Deduction in respect of contribution to a national pension system (NPS [sec.80CCD])
237A.These provisions are given below-
Conditions - section 80CCD is applicable if the following conditions are satisfied-
1.The taxpayer is an individual.
2.He is employed by the central Government (on or after january 1,2004),or employed by any other
person.He may be
even a self-employed person.
3.He has in the previous year paid or deposited any amount in his account under NPS.NPS covers New
pension Scheme
(notified under Notification No.
F.No.5/7/2003-ECB&PR,dated December 22,2003) and atal pension yojana (as per Notification No.SO
529(E),
dated
February 19,2016),
Consequences if the above conditions are satisfied-If the above conditions are satisfied,then
the
following
consequences given by section
80CCD should be noted-
1.Contribution towards NPS by employee (or any other individual assessee) [see. 80CCD(1)]-Assessee's
contribution
to NPS is deductible under
section 80CCD(1) in the year in which contribution is made.No deduction is available in respect of
employee's
contribution which is in excess
of 10 per cent of the salary of the employee. LikeWise, if contribution by a taxpayer (not being an
employee)
exceeds 10 per cent
(20 per cent from the assessment year 2018-19) of his gross total income, the excess shall not be
taken
into
consideration for the purpose
of section 80CCD(1).
2.contribution towards NPS by employer {sec.80CCD(2)]-Contribution by the employer to NPS is
deductible
under
section 80CCD(2) in the hands
of the concerned employee in the year in which contribution is made.However, no deduction is
available
in
respect of employer's contribution
which is in excess of 10 per cent [or (with effect from the assessment year 2020-21) 14 per cent, if
employer is
the central Government] of
the salary of the employee.
3.Cumulative monetary ceiling - By virtue of section 80CCE, the aggregate amount of deduction under
section
80C,80CCC and 80CCD(1)
[i.e.,contribution by an employee (or any other individual)towards NPS]cannot exceed Rs.1,50,000.The
ceiling
limit is not applicable
(from the assessment year 2012-13)in respect of an assessee's contribution towards NPS under section
80CCD (1B)
From
the assessment year 2016-17 which is given below.
4.Additional contribution up to Rs.50,000 towards NPS under section 80CCD(1B)-Sub-section (1B) has
been
inserted
in section 80CCD (With effect from
the assessment year 2016-17) so as to provide for an additional deduction in respect of any amount
paid
(up to
Rs.50,000) For contribution made by any
individual assessee under the NPS. On this contribution, the ceiling of Rs.1,50,000 under section
80CCE
will not
be applicable.The additional deduction
of Rs.50,000 is available whether (or not) any claim under section 80CCD(1) has been made-CIRcular
No.19/2015,dated november 27,2015.For instance, X
(Who is covered by NPS) gets salary of RS.8,00,000 per annum.He annually contributes 10per cent of
salary
towards NPS and RS.1,21,000 towards PPF/LIP
since 2014.For the assessment year 2020-21,he can claim deduction as follows-
-Rs.50,000 under section 80CCD(1B).
-Rs.30,000 Under section 80CCD(1).
-Rs.1,20,000 under section 80C.
X has not made any additional investment over and above the minimum requirement of 10 per cent
contribution
towards NPS.But he can claim deduction of
Rs.50,000 under section 80CCD(1B).
5.Tax at the time of withdrawal-The amount standing to the credit of an assessee in NPS,for which a
deduction has
already been claimed by him, and accretions
to such account, shall be taxed as follows-
|
Provisions applicable- |
|
From the AY 2020-21 |
For the AYs 2018-19 and 2019-20 |
For the AY 2017-18 |
Up to the AY 2016-17 |
| 1.Partial withdrawal from NPS (to the extent it does not exceed 25% of an employee's
contribution) |
Exempt |
Exempt |
Taxable |
Taxable |
| 2.Amount received by an employee [or a non-employee (applicable from the assessment year
2019-20)]
on closure of his account or on his opting out of the NPS |
60% exempt |
40% exempt |
40% exempt |
Taxable |
| 3.In (2),amount is received by a nominee
on the death of the assessee. |
Exempt |
Exempt |
Exempt |
Taxable |
| 4.Pension received out of NPS |
Taxable |
Taxable |
Taxable |
Taxable |
| 5.Amount received in (2),(3),(4) is Utilized for purchasing an annuity plan in the same
previous
year
|
Exempt |
Exempt |
Exempt |
Exempt |
| 6.Pension received out of annuity plan purchased in (5) |
Taxable |
Taxable |
Taxable |
Taxable |
6.Meaning of "Salary"-"salary" for the purpose of points1 and 2 (supra)includes dearness allowances
(if the terms of employment so provide) and commission (if is payable at a percentage of turnover
achieved by the employee),but excludes all other allowances and perquisites.
Para 237A
237A-P1 Find out net income in the following cases for the assessment year 2020-21
(age of the taxpayer in each case in 55 year)-
Situation 1-X is employed by the central government sinx=ce 2009. For the previous year 2019-20, his
basic salary
is Rs. 5,00,000 per annum. Besides, he gets deamess allowance of Rs. 50,000 per annum and special
allowances of
Rs.
1,00,000 per annum.His income of other sources is Rs.2,10,000. The central Government contributes 13
per
cent of
salary
(including dearness allowance) towards NPS. The contribution of X towards NPSis RS.1,40,000.
Besides, X
deposits
Rs.
96,000 in public provident funds, Rs.5,000 in notified (section 80CCC) annuity plan of LIC and pays
mediclaim
insurance
premium of RS.35,000 (policy covers medical benefits for X and Mrs. X).
Situation 2 - X in the aforesaid case is employed by a private sector company and the employer has
opted
for NPS.
Situation 3 - X in the Aforesaid case is employed by a private sector company and the employer has
recognized
provident fund.
