 80CCE
Aggregate deduction u/s 80C, 80CCC and 80CCD cannot exceed Rs 1.5 lakh(effective AY
2015 – 16). For the purpose of limits u/s 80CCE (i.e Rs 1,00,000), employer’s
contribution to notified pension u/s 80CCD shall not to be included. In other words, the
total limit for deduction u/s 80C, 80CCC and 80CCD shall be Rs 1,00,000 plus employer’s
contribution u/s 80CCD.
Deduction in respect of investment made under an equity savings scheme- Sec
80CCG
• Eligible assessee: Resident individual considered as a new retail investor as per
notification issued by the Central Government for the purpose of this section. The gross
total income of the assessee for the relevant previous year shall not exceed Rs 10 lakhs.
• Eligible investment: Investment in listed shares in accordance with the scheme
notified.
• Deduction: 50% of the amount invested or Rs 25,000 whichever is less
• Minimum lock-in period: The investment is locked-in for a period of three years from
the date of acquisition in accordance with the scheme
• Restriction: 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 or any subsequent assessment year.
• Consequences in the event of violation: If the assessee, in any previous year, fails to
comply with any condition specified, deduction originally allowed shall be deemed to be
the income of the assessee of such year of violation.
Notification No 51/2012 dtd 23rd Nov 2012 : New retail investor means the following
resident individual who:
- has not opened a demat account and has not made any transactions in the derivative
segment as at the date of notification
- has opened a demat account before the notification of the scheme but has not made
any transactions in the derivative segment as at the date of notification
Note: Any individual who is not the first account holder of an existing joint demat
account shall be
deemed to have not opened a demat account for the purpose of this scheme
11.3 Deductions pertaining to medical treatment and expenses
Here, we shall look at deductions which are available for various expenses pertaining to
medical treatment, insurance and maintenance. These deductions can be broadly
classified as:
Section Eligible assessee Description
80D Individual or HUF Health insurance and
contribution to Central
Government Health Scheme
80DD Resident Individual and HUF Maintenance of a
dependant person with
disability
80DDB Resident Individual and HUF Medical treatment etc
80U Resident Individual Individual with disability
11.3.1 Health insurance and contribution to Central Government Health Scheme –
Sec 80D
Particulars Provisions
Eligible
assessee
Individual and HUF
Eligible
Expenditure
Medical insurance premium or contribution to Central Government
Health
and payment for preventive health check up
Quantum of
Deduction
In the case of an individual
For family : Rs 15,000
For parents : Rs 15,000
In the case of HUF : Rs 15,000
Additional deduction of Rs 5, 000 is available where the payment is
made for
the benefit of a senior citizen –
Condition Payment shall be made by any mode other than cash.
Payment shall be made out of income chargeable to tax.
Family means Spouse and Dependent Children
In case of HUF policy can be taken on any member of the HUF
Preventive health checkup included within Sec 80D:
Any payment made on account of preventive health check-up of the
assessee or his family shall be eligible for deduction u/s 80D.Payment for
preventive health checkup would fall within the overall limit of Rs 15,000 or Rs
20,000 as the case may be. However maximum deduction towards preventive health
check up for the assessee, his family and parents cannot exceed Rs 5,000.
Payments for preventive health checkup can be made in cash however all other
mediclaim insurance payments shall be eligible for deduction only if the payment is
made by any mode other than cash.
Age-limit for the purpose of senior citizen for this section has been reduced from 65
years to 60 years
Illustration 1
Mr Sundara Rajan aged 28 years, made the following payments during the previous
year. Discuss the tax implications
Particulars Amount
Mediclaim insurance premium for self Rs 7,000
Mediclaim insurance for mother aged 65 years Rs 11,000
Mediclaim insurance for father aged 72 years Rs 12,000
Master health check up for mother Rs 2,500
Master health check up for father Rs 3,500
Comprehensive Master health check up for self Rs 6,500
Would your answer change if the assessee had spent a sum of Rs 2,500 towards
comprehensive master health check-up for self instead of Rs 6,500.
