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 Income Tax Deduction under Section 80D in respect of health insurance premium for covering the health of self, spouse, dependent children and parents

Deduction eligibility in respect of Health Insurance Premium and health checkup charges paid from the income of the tax payer under Section 80D has been increased to Rs. 25,000 from the last year eligibility of Rs. 15,000. This deduction cap or Rs. 25,000 will be applicable for Medical Insurance premium paid for the health of self, spouse and dependent children.

As far as Health Insurance Premium paid by the tax payer to cover the medical expenses of his/her parents, yearly premium and health check-up cost paid up to Rs. 25,000 can be deducted from the income. Also in the case of senior parents health insurance premium up to Rs. 30,000 can be deducted.

In the case of sharing of premium payment for covering the health of Parents, the actual premium paid by each person can be deducted from his/her income.

Further, medical expenditure incurred for very Senior Citizen up to Rs. 30,000 can be deducted from the income of the person who has spent the same, provided the said very senior citizen has no insurance coverage.

Deduction in respect of health insurance premia.

80D. (1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted such sum, as specified in sub-section (2) or sub-section (3), payment of which is made by any mode as specified in sub-section (2B), in the previous year out of his income chargeable to tax.

(2) Where the assessee is an individual, the sum referred to in sub-section (1) shall be the aggregate of the following, namely:—

(a)  the whole of the amount paid to effect or to keep in force an insurance on the health of the assessee or his family or any contribution made to the Central Government Health Scheme [or such other scheme as may be notified by the Central Government in this behalf] or any payment made on account of preventive health check-up of the assessee or his family as does not exceed in the aggregate [Twenty Five] thousand rupees; and

(b)  the whole of the amount paid to effect or to keep in force an insurance on the health of the parent or parents of the assessee or any payment made on account of preventive health check-up of the parent or parents of the assessee as does not exceed in the aggregate [Twenty five] thousand rupees.

Following clauses (c) and (d) shall be inserted after clause (b) of sub-section (2) of section 80D by the Finance Act, 2015, w.e.f. 1-4-2016 :

(c)  the whole of the amount paid on account of medical expenditure incurred on the health of the assessee or any member of his family as does not exceed in the aggregate thirty thousand rupees; and

(d)  the whole of the amount paid on account of medical expenditure incurred on the health of any parent of the assessee, as does not exceed in the aggregate thirty thousand rupees:

Provided that the amount referred to in clause (c) or clause (d) is paid in respect of a very senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person:

Provided further that the aggregate of the sum specified under clause (a) and clause (c) or the aggregate of the sum specified under clause (b) and clause (d) shall not exceed thirty thousand rupees.

Explanation.—For the purposes of clause (a), “family” means the spouse and dependant children of the assessee.

(2A) Where the amounts referred to in clauses (a) and (b) of sub-section (2) are paid on account of preventive health check-up, the deduction for such amounts shall be allowed to the extent it does not exceed in the aggregate five thousand rupees.

(2B) For the purposes of deduction under sub-section (1), the payment shall be made by—

(i)  any mode, including cash, in respect of any sum paid on account of preventive health check-up;

(ii)  any mode other than cash in all other cases not falling under clause (i).

Following sub-section (3) shall be substituted for the existing sub-section (3) of section 80D by the Finance Act, 2015, w.e.f. 1-4-2016 :

(3) Where the assessee is a Hindu undivided family, the sum referred to in sub-section (1), shall be the aggregate of the following, namely:—

(a)  whole of the amount paid to effect or to keep in force an insurance on the health of any member of that Hindu undivided family as does not exceed in the aggregate twenty-five thousand rupees; and

(b)  the whole of the amount paid on account of medical expenditure incurred on the health of any member of the Hindu undivided family as does not exceed in the aggregate thirty thousand rupees:

Provided that the amount referred to in clause (b) is paid in respect of a very senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person:

Provided further that the aggregate of the sum specified under clause (a) and clause (b) shall not exceed thirty thousand rupees.