Contributions given in situation 1 are towards recognized provident fund. Besides, X contributes on
additional
sum of
Rs.40,000 towards NPS.
situation 4 - X is a self-employed person. His business income is Rs.8,10,000 and income from other
sources is
RS.2,10,000.
He annually contributes Rs.2,60,000 towards NPS. Besides, X deposits RS.30,000 in public providers
fund,
deposits Rs.5,000
in notified (section 80CCC) annuity plan of LIC, and pays mediclaim insurance premium of Rs.35,000
(policy
covers medical
benefits for X and Mrs. X).
| SOLUTION : |
situation 1 Rs. |
situation 2 Rs. |
situation 3 Rs. |
situation 4 Rs. |
| Basic salary and dearness allowance |
5,50,000 |
5,50,000 |
5,50,000 |
Nil |
| Special allowance |
1,00,000 |
1,00,000 |
1,00,000 |
Nil |
| Employer's contribution towards NPS (13% of Rs.5,50,000) |
71,500 |
71,500 |
Nil |
Nil |
| Employer's contribution towards RPF (in excess of 12% of salary) |
Nil |
Nil |
5,500 |
Nil |
| Gross salary |
7,21,500 |
7,21,500 |
6,55,500 |
Nil |
| Less: standard deduction |
50,000 |
50,000 |
50,000 |
Nil |
| Income under the head "salaries" |
6,71,500 |
6,71,500 |
6,05,500 |
Nil |
| Business income |
Nil |
Nil |
Nil |
8,10,000 | >
| Income from other sources |
2,10,000 |
2,10,000 |
2,10,000 |
2,10,000 |
| Gross total income (GTI) |
8,81,500 |
8,81,500 |
8,15,500 |
10,20,000 |
List of Deduction |
|
DEDUCTIONS NOT COVERED BY CUMULATIVE CEILING- Under section 80CCD(1B) (contribution by the
assessee
towards NPS up to Rs.50,000)
|
(a) |
50,000 |
50,000 |
40,000 |
50,000 |
| Under section 80CCD(2) [Contribution by employer towards NPS, subject to maximum of 14% of
salary in
the case of central Government employee
or 10% of salary in the case of any other employee] |
(b) |
71,500 |
55,000 |
Nil |
Nil |
| Under section 80D (mediclaim insurance premium) (limited to Rs.25,000 in the case of a
person who is
not a senior citizen) |
(c) |
25,000 |
25,000 |
25,000 |
25,000 |
| DEDUCTIONS COVERED BY CUMULATIVE CEILING OF
Rs.1,50,000-Under section 80C (ppf and
contribution
towards recognized
provide fund) |
(d) |
(96,000) |
(96,000) |
(1,50,000) |
(30,000) |
| Under section 80CCC (annuity plan of LIC) |
(e) |
(5,000) |
(5,000) |
(5,000) |
(5,000) |
| Under section 80CCD (1) [contribution of X towards NPS (excluding the contribution
considered above
in section 80CCD(1B)), subject
to a maximum of 10% of salary in the case of an employee or 20% of GTI in the case of a
person other
than employee] |
(f) |
(54,000) |
(54,000) |
Nil |
(2,04,000) |
| Maximum deductible amount [i.e.,(d) + (e) + (f), subject to a maximum of Rs.1,50,000] |
(g) |
1,50,000 |
1,50,000 |
1,50,000 |
1,50,000 |
| Net income [GTI-(a)-(b)-(c)-(g)] |
|
5,85,000 |
6,01,500 |
6,00,500 |
7,95,000 |
Deduction 80D
Deduction in respect of medical insurance premia[Sec. 80D]
238. Deduction under section 80D is available if the following conditions are satisfied-
.The Taxpayer is an individual(may be resident/non-resident or Indian citizen/foreign citizen of
a
Hindu undivided family(may be resident or non resident).
.payment Should be made out of income chargeable to tax
.Payment should be made by any mode other than cash. However,payment on account of preventive
health
check-up cn be made by any mode(including cash).
238.1 Maximum deductible amount- The maximum deductible amount and other relevant payment are
below-
|
Deduction case of individual |
|
Deduction in the case of Huf |
| For whose benefit payment can be made |
family |
parent |
Any member of Huf |
a.Medi-claim insurance premium
b.Contribution to CGS/notified scheme
c.preventive health check-up payment
|
Eligible
Eligible
Eligible
|
Eligible
_
Eligible
|
Eligible
_
_
|
|
Maximum deduction
.General deduction[applicable in respect of (a),(b)and(c)]
.Additional deduction [applicable only in case of
(a)when med-claim policy is taken on the life of a senior citizen]
|
Rs 25,000
Rs 25,000
|
Rs 25,000
Rs 25,000
|
Rs 25,000
Rs 25,000
|
|
Medical expenditure on the health of a person who is a super senior citizen
(senior citizen from the assessment year 2019-20)
if medi-claim insurance is not paid on the health of such person
Maximum deduction in respect of(B)
|
Eligible
Rs 50,000
|
Eligible
Rs 50,000
|
Eligible
Rs 50,000
|
|
Maximum deduction in respect of (A)and(B)
|
Rs 50,000
|
Rs 50,000
|
Rs 50,000
|
Notes-
1.Family includes individual,spouse of the individual and dependent Children of the individual
2.Parents includes father and mother(dependent or otherwise).Father-in-law and mother-in-law are not
included.
3.The aggregate payment on account of preventive health check-up of self,spouse dependent
children,father
and
mother cannot exceed Rs 5,000.
4.The above payment[given under (A)and(B)should be made by any mode other than cash.However,payment
on
account of preventive health check up
can be made by any mode(including cash).
5."senior citizen" is a resident individual who is least 60 years of age at any time during the
previous
year.
6."super senior citizen"is a resident individual who is at least 80 years of age at any time during
the
previous year.