Particulars Remarks / Computation Amount
Mediclaim insurance
premium for self
Allowed subject to an
overall limit of Rs 15,000
Rs 7,000
Mediclaim insurance for
other aged 65 years
Allowed subject to an
overall limit of Rs 20,000
Rs 11,000
Mediclaim insurance for
father aged 72 years
Allowed subject to an
overall limit of Rs 20,000
Rs 12,000
Total deduction for
mediclaim
Insurance
Restricted to Rs 7,000 for
the assessee and Rs 20,000
for the parents
Rs 27,000
Master health check up for
mother
Rs 2,500
Master health check up for
father
Rs 3,500
Comprehensive Master
health check up for self
Rs 6,500
Total preventive
expenditure
Rs 12,500
Maximum preventive
expenditure allowed as a
deduction u/s 80D
Rs 5,000 (this is the
aggregate limit for the
assessee, family and
parents)
Rs 5,000
Total deduction u/s 80D Rs 32,000
Particulars Remarks / Computation Amount
Mediclaim insurance for
mother aged 65 years
Allowed subject to an
overall
limit of Rs 20,000
Rs 11,000
Mediclaim insurance for
father aged 72 years
Rs 12,000
Master health check up for
Mother
Allowed subject to the
overall limit of Rs 20,000
and
sublimit of Rs 5,000
Rs 2,500
Master health check up for
father
Rs 3,500
Total deduction for
mediclaim
insurance for parents
Restricted to Rs 20,000 for
the parents
Rs 20,000
Since the mediclaim insurance premium paid for parents exceeds Rs 20,000, there
seems to be
no surplus limits available for claiming preventive health check up expenditure
incurred for parents of the assessee
Mediclaim insurance
premium for self
Allowed subject to an
overall
limit of Rs 15,000
Rs 7,000
Comprehensive Master
health
Allowed subject to the
overall limit of Rs 15,000
Rs 2,500
check up for self and
sublimit of Rs 5,000
Total deduction for
mediclaim
insurance for self
(assessee)
Restricted to Rs 15,000 Rs 9,500
Total deduction u/s 80D Rs 32,000
11.3.2 Maintenance of a dependant person with disability – Sec 80DD
Particulars Provision
Eligible
Assessee
Resident Individual and Resident HUF
Eligible
Expenditure
• Medical treatment, training and rehabilitation of a dependant
suffering
from permanent physical disability OR
• Amount deposited in an approved scheme of LIC/ UTI for the
benefit of
the dependant relative
Quantum of
Deduction
Fixed Deduction of Rs 50,000 irrespective of actual expenditure
incurred /
amount deposited
In case of severe disability (80% or more) deduction enhanced
to Rs 1,00,000
Conditions Disability to be certified by a medical authority and a copy of the
same to be furnished with ITR
Relative is not dependant on any other person and does not
claim deduction u/s 80U
Where the dependant relative predeceases the assessee, any
amount received from the scheme shall be treated as income of
the assessee in the year of such receipt.
Where condition of disability is temporary and requires
reassessment after a specified period, the certificate shall be
valid for the period starting from the assessment year relevant
to the previous year during which the certificate was issued and
ending with the assessment year relevant to the previous year
during which the validity of the certificate expire
11.3.3 Medical treatment etc – 80DDB
Eligible
assessee
Resident Individual and Resident HUF
Eligible
Expenditure
In case of an individual amount paid for medical Treatment of
specified diseases for self or dependent. In case of HUF amount paid
for medical treatment for any member of HUF
Quantum of
Deduction
Rs 40,000 or actual expenditure whichever is less
Rs 60,000 or actuals whichever is less for senior citizens
Conditions Certificate by a specified medical authority to be filed with the ITR
Any reimbursement from employer or insurance company should be
reduced from the above limits for claiming deduction
Specified diseases include neurological / Cancer/ AIDS/ Renal failure/
Haemophilia/ Thalassaemia
Dependent means spouse, children, parents, brothers and sisters of