(4) Where the sum specified in clause (a) or clause (b) of sub-section (2) [or in sub-section (3)] is paid to effect or keep in force an insurance on the health of any person specified therein, and who is a senior citizen, [or a very senior citizen], the provisions of this section shall have effect as if for the words” [Twenty Five] thousand rupees”, the words ” [Thirty] thousand rupees” had been substituted.

[Explanation.—For the purposes of this sub-section, “senior citizen” means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.]

(5) The insurance referred to in this section shall be in accordance with a scheme made in this behalf by—

(a)  the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and approved by the Central Government in this behalf; or

(b)  any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999).

Following Explanation shall be inserted to section 80D by the Finance Act, 2015, w.e.f. 1-4-2016 :

Explanation.—For the purposes of this section,—

(i)  “senior citizen” means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year;

(ii)  “very senior citizen” means an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year. 

On January 12, 2016 by www.taxexcel.net

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Download andprepare at a time 100 employees Form 16 Part B for Financial Year 2015-16 &Assessment Year 2016-17 [This Excel Based Software can prepare at a time 100 employees Form 16 Part B for F.Y.2015-16 ]

Income Tax Deduction under Section 80D in respect of health insurance premium for covering the health of self, spouse, dependent children and parents

Deduction eligibility in respect of Health Insurance Premium and health checkup charges paid from the income of the tax payer under Section 80D has been increased to Rs. 25,000 from the last year eligibility of Rs. 15,000. This deduction cap or Rs. 25,000 will be applicable for Medical Insurance premium paid for the health of self, spouse and dependent children.

As far as Health Insurance Premium paid by the tax payer to cover the medical expenses of his/her parents, yearly premium and health check-up cost paid up to Rs. 25,000 can be deducted from the income. Also in the case of senior parents health insurance premium up to Rs. 30,000 can be deducted.

In the case of sharing of premium payment for covering the health of Parents, the actual premium paid by each person can be deducted from his/her income.

Further, medical expenditure incurred for very Senior Citizen up to Rs. 30,000 can be deducted from the income of the person who has spent the same, provided the said very senior citizen has no insurance coverage.

Deduction in respect of health insurance premia.

80D. (1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted such sum, as specified in sub-section (2) or sub-section (3), payment of which is made by any mode as specified in sub-section (2B), in the previous year out of his income chargeable to tax.

(2) Where the assessee is an individual, the sum referred to in sub-section (1) shall be the aggregate of the following, namely:—

(a)  the whole of the amount paid to effect or to keep in force an insurance on the health of the assessee or his family or any contribution made to the Central Government Health Scheme [or such other scheme as may be notified by the Central Government in this behalf] or any payment made on account of preventive health check-up of the assessee or his family as does not exceed in the aggregate [Twenty Five] thousand rupees; and

(b)  the whole of the amount paid to effect or to keep in force an insurance on the health of the parent or parents of the assessee or any payment made on account of preventive health check-up of the parent or parents of the assessee as does not exceed in the aggregate [Twenty five] thousand rupees.

Following clauses (c) and (d) shall be inserted after clause (b) of sub-section (2) of section 80D by the Finance Act, 2015, w.e.f. 1-4-2016 :

(c)  the whole of the amount paid on account of medical expenditure incurred on the health of the assessee or any member of his family as does not exceed in the aggregate thirty thousand rupees; and

(d)  the whole of the amount paid on account of medical expenditure incurred on the health of any parent of the assessee, as does not exceed in the aggregate thirty thousand rupees:

Provided that the amount referred to in clause (c) or clause (d) is paid in respect of a very senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person:

Provided further that the aggregate of the sum specified under clause (a) and clause (c) or the aggregate of the sum specified under clause (b) and clause (d) shall not exceed thirty thousand rupees.

Explanation.—For the purposes of clause (a), “family” means the spouse and dependant children of the assessee.

(2A) Where the amounts referred to in clauses (a) and (b) of sub-section (2) are paid on account of preventive health check-up, the deduction for such amounts shall be allowed to the extent it does not exceed in the aggregate five thousand rupees.

(2B) For the purposes of deduction under sub-section (1), the payment shall be made by—

(i)  any mode, including cash, in respect of any sum paid on account of preventive health check-up;

(ii)  any mode other than cash in all other cases not falling under clause (i).