7.In cas of single premium health insurance policies having cover of more than one year, the
aforesaid
deduction shall be allowed(from
the assessment year 2019-20)on proportionate basis for the number of year for which health insurance
cover
is
provided.
-->
Deduction Under 80D
DEDUCTION IN RESPECT OF MEDICAL INSURANCE Premia[sec . 80D]
238.Deduction under section 80D is available if available if the following conditions
are satisfied-
- .The taxpayer is an individual (may be resident or Indian citizen/foreign citizen) a
Hindu undivided family(may be residents) a Hindu undivided family (maybe resident or
non-resident)
- .Payment should be made out of income chargeable to tax
- .Payment should be made by any mode other than cash. However, payment on account of
preventive health check-up can be made by any mode(including cash)
238.1 Maximum deductible amount - The maximum deductible amount and other revealment payment
are given below-
|
deduction in the case of individual |
|
Deduction in the case of huf |
| for whose benefit payment can be made |
family |
parents |
Any member of Huf |
a.Medi-claim insurance premium
b.contribution to CGHS/notified scheme
c.preventive health check-up payment
|
Eligible
Eligible
Eligible
|
Eligible
-
Eligible
|
Eligible
-
-
|
|
Maximum deduction
-General deduction [applicable in respect of (a),(b) and (c)]
Additional deduction [applicable only in case of
(a) when Medi-claim policy is taken on the life of a senior citizen]
|
Rs 25,000
|
Rs 25,000
|
Rs 25,000
Rs 25,000
|
|
medical expenditure on the health of a person who is a super senior citizen (senior
citizen from the assessment year 2019-20) if medi-claim insurance is not paid on the
health of such person
Maximum deduction in respect of (B)
|
Eligible
Rs 50,000
|
Eligible
Rs 50,000
|
Eligible
Rs 50,000
|
|
Maximum deduction in respect of (A) and (B)
|
Rs 50,000
|
Rs 50,000
|
Rs 50,000
|
Notes-
1.Family includes individual, spouse of the individual and dependent children of the
individual.
2.Parents include father and mother (dependent or otherwise).Father-in-law and
mother-in-law are not included.
3.The aggregate payment on account of preventive health check-up of self, spouse,
dependent children, father and mother cannot exceed Rs.5,000.
4.the above payments [given under (A) and (B) should be made by any mode other than
cash. However payment on account of preventive health check-up can be made by any
mode (including cash).
5.*Senior citizen* is a resident individual who is at least 60 years of age at any
time during the previous year.
6.*Super senior citizen* is a resident individual who is at least 80 years of age at
any time during the previous year.
7.in case of single premium health insurance policies having cover of more than one
year, the aforesaid deduction shall be allowed (form the assessment year 2019-20)on
proportionate basis for the number of years for which health insurance cover is
provided
Deduction 80C
Deduction in respect of life insurance premia, deferred annuity, contributions to provident fund,
subscription
to certain fund,
to certain equity shares or debentures, etc.[Sec.80C]
235.Section 80C provides deduction in respect of specified qualifying amounts paid or
deposited by
the
assessee in the previous year.
235.1 Salient features of section 80C -The following are salient features of section 80C-
Who can claim deduction under section 80C - Deduction under section 80C is available only to an
individual
or a
Hindu undivided family.
What is the Qualifying investments to avail deduction - Deduction is available on the basis of
specified
qualifying investments/contributions/
deposits/payments made by the taxpayer during the previous year. such investment, deposit, etc., can
be
made
out
of taxable income or otherwise
The complete list of such investment is given in para 235.2-1.
What is the basis of deduction - Deduction is available on actual payment basis. For instance, if
insurance
premium becomes due on March 24,2020
and actually paid on April 1, 2020, such premium is qualified for deduction under section 80C for
the
previous
year 2020-21.
How much deduction available under section 80C - The maximumamount deductible under section 80C is
Rs.1,50,000.
is there any combined maximum ceiling - The aggregate amount of deduction under section 80C, 80CCC
and
80CCD(l)
[i.e.,Contribution by an employee
(or any other individual)towards National Pension scheme (NPS)] cannot exceed Rs.1,50,000.
235.2 Computing of deduction under section 80C -The deduction is calculated as per the
following
steps--
Step 1 -Gross qualifying amount [see para 235.2-1]
Step 2 -Amount of deduction [see para 235.2-2].
235.2-1 step 1 -GROSS QUALIFYING AMOUNT -Gross qualifying amount is the aggregate of the
following:
I'm a flexbox container!
Nature of payment
- Life insurance premium (including payment made by Government employees to the Central
Government
Employees' insurance scheme and payment
made by a person under children's deferred endowment assurance policy) [see Note 1]
- Payment in respect of non-commutable deferred annuity[see Note 2
- Any sum deducted from salary payable to a government employee for the purpose of securing
him a
deferred
annuity (subject to a maximum
of 20 per cent of salary) [See Note.3]
Claim For deduction will be denied if return is not submitted within the due date specified under
section
139(1).this Rule is equally
applicable, if return is submitted in a belated mode under section 139(4)-SUOLIFICIO LINEA ITALIA
(INDIA)(P.)LTD.v.CIT[2018]96 taxman.com 462(cal.)
Nature of payment
- Contribution (not being repayment of loan) towards statutory provident fund and recognized
provident
fund.
- contribution (not being repayment of loan) towards 15 year public provident fund [see Notes
4,6
and
it]
- contribution towards an approved superannuation fund
- Subscription to National savings certificates, VIII Issue or IX Issue[see Note 7] and
deposit
in
sukanya samadhi
Account [see Note 12]
- Contribution for participating in the unit-linked insurance plan (ULIP) of unit trust of
india
[see
Note5]
- Contribution for participating in the unit-linked insurance plan (ULIP) of LIC Mutual Fund
(formerly
known as
Dhanraksha plan of LIC Mutual Fund) [see Note 5]
- Payment for notified annuity plan of LIC (i.e.,Jeevan Dhara Akshay) or any other insurer
(i.e.,immediate
Annuity plan
of ICICI Prudential Life Insurance company), Tata AIG Easy Retire Annuity plan)
- Subscription towards notified units of Mutual funds or UTI
- Contribution to notified pension fund set up by Mutual Fund or UTI(i.e.,Retirement Benefit
Pension
Fund
of UTI, Reliance
Retirement Fund)
- Any sum paid (including accrued interest) as subscription to Home Loan Account scheme of the
National
Housing Bank or
contribution to any notified deposit scheme or pension fund set up by the National Housing
bank.
- Any sum paid as subscription to any scheme of-
- a.Public sector company engaged in providing long -term finance for purchase/construction of
residential
houses in india (i.e., public deposit scheme of HUDCO);
- b.housing board constituted in india for the purpose of planning, development or improvement
of
cities/towns
- Any sum paid as tuition fees(not including any payment towards development
fees/donation/payment
of
similar nature)whether at the time of admission or otherwise to any
two children of the individual [Note 10]
- Any instalment or part payment towards the cost of purchase/construction of a residential
property
to a
housing board or co-operative society (or repayment of housing Loan
taken from Government,bank,cooperative bank, LIC, National Housing Bank, assessee's employer
where
such
employer is public company/public sector company/university/co-operative society)
[see Note 9]
- Amount invested in approved debentures of, and equity shares in, a public company engaged
infrastructure
including power sector or units of a mutual fund proceeds of which are utilized
for the developing, maintaining,etc., of a new infrastructure facility
- Amount deposited as term deposit for a period of 5 years or more in accordance with a scheme
framed
by
the central Government
- Subscription to any notified bonds of National Bank for Agriculture and Rural
Development(NABARD)
- Amount deposited under Senior Citizens Saving scheme [Note 11]
- Amount deposited in five year time deposit scheme in post office.
- Amount contributed (for a fixed period of not less than 3 years) by a Central Government
employee to
his NPS(Tier-II) account (applicable from the assessment year 2020-21).
Note:
1.In the case of an individual policy should be taken on his own life, life of the spouse or any
child
(child
may
be dependent/independent, male/female, minor/major or married/unmarried). In the case
of a Hindu divided family, policy may be taken on the life of any member of the family.Insurance
premium
cannot
occed the maximum ceiling given below-
|
Policy on the life of a person with disability or severe disability or on the life of a person
suffering
from disease
or ailment as given in section 80DDB |
Policy on the life any other person |
|
-If policy is issued before April 1,2012
-If policy is issued during 2012-13
-If policy is issued on or after April 1,2013
|
20% of sum assured*
10% of sum assured**
15% of sum assured**
|
20% of sum assured*
10% of sum assured**
10% of sum assured**
|
verified scheme for this purpose is the National Housing Bank (Tax Saving)Term Deposit Scheme,2008.
Deduction 80DD
Deduction in respect of maintenance including medical treatment of a dependent being a person with
disability-when and to what extent available [Sec.80DD]
239.The provisions of section 80DD are given below :
239.1Conditions - The following conditions should be satisfied-
1.The taxpayer is resident in india (may be ordinarily resident or not ordinarily resident).
2.The resident taxpayer is an individual (may be an indian citizen or foreign citizen) or a hindu
undivided
family.
3.The taxpayer has opted for any (or both)of the following options-
| Option 1 |
Option 2 |
|
The taxpayer has incurred an expenditure for the medical treatment y (including
nursing),training
and rehabilitation of a dependent (being a person with disability)
|
The taxpayer has paid or deposited under any scheme framed in this behalf by the life
insurance
corporation or any other insurer,or the administrator' or specified company and approved
by
the
board in this behalf, for main-tenace of dependent (being a person with disability)
|
4.For the above purpose, a "dependent being a person with disability* is a person who satisfies the
following
points-
a.in the case of an individual, dependent means the spouse,children,parents,brother and sisters of
the
individual or any of them;
b.in the case of a hindu undivided family , "dependent" means a member of a hindu undivided family;
c.such person is wholly or mainly dependent upon such individual or hindu undivided family for
support
and
maintenance;
d.such person has not claimed any deduction under section 80U in computing his total income for the
assessment
year relating to the previous year;
e."disability" shall have the meaning assigned to it in section 2(i) of the persons with
disabilities
(Equal
Opportunities, protection of rights and full participation) Act,1995 [see para 268.1-3];
f."person with disability" means a person having any "disability" stated above of not less than 40
per
cent.
Autism cerebral palsy and multiple disability - the meaning of the expression "disability" has been
enlarged from
the assessment year 2005-06 to include "autism","cerebral palsy" and "multiple disability" referred
to
in
clauses (a), (c) and (h) of section 2 of the National Trust for welfare of persons with Autism,
cerebral
palsy,
Mental Retardation and multiple Disabilities Act, 1999. A similar amendment has been made in the
definition of
"medical authority","person with disability".
----------------
1."Administrator" means the administrator as referred to in clause (a) of section 2 of the unit trust
of
india
(transfer of undertaking and repeal) Act, 2002.
2."Specified company" means a company as referred to in clause (h) of section 2 of the unit trust of
india
(transfer of undertaking and repeal) Act, 2002.
Para 239.2
Income -tax-Deductions from gross total income
5.Under option 2,the scheme provides for payment of an annuity or a lump sum amount for the benefit
of
dependent,
being a person with disability, in the event of the death of the individual or the
member of the hindu undivided family in whose name subscription to the scheme has been made.
6.Under option 2,the assessee nominates either the dependent (being a person with disability) or any
other person
or a trust to receive the payment on his behalf, for the benefit of such dependent.