Following sub-section (3) shall be substituted for the existing sub-section (3) of section 80D by the Finance Act, 2015, w.e.f. 1-4-2016 :

(3) Where the assessee is a Hindu undivided family, the sum referred to in sub-section (1), shall be the aggregate of the following, namely:—

(a)  whole of the amount paid to effect or to keep in force an insurance on the health of any member of that Hindu undivided family as does not exceed in the aggregate twenty-five thousand rupees; and

(b)  the whole of the amount paid on account of medical expenditure incurred on the health of any member of the Hindu undivided family as does not exceed in the aggregate thirty thousand rupees:

Provided that the amount referred to in clause (b) is paid in respect of a very senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person:

Provided further that the aggregate of the sum specified under clause (a) and clause (b) shall not exceed thirty thousand rupees.

(4) Where the sum specified in clause (a) or clause (b) of sub-section (2) [or in sub-section (3)] is paid to effect or keep in force an insurance on the health of any person specified therein, and who is a senior citizen, [or a very senior citizen], the provisions of this section shall have effect as if for the words” [Twenty Five] thousand rupees”, the words ” [Thirty] thousand rupees” had been substituted.

[Explanation.—For the purposes of this sub-section, “senior citizen” means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.]

(5) The insurance referred to in this section shall be in accordance with a scheme made in this behalf by—

(a)  the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and approved by the Central Government in this behalf; or

(b)  any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999).

Following Explanation shall be inserted to section 80D by the Finance Act, 2015, w.e.f. 1-4-2016 :

Explanation.—For the purposes of this section,—

(i)  “senior citizen” means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year;

(ii)  “very senior citizen” means an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year.

On January 09, 2016 by www.taxexcel.net

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This section has been introduced by the Finance Act 2005. Broadly speaking, this section provides deduction from total income in respect of various investments/ expenditures/ payments in respect of which tax rebate u/s 88 was earlier available. The total deduction under this section (along with section 80CCC and 80CCD) is limited to Rs. 1.50 lakh only.

·                            Life Insurance Premium For individual, policy must be in self or spouse's or any child's name. For HUF, it may be on life of any member of HUF.

·                            Sum paid under contract for deferred annuity for individual, on life of self, spouse or any child .

·                            Sum deducted from salary payable to Govt. Servant for securing deferred annuity for self-spouse or child Payment limited to 20% of salary.

·                            Investment in Senior Citizens Savings Scheme 2004 for 5 year by resident individuals.

·                            Contribution made under Employee's Provident Fund Scheme.

·                            Contribution to PPF For resident individual, can be in the name of self/spouse, any child & for HUF, it can be in the name of any member of the family.

·                            Deposit in Sukanya Samriddhi Account as natural / legal guardian of girl child.

·                            Contribution by employee to a Recognised Provident Fund.

·                            Sum deposited in 10 year/15 year account of Post Office Saving Bank

·                            Subscription to any notified securities/notified deposits scheme. e.g. NSS

·                            Subscription to any notified savings certificate, Unit Linked Savings certificates. e.g. NSC VIII issue.

·                            Contribution to Unit Linked Insurance Plan of LIC Mutual Fund e.g. Dhanrakhsa 1989

·                            Contribution to notified deposit scheme/Pension fund set up by the National Housing Scheme.

·                            Certain payment made by way of instalment or part payment of loan taken for purchase/construction of residential house property.

·                            Investments in Sukanya Samriddhi Scheme (w.e.f. 01.04.2015} 

Condition has been laid that in case the property is transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year.

·                            Contribution to notified annuity Plan of LIC(e.g. Jeevan Dhara) or Units of UTI/notified Mutual Fund. If in respect of such contribution, deduction u/s 80CCC has been availed of rebate u/s 88 would not be allowable.

·                            Subscription to units of a Mutual Fund notified u/s 10(23D).

·                            Subscription to deposit scheme of a public sector, company engaged in providing housing finance.

·                            Subscription to equity shares/ debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions.