7.For claiming the deduction, the assessee shall have to furnish a copy of the certificate issued by
the
medical
authority [see para 268.1-4] along with the return of income*[the certificate shall be in
Form NO.1O-IA Where the person is suffering from autism, cerebral palsy or multiple disability or in
the
form
prescribed under persons with Disabilities Act in any other case].Where the condition of
disability requires reassessment, a fresh certificate from the medical authority shall have to be
obtained after
the expiry of the period mentioned on the original certificate in order to continue to
claim the deduction.
239.2 Amount of deduction-The amount deductible is a fixed deduction of Rs.75,000 Whenever the
conditions
specified above are satisfied, irrespective of the amount incurred or deposited under Option 1 and
Option 2.
A higher deduction of Rs. 1,25,000 shall be allowed, where such dependent is a person with severe
disability
having disability of 80 per cent or more.
239.3 If dependent predeceases the taxpayer-If the dependent with disability predeceases the
individual or
the member of the Hindu undivided family
referred to above, an amount equal to the amount paid or deposited as stated above shall be deemed
to be
the
income of the assessee of the previous year in
in which such amount is received by the assessee and shall accordingly be chargeable to tax as the
income of
that previous year.
239-P1X is a resident individual. He annually deposits a sum of Rs.15,000 With LIC for the
maintenance of
his handicapped grandfather who is whally dependent
upon him.The Disability comes under section 2(i) of the persons with Disabilities (Equal
Opportunities,protection of rights and full participation) Act, 1995.A copy
of certificate from medical authority is submitted .determine the amount of deduction available
under
section
80DD for the assessment year 2020-21
SOLUTION:As grandfather does not come with in the definition of "dependent" in the section,
nothing shall
be deducted under section 80DD.
239-P2 Suppose in 239-P1, the person with disability is a dependent brother (disability up to
40
per
cent).
SOLUTION:As brother comes in the definition of "dependent" ,Rs.75,000 is deductible for the
assessment
year 2020-21.If,however,the dependent brother is a person with severe disability 80% or more, then
Rs.
1,25,000
is deductible.
Deduction 80DDB
240.The provisions of section 80DDB are given below-----
240.1 conditions - One has to satisfy the following conditions----
1.The taxpayer is resident in india (may be ordinarily resident or not ordinarily resident).
2.The taxpayer is an individual (may be an indian citizen or a foreign citizen) or a Hindu undivided
family.
3.The taxpayer has actually paid any amount for the medical treatment of a specified disease or
ailment
as
prescribed by the Board under rule 11DD [see para 240.3].
4.The expenditure is actually incurred for the medical treatment of the assessee himself or
wholly/mainly
dependent husband/wife, children, parents, brothers and sisters of the taxpayer. If the
---------------
*It is not possible to attach any prescription with new income-tax return forms. The assessee should
himself
retain the prescription. It may be furnished in original whenever the assessing Officer
wants to examine it in assessment proceeding or otherwise. taxpayer is a Hindu Undivided family, the
expenditure
is actually incurred for the medical treatment of any member of the family who is wholly/mainly
dependent upon
the family.
5.The assessee shall have to submit a doctor's prescription*[see para 240.3]
240.2 Amount of deduction -If the above conditions are satisfied, actual expenditure on
medical
treatment
is deductible under section 80DDB. However,deduction cannot exceed the maximum amount given below -
|
Maximum limit Rs. |
Maximum limit in the case of senior citizen Rs. |
Maximum limit in the case of super senior citizen Rs. |
|
Up to the assessment year 2015-16
For the assessment year 2016-17 to 2018-19
From the assessment year 2019-20
|
40,000
40,000
40,000
|
60,000
60,000
1,00,000
|
-
80,000
-
|
Notes-
1.*Senior Citizen* is a resident individual who is at least 60 years (65 years, up to the assessment
year
2012-13)
of age at any time during the previous year.
2.*Super senior citizen* is resident individual who is at least 80 years of age at any time during
the
previous
year.
Deduction under this section shall be reduced by the amount received, if any, under an insurance
from an
insurer, or
reimbursed by an employer, for the medical treatment of the person referred to above.
240.3 Prescribed diseases and certificate from a doctor -For the purpose of section 80DDB, the
following
diseases
have been specified under rule 11DD (colon 1 of the table given below).to get the benefit of
deduction,
prescription
in respect of these diseases/ailments shall be issued by the following specialists given in column 2
of
the
table -
| Specified diseases |
Prescription in respect of the diseases or ailments specified in column 1 to be
issued by
the following specialists - |
| Neurological diseases where the disability level has been certified to be of 40% and
above,-(a)
Dementia; (b)Dystonia Muscularly Deformans;
(c)Motor Neuron Disease; (d)Ataxia; (e)Chorea; (f) Hemiballismus; (g) Aphasia; (h)
parkinson's
Disease
|
A neurologist having a doctorate of medicine (DM) Degree in Neurology or any equivalent
recognizee
degree |
| Malignant cancers |
An oncologist having a Doctorate of medicine (DM) degree in oncology or any equivalent
recognized degree
|
| Full blown Acquired Immuno-Deficiency synd-rome (AIDS) |
Any specialist having a post-graduate degree in general or internal medicine, or any
equivalent
recognized degree |
| Chronic Renal failure |
A Nephrologist having a Doctorate of Medicine(DM) degree in Nephology or a Urologist having
a
Master of
Chirurgeon(MCh)
degree in Urology or any equivalent recognized degree
|
*It is not possible to attach any prescription with new income-tax return forms. The assessee should
himself
retain prescription.
it may be furnished in original whenever the Assessing Officer wants to examine it in assessment
proceedings or
otherwise.
Para 240.3 Income-tax - Deductions from gross total income
| Specified diseases |
Prescription in respect of the diseases or ailments specified in column 1 to be
issued by
the following specialists - |
| Hematological disorders :(a) Hemophilia; (b) Tha-lassaemia |
A specialist having a Doctorate of medicine (DM) degree in Hematology or any equivalent
recognized
degree |
Notes-
1.Where in respect of any diseases or ailments specified above, the patient is receiving the
treatment in
a
government hospital,
the prescription may be issued by any specialist working full-time in that hospital and having a
postgraduate
degree in General
or Internal medicine or any equivalent recognized degree.
2.For the prescription referred to above, noformat or form has been issued. The prescription shall
contain the
name and age of the
patient,name of the disease or ailment along with the name,address,registration number and the
qualification of
the specialist
issuing the prescription. Where,however,the patient is receiving the treatment in a government
hospital,
such
prescription shall
also contain the name and address of the Government hospital.
240-P1 X(35 years) is a resident individual. during the previous year, he incurs the following
expenditure-
| Actual expenditure Rs. |
Amount re-imburse by insurance company Rs. |
Amount re-imbrued by employer of X RS. |
|
30,000
14,000
|
Nil
3,000
|
28,000
6,000
|
Medical treatment (specified disease) of X in a government Hospital
Medical treatment (specified disease) of Mrs.X in a Hospital recognized by chief commissioner
Salary of X is Rs. 14,00,000. in the two cases, disease is specified in the rules made by the Board.
Find out the net income of X for the assessment year 2020-21.
SOLUTION:
| Salary |
Rs. |
| Perquisite in respect of medical treatment of X and his spouse |
14,00,000 |
| Gross Salary |
Nil |
| less:standard deduction |
14,00,000 |
| Salary |
50,000 |
| Any other income |
13,50,000 |
| Gross total income |
Nil |
| Less : Deduction under section 80DDB [see Note] |
13,50,000 |
| Net income |
3,000 |
| Note - The amount deductible is an follows- |
13,47,000 |
| a.actual expenditure (i.e., Rs.30,000 + Rs. 14,000);or |
| b.Rs.40,000 (Rs. 1,00,000 in the case of senior citizen),Whichever is less. |
Rs. 40,000 is deductible if nothing is recovered from the insurance company or employer. From the
amount
deductible
(i.e., Rs.40,000 in this case), the amount received from insurance company as well as employer shall
be
deducted.
Therefore, Rs. 40,000 - Rs.3,000 - Rs.28,000 - Rs.6,000, i.e.,RS.3,000 is deductible.
240-P2Find out the amount of deduction under section 80DDB in the following cases for the
assessment year
2020-21-
| Name of taxpayer |
X |
Y |
Z |
A |
B |
| Residential status of the taxpayer |
Resident |
Resident |
Resident |
Resident |
Non-resident |
| Expenditure incurred on medical treatment of dependent mother in a hospital recognised by
the
chief
commissioner (amount in rupees) |
50,000 |
96,000 |
1,60,000 |
1,00,000 |
54,000 |
| Age of mother |
59 years |
69 years |
73 years |
63 years |
64 years |
| residential status of dependent mother |
REsident |
Non-resident |
Resident |
Non-resident |
Resident |
| Whether the disease is specified under rule 11DD made by the board |
Yes |
Yes |
Yes |
Yes |
Yes |
| Amount received from insurance company (amount in rupees |
4,000 |
14,000 |
90,000 |
15,000 |
7,000 |
| Amount received from the employer of the taxpayer (amount in rupees) |
2,000 |
3,000 |
14,000 |
20,000 |
16,000 |
SOLUTION:
| Amount of deducting under section 80DDB |
X Rs. |
Y Rs. |
Z Rs. |
A Rs. |
B Rs. |
| Deduction under section 80DDB if no money is recovered from insurance company and employer
|
40,000 |
40,000 |
1,00,000 |
40,000 |
Nil |
| Less : Amount received from insurance company and employer |
6,000 |
17,000 |
1,04,000 |
35,000 |
23,000 |
| Amount of deduction under section 80DDB |
34,000 |
23,000 |
Nil |
5,000 |
Nil |
Note -The perquisite in respect of reimbursement of medical expenditure by employer is not
chargeable to
tax in this case.
Deduction80EE
Deduction in respect of interest on loan taken for residential house property [Sec.80EE]
241A.The amount provisions of section 80EE are given below
Conditions- The following conditions should be satisfied in order to claim deduction under section
80EE.
1.The assessee is an individual.He may be resident or non-resident.
2.He has taken a loan.
3.Loan is taken for acquisition of residential house property.
4.Loan is taken from a bank or a housing finance Company.Bank for this purpose means a banking
company
to
which
the Banking Regulation
Act,1949 applies including any bank or banking institution referred to in section 51 of that Act.A
Housing
finance Company means a public
company formed or registered in India with the main object of carrying on the business of providing
long-term
finance for construction
or purchase of residential houses in India.
5.The Loan has been sanctioned by the bank/housing finance company during April1,2016 and
March31,2017.
6.The amount of loan sanctioned for residential house property does not Exceed Rs.35 lakh.
7.The value of residential house property does not exceed rs.50 lakh.
8.The assessee does not own any residential house property on the date of sanction of loan.
Amount of deduction-If the above conditions are satisfied,the assessee can be claim deduction under
section
80EE.Deduction is available
in respect of interest payable on the above loan or Rs.50,000 whichever is less.Deduction is
available
for
the
assessment year 2017-18 and
subsequent assessment year.
Double deduction not possible-If deduction is claimed under section 80EE no deduction will be
allowed in
respect
of such interest under any other
provision of the Act for the same or any other assessment year.