·                            Tuition fees paid at the time of admission or otherwise to any school, college, university or other educational institution situated within India for the purpose of full time education of any two children. Available in respect of any two children

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Section 80CCC: Deduction in respect of Premium Paid for Annuity Plan of LIC or Other Insurer

Payment of premium for annuity plan of LIC or any other insurer Deduction is available upto a maximum of Rs. 150,000/-.

The premium must be deposited to keep in force a contract for an annuity plan of the LIC or any other insurer for receiving pension from the fund.

Note: The limit for maximum deduction available under Sections 80C, 80CCC and 80CCD(1) (combined together) is Rs. 1,50,000/-.

Section 80CCD (1): Deduction in respect of Contribution to Pension Account (by Assessee}

Deduction available for the amount paid or deposited in a pension scheme notified or as may be notified by the Central Government subject to a maximum of :
(a) 10% of salary in the previous year in the case of an employee
(b) 10% of gross total income in any other case.

The maximum deduction allowable under the secion is Rs. 1.00 lac. Rs. 1.50 lacs w.e.f. 01.04.2015 in case of contribution to New Pension Scheme (NPS).

Section 80CCD (2): Deduction in respect of Contribution to Pension Account (by Employer}

Deduction available for the amount paid or deposited by the employer of the assessee in a pension scheme notified or as may be notified by the Central Government subject to a maximum of 10% of salary in the financial year.

Section 80CCD: Additional Contribution to New Pension Scheme (NPS)

A deduction of upto Rs. 50,000 is available over and above the limit of Rs. 1.50 lakh in respect of contributions made to NPS under Section 80CCD(1).

Section 80CCG:

Amount invested by resident individuals, whose gross total income does not exceed Rs. 12 lakhs, in listed shares or listed units in accordance with notified scheme for a lock-in period of 3 years (Subject to certain conditions).

Deduction of 50 % of total investment subject to maximum of Rs. 25,000 in 3 consecutive assessment years, beginning with the assessment year relevant to the previous year in which the listed shares or list units of equity oriented funds are first acquired.

Section 80D: Deduction in respect of Medical Insurance

Deduction is available upto Rs. 30,000/- (enhanced from Rs. 20,000 w.e.f. 01.04.2015) for senior citizens and upto Rs. 25,000/- (enhanced from Rs. 15,000 w.e.f. 01.04.2015) in other cases for insurance of self, spouse and dependent children. Additionally, a deduction for insurance of parents (father or mother or both) is available to the extent of Rs. 30,000/- (enhanced from Rs. 20,000 w.e.f. 01.04.2015) if parents are senior Citizen and Rs. 25,000/- (enhanced from Rs. 15,000 w.e.f. 01.04.2015) in other cases. Therefore, the maximum deduction available under this section is to the extent of Rs. 60,000/-. From AY 2013-14, within the existing limit a deduction of upto Rs. 5,000 for preventive health check-up is available.

Section 80DD: Deduction available to resident Individual and HUF in respect of Rehabilitation of Handicapped Dependent Relative

Deduction of Rs. 75,000/- (enhanced from Rs. 50,000 w.e.f. 01.04.2015) in respect of

1.                         Expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent relative.

2.                         Payment or deposit to specified scheme for maintenance of dependent handicapped relative.

Further, if the defendant is a person with severe disability a deduction of Rs. 125,000/- (enhanced from Rs. 1,00,000 w.e.f. 01.04.2015) shall be available under this section. The handicapped dependent should be a dependent relative suffering from a permanent disability (including blindness) or mentally retarded, as certified by a specified physician or psychiatrist. Note: A person with 'severe disability' means a person with 80% or more of one or more disabilities as outlined in section 56(4) of the 'Persons with disabilities (Equal opportunities, protection of rights and full participation)' Act.

Section 80DDB: Deduction allowed to resident Individual and HUF in respect of Medical Expenditure on Self or Dependent Relative

A deduction to the extent of Rs. 60,000/- (Rs. 80,000 in case of senior citizen) or the amount actually paid, whichever is less is available for expenditure actually incurred by resident assessee on himself or dependent relative for medical treatment of specified disease or ailment. The diseases have been specified in Rule 11DD. A certificate in form 10 I is to be furnished by the assessee from any Registered Doctor.