Deduction 80G
Deduction in respect of donation to certain funds,charitable institutions,etc.[sec.80G]
242.Deduction under section 80G is available to any taxpayer(maybe individual, firm
HUF,company;resident
or
non-resident)For calculating
the Deduction Admissible under the section,the following three steps have to be observed:
Step1 :Find out Gross Quality Amount[see para 242.1]
Deduction 80GG
Deduction in respect of rent paid [sec.80GG]
243.The following are salient features of section 80GG-
who can claim deduction - only an individual can claim deduction under section 80GG He can be a
self-employed
person. Alternatively he can
an employee who does not get house rent allowance from the employer.
What is the qualifying expenditure -only an individual who pays rent for a residential
accommodation for
himself (and family)can avail deduction
under section 80GG provided he gives a declaration in Form no.10B (this declaration can be submitted
electronically to the Assessing officer or whenever he wants to examine it.)
Can a person who payed rent to avail this deduction own house-The following person should not own
any
residential accommodation at the place
whenever the taxpayer resides, performs the duties of his office,or employment or carries on his
business or
profession -
a.the taxpayer;
b.his/her spouse;
c.his/her minor chaild (including minor step chaild and minor adopted chaild);and
d.the Hindu undivided family of which the taxpayer is a member .
If the taxpayer owns a residential accommodation at a place other than the place noted above, then in
respect
of that house the concession
in respect of self-occupied property is not claimed by him .
What is the amount of deduction -The amount deductible under section 80GG is the least of the
following
a.Rs.5,000 per month (Rs. 2,000 per month,up to the assessment year 2016-17;
b.25 per cent of "total income".
c.the excess of actual rent paid over 10 per cent of "total income".
"Total income",for this purpose, is gross total income minus long terms capital gains,short-term
capital
gains under section 111A deductions section 80Cto80u (not being section 80GG)
and income under section 115A.
243-p1Gross total income of X tax consultant based at Bombay is Rs.6,50,000[professional
income/salary Rs.6,00,000(after Standers deduction)
interest on bank deposit: Rs.50,000 ] He pay Rs.9,500 as mediclaim insurance premium deductible
under
section 80D and Rs.80,000 as house rent.He deposits Rs.24,000 in public provident funds.compute his
taxable
income for the assessment year 2020-21.
SOLUTION:
| professional income/salary |
Rs. |
| Interest on bank deposit |
6,00,000 |
| Gross total income |
50,000 |
| Less:Deduction under sections 80CCC to 80U |
6,50,000 |
| under section 80C |
24,000 |
| under section 80DD |
9,500 |
| Under section 80GG(computed as per details given below) |
Rs 18,350 |
| Net income |
5,98,150 |
Deduction under section 80GG is the least of the following :(a)Rs60,000;(b) Rs.1,54,125(being 25% of
Rs.
6,16,500,i.e,Rs 6,50,000
Rs.24,000 -Rs.9,500); or (c)Rs.18,350(being the excess of rent paid over 10% of total income of
Rs.6,16,500)
Deduction80EEA
Deduction in respect in interest on loan taken for certain house property [sec 80EEA]
241B.section 80EEA has been interested with effect from the assessment year 2020-21.Deduction
under
this
section is available if the following
conditions are satisfied-
1.The assessee is an individual .
2.He is not eligible to claim any deduction under section 80EE.
3.He has taken a loan for the purpose of acquisition of residential house property.
4.The loan is sanctioned by a financial institution(i.e,a bank or banking institution or a housing
finance
company)during April 1,2019 and March31,2020.
5.The stamp duty value of the residential house property does not exceed Rs.45 lakh.The expression
"stamp
duty value"means value adopted (or assessee
or assessable)by any authority of the central Government or a state Government for the purpose of
payment
of duty in respect of an immovable property
6.The assessee does not own any residential house property on the date of sanction of loan.
Amount of deduction-If the above conditions are satisfied,the assessee can claim deduction under
section
80EEA.Deduction is available in
respect of interest payable on the above loan or Rs.1,50,000,whichever is less.Deduction is
available
for
the
assessment year 2020-21 and
subsequent assessment years.
Same interest is not deductible twice-If interest is claimed as deduction under section 80EEA,such
interest
(or such portion of interest)is not
again deductible under section24(b)or under any other provision of the Act for the same or any other
assessment year.
Deduction80EEB
241.Deduction in respect of interest on loan taken for purchace of electronic vehicle
[sec.80EEB]
80EEB has been inserted from the assessment year 2020-21.Under this section,
deduction is available if the following condition are
1.The assessee is an individual.
2.He has taken a loan for the purpose of purchase of an electric vehicle.For this
purpose,"electric vehicle"means-
- a vehicle which is powered "excursively" by an electric motor whose traction energy is supplied
excursively by traction battery installed in the vehicle,and
- it has such electric regenerative braking system,which during braking provides for the
conversion of vehicle kinetic energy into electric energy.
as the word"exclusive"is used,interest on loan taken for purchase of a "hybrid car"(which
derives some of its power from convectional engine)is not eligible for deduction.
3.Loan is taken from a financial institution (i.e, a bank or any deposit taking NBFC or
systematically important non-deposit taking NBFC).
4.Loan is sanctioned during April 1,2019 and March 31,2023.
.Amount of deduction-If the above conditions are satisfied,the assessee can claim deduction under
section 80EEB.Deduction is available in respect of interest payable on the above loan or
Rs.1,50,000,whichever is less.Deduction is available for the assessment year 2020-21 and
subsequent assessment years.
.Same interest is not deductible twice-if interest is claimed as deduction under section 80EEB,Such
interest(or such portion of interest) is not again deductible under any other provision of the Act
for the same or any other assessment year.
Deduction in respect of interest on deposits in savings accounts [sec.80TTA]
266.Section 80TTA has been inserted with effect from the assessment year 2013-14.It provides a
deduction
up to Rs.10,000 in aggregate
to an assessee (being an individual or a Hindu undivided family) in respect of any income by way of
interest on
deposits (not being time
deposits) in a savings account with--
- a banking company;
- a co-operative society engaged in carrying on the business of banking (including a co-operative
land
mortgage bank or a co-operative
land development bank);or
- a post office.
The following points should be noted-
- From the assessment year 2019-20, the above deduction is not available in the case of a senior
citizen who
is eligible to claim
deduction under section 80TTB.
- Where the aforesaid income is derived from any deposit in a savings account held by, or on
behalf of a
firm,an association of
persons or a body of individuals,no deduction shall be allowed in respect of such income in
computing the
total income of any
partner of the firm or any men=mber of the association or body.
266.1 Post office saving bank interest exemption under section 10(15)(i)-Post office savings
bank
interest is exempt up to
Rs.3,500(in an individual account)and Rs.7,000(in a joint account)under section 10(15)(i) by virtue
of
Notification No.32/2011, dated
June 3,2011, read with Notification No.GSR607, dated June9,1989.The cumulative impact of sections
10(15)(i)and
80TTA is as follows-
|
Up to the assessment year 2011-12 Rs. |
For the assessment year 2012-13 Rs. |
From the assessment year 2013-14 Rs. |
|
Interest on post office saving bank [exemption under section 10(15)(i)]
|
Full exemption, nothing is taxable |
Exemption up to Rs.3,500 in a single account and Rs.7,000 in a joint account |
Exemption up to Rs.3,500 in a single account and Rs.7,000 in a joint account |
| Interest on savings account with a bank, co-operative bank and post office (deduction
under section 80TTA) |
No deduction |
No deduction |
Deduction up to Rs.10,000 |
Deduction 80U
Deduction in case of a person with disability [Sec.80U]
268.The provisions of section 80U are given below-
268.1 conditions-Deduction is available if the following conditions are satisfied-
268.1-1 Individual-The taxpayer is an individual (may be a citizen of india or foreign
country).
268.1-2 resident in india-He is resident in india (may be ordinarily resident or not
ordinarily
resident).Deduction
under this section is not available if he is non-resident in india for the relevant assessment year.
268.1-3 Person with disability-The taxpayers suffers 40 per cent or more than 40 per cent of
any
disability given below-
- blindness;
- low vision;
- leprosy-cured;
- hearing impairment;
- locomotor disability;
- mental retardation;
- mental illness.
Blindness-Blindness" refers to a condition where a person suffers from any of the following
conditions, namely:-
- total absence of sight; or
- visual acuity not exceeding 6/60 or 20/200 (snellen) in the better eye with correcting lenses:
or
- limitation of the field of vision subtending an angle of 20 degree or worse.
Low vision-"Person with low vision" means a person with impairment of visual functioning even after
treatment or
standard
refractive correction but who uses or is potentially capable of using vision for the planning or
execution of a
task with
appropriate assistive device.
Leprosy cured person- "Leprosy cured person" means any person who has been cured of leprosy but is
suffering
from-
- loss of sensation in hands or feet as well as loss of sensation and paresis in the eye and
eye-lid but with
no manifest deformity;
- manifest deformity and paresis but having sufficient mobility in their hands and feet to enable
them to
engage in normal
economic activity;
- extreme physical deformity as well as advanced age which prevents him from undertaking any
gainful
occupation.
Hearing impairment-"Hearing impairment" means loss of sixty decibels or more in the better ear in
the
conversational range of frequencies.
Locomotor disability-"Locomotor disability"meansdisability of the bones, joints or muscles leading
to
substantial restriction of the movement
of the limbs or any form of cerebral palsy.
Mental retardation-"Mental retardation" means a condition of arrested or incomplete development of
mind of a
person, which is specially
characterized by subnormality of intelligence.
Mental illness-"Mental illness" means any mental disorder other than mental retardation.
Autism,cerebral plays and multiple disability-From the assessment year 2005-06,autism,cerebral plasy
and
multiple disability have been included
in the expression "person with disability".
268.1-4 certified By Medical Authority-The taxpayer shall have to furnish a copy of the
certificate [In
Form No.10-IA Where the person is
suffering from autism,cerebral plasy or in the notified from under person with Disabilities Act,
1995 in any
other case]issued by the medical
authority along with the return of income. where the condition of disability requires reassessment,
a fresh
certificate from the medical authority
shall have to be obtained after the expiry of the period mentioned on the original certificate in
order to
continue to claim the deduction.
"Medical authority" for this purpose means any hospital or institution specified by notification by
the
appropriate Government for the purpose of
the persons with Disabilities (Equal opportunities, protections of Rights and Full Participation)
Act, 1995.
268.2 Amount of deduction-If the aforesaid conditions are satisfied, then a fixed deduction of
Rs.75,000
is available. A higher deduction of
Rs.1,25,000 is allowed in respect of a person with severe disability (i.e., having any disability of
80 per cent
or above).
268-P1X is a resident individual.He suffers from a severe disability as certified by medical
authority. He
is mainly dependent upon his brother
Y for support and maintenance.Y annually incurs a sum of Rs.5,000 on medical treatment of X. Income
of X and Y
is Rs.10,000 and Rs.36,00,000. Find out
the net income of X and Y for the assessment year2020-21.
SOLUTION:
| Gross total income |
XRs.
|
YRs.
|
| Less:Deductions under sections 80C to 80U |
10,000 |
36,00,000 |
| Under section 80DD |
--- |
1,25,000 |
| Under section 80U |
--- |
--- |
| Net income |
10,000 |
34,75,000 |
Note-1If deduction is claimed by X under section 80U then no deduction will be available to Y
under
section 80DD.Income of X is below Rs.2,50,000
and is not chargeable to tax. X should not claim any deduction under section 80U.
Deductions from tax liability
269.First determine net income and tax payable thereon at the rates mentioned in Annex 1. From
the sum of
tax so determined, deduct the following
tax reliefs/tax rebates:
Rebate under section 86 in respect of share of profit from an association of persons [see para
326.4-1].