Section 80E: Deduction in respect of Interest on Loan for Higher Studies

Deduction in respect of interest on loan taken for pursuing higher education. The deduction is also available for the purpose of higher education of a relative w.e.f. A.Y. 2008-09.

Section 80EE: Deduction in respect of Interest on Residential House Property

The deduction under this sub-section is available w.e.f. AY 2014-15. The maximum deduction available is Rs. 1 lac. In a case where the interest payable for the financial year 2013-14 is less than Rs. 1 lac, the balance deduction amount shall be available in AY 2015-16.

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

i.                               the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2013 and ending on the 31st day of March, 2014;

ii.                               the amount of loan sanctioned for acquisition of the residential house property does not exceed twenty-five lakh rupees;

iii.                               the value of the residential house property does not exceed forty lakh rupees;

iv.                               the assessee does not own any residential house property on the date of sanction of the loan.

If deduction for Housing Loan Interest is availed under this section, no deduction can be availed for such interest under any other provisions of the Act for the same or any other assessment year.

Section 80G: Deduction in respect of Various Donations

The various donations specified in Sec. 80G are eligible for deduction up to either 100% or 50% with or without restriction as provided in Sec. 80G

Section 80GG: Deduction in respect of House Rent Paid

Deduction available is the least of

1.                         Rent paid less 10% of total income

2.                         Rs. 2000/- per month i.e. Maximum Deduction available is 24,000/-

3.                         25% of total income, provided

Assessee or his spouse or minor child should not own residential accommodation at the place of employment.

He should not be in receipt of house rent allowance.

He should not have self occupied residential premises in any other place.

Section 80GGA: Deduction in respect of certain donations for scientific research or rural development

Section 80GGC: Deduction in respect of contributions given by any person to political parties

Section 80QQB: Royalty Income of resident individuals on patents.

Maximum deduction Rs. 3,00,000/-

Section 80RRB: Royalty Income of resident individual authors of certain books other than text books.

Maximum deduction Rs. 3,00,000/-

Section 80 TTA: Deduction from gross total income in respect of any Income by way of Interest on Savings account

Deduction from gross total income of an individual or HUF, upto a maximum of Rs. 10,000/-, in respect of interest on deposits in savings account ( not time deposits ) with a bank, co-operative society or post office, is allowable w.e.f. 01.04.2012 (Assessment Year 2013-14).

Section 80U: Deduction in respect of Person suffering from Physical Disability

Deduction of Rs. 75,000/- (enhanced from Rs. 50,000 w.e.f. 01.04.2015) to a resident individual who suffers from a physical disability(including blindness) or mental retardation. Further, if the individual is a person with severe disability, deduction of Rs. 125,000/- (enhanced from Rs. 1,00,000 w.e.f. 01.04.2015) shall be available u/s 80U. Certificate should be obtained from a Govt. Doctor. The relevant rule is Rule 11D.

Deductions Allowable under Section 24 of Income Tax Act :

Where a housing property has been acquired / constructed / repaired / renewed with borrowed capital, the amount of interest payable yearly on such capital is allowed as deduction under Section 24 of Income Tax Act, subject to the limits stated below. Penal interest on housing loan is not eligible for deduction. If a fresh loan has been raised to repay the original loan and the new loan has been used only for the purpose of repaying the original loan then, the interest accrued on such fresh loan is allowed for deduction.

1.                         If the property is acquired or constructed with the capital borrowed on or after 01-04-1999 and such acquisition or construction is completed within 3 years of the end of the financial year in which capital was borrowed then the actual interest payable is allowed as deduction subject to a maximum Rs. 2,00,000/- (Rs. 1,50,000/- upto 31.03.2015).

2.                         In other case interest up to maximum Rs. 30,000/- is deductible.

3.                         The ceiling of Rs.2,00,000/- (Rs. 1,50,000 upto 31.03.2015) or Rs. 30,000/- is only in case the property is self occupied. There is no limit on deduction of interest if the property is let out.

The visitors may visit the web site of Income Tax Department for resolving their doubts or for clarifications.

On August 12, 2015 by www.taxexcel.net

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