The Income Tax Act allows deductions from your gross total income, before the levy of tax, if medical expenditure has been incurred on the treatment of a differently-abled person. Sections 80DD and 80U of the Income Tax Act deals with the medical expenditure incurred for this purpose.

However, Though the working of these two deductions is the same, according to income tax rules, these cannot be claimed simultaneously. In other words, Section 80DD and Section 80U of the Income Tax Act allows a deduction for the medical expenses incurred for differently-abled persons. The amount of deduction is the same for both the sections. However, Section 80DD can be claimed by the person who has incurred expenses for the dependent differently-abled person. On the other hand, 80U can be claimed by the individual if he/she, himself/herself, is differently-abled. If the individual is claiming deduction under section 80U, then no other person can claim deduction under section 80DD for the aforesaid person.

Download Automated 100 Employees Income Tax Revised Form 16 Part A&B for F.Y.2019-20 [This Excel Utility can prepare at a time 100 Employees Revised Form 16 Part A&B ]

Here is everything you need to know about claiming deductions under both sections 80DD and 80U.

Who can claim the deduction?
For instance, as mentioned above, deduction under section 80DD can be claimed by a resident individual who has incurred expenditure on the training, rehabilitation, medical treatment of a differently-abled or disabled dependent person.

The income tax law defines a dependent person like spouse, children, parents, brother and sisters of the individual who is fully dependent on the individual for the support and maintenance Above all, 

The deduction can also be claimed if payment or deposit has been made by an individual under any scheme of Life Insurance Corporation (LIC), or any other the insurer or any other specified scheme or deposit for the maintenance of the dependent. In addition,
 
The scheme should provide the annuity or lump-sum benefit in the event of the death of the individual for the maintenance of the dependent person suffering from disability

Conditions for claiming deduction  
After that, the deduction under either section 80DD or 80U can be claimed only if the individual himself or dependent is suffering from disability, autism, cerebral palsy or multiple disabilities.

Similarly,the percentage of disability should not be less than 40 per cent in order to be eligible to claim deduction under these sections. In case you are claiming the deduction allowed for severe disability, then the disability level should be a minimum 80 per cent.

Download Automated 50 Employees Income Tax Revised Form 16 Part A&B for F.Y. 2019-20 [This Excel Utility can prepare at a time 50 Employees Revised Form 16 Part A&B ]

To avoid the rejection of the claim for deduction by the income tax department, one must also satisfy the definition of disability, autism, cerebral palsy or multiple disabilities as per the act governing the same.

Disability is defined as per the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1955. As per Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, disability is defined as someone who is suffering from blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, mental retardation, mental illness, autism, cerebral palsy and multiple disabilities. A person with a disability. 

Similarly, autism, cerebral palsy and multiple disabilities take their meaning from the National Trust for the welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999. Multiple disabilities can be defined as the person suffering from a combination of two or more disabilities as defined in Person with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.

Download Automated 50 Employees Income Tax Revised Form 16 Part B With Form 12 BA for F.Y. 2019-20 [This Excel Utility can prepare at a time 50 Employees Revised Form 16 Part B With 12 BA ]

Amount of deduction depends on disability, not expenses & age
The amount of deduction that can be claimed depends on the percentage of disability. If the individual or dependent has 40 per cent or more disability but less than 80 per cent, then the deduction of Rs75,000 can be claimed in a financial year.

In case of severe disability, i.e., if the percentage of disability exceeds 80 per cent, then the deduction of Rs 1.25 lakh is allowed.

The amount of deduction depends on the percentage of disability. The deduction claimed is fixed irrespective of the actual expenses. Therefore, even if the actual expenses are less than Rs 75,000 or Rs 1.25 lakh as applicable, you can still claim the mentioned amount.

Documents required
To claim this deduction, either under Section 80DD or Section 80U, one is required to provide a certificate of disability. As per the income tax laws to claim the deduction, one is required to obtain a certificate in the prescribed manner as mentioned in Form 10-IA. The certificate must be obtained from the prescribed medical authority.

Download Automated One by One Preparation Excel Based Income Tax Revised Form 16 Part A&B for F.Y. 2019-20 [This Excel Utility can prepare One by One Revised Form 16 Part A&B ]

In conclusion, the medical authority is required to issue the disability certificate shall be a neurologist having a degree of Doctor of Medicine in Neurology (in case of children, a Pediatric Neurologist having an equivalent degree) or a civil surgeon or chief medical officer in a Government hospital.

Source From  Economics Times

On March 15, 2020 by www.taxexcel.net

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There is no denying the need for adequate health insurance in your insurance portfolio. If you feel you can’t afford health insurance premium, just imagine how you will afford the treatment cost, if you were to get hospitalized. Even the government wants you to purchase health insurance. Though it won’t pay the premium on your behalf, but the government certainly does its bit to ease the burden on your pocket through tax incentives.

Let’s look at tax incentives for expenses on health insurance and certain specific medical expenses.

Download Automated 50 employees Master of Form 16 Part A&B for F.Y.2016-17 & A.Y.2017-18 [ This Excel Utility can prepare at a time 50 employees Form 16 Part A&B for F.Y.2016-17]

Download Automated 100 employees Master of Form 16 Part A&B for F.Y.2016-17 & A.Y.2017-18 [ This Excel Utility can prepare at a time 50 employees Form 16 Part A&B for F.Y.2016-17]

Section 80D (Health Insurance Premium Payment)

You can claim deduction up to Rs 25,000 per financial year for health insurance premium payment. The premium shall be for self, spouse, and dependent children. If either you or spouse is a senior citizen (60 years and above), the limit goes up to Rs 30,000.

a) Preventive health check-up

You get tax benefit on preventive health check-up. Within the aforesaid limit of Rs 25,000 (or Rs 30,000 as the case may be) under Section 80D, you can also claim expenses incurred towards preventive health check-up till Rs 5,000 per financial year.

Note: Health Insurance premium paid for siblings is not eligible for tax deduction.

b) Health insurance policy for parents

Health insurance premium paid for parents is also eligible for deduction up to Rs 25,000 per financial year. If either of your parents is a senior citizen, the limit goes up to Rs 30, 000 per year. This limit also subsumes Rs 5,000 that can be incurred towards your parents’ health checkup.

c) No tax benefit on cash payment

Health insurance premium shall be made through banking channel (cheque, demand draft, credit and debit cards, net banking etc). The tax benefit is not available for cash payments. However, payment for preventive health checkup can be made in cash.

d) Health insurance for very senior citizens

For very senior citizens (80 years and above) who are uninsured, you can claim deduction up to Rs 30,000 per financial year towards medical treatment. This is not just for own expenses.

If your father is a very senior citizen (and uninsured) and mother is a senior citizen, you can claim deduction up to Rs 30,000 towards your medical treatment for parents, health insurance and check-up of both parents.

Section 80DDB (Treatment of Specified Illnesses)

You can avail deduction up to Rs 40,000 (Rs 60,000 for senior citizens and Rs 80,000 for very senior citizens) for medical expenses incurred for specified ailments such as cancer, chronic renal failure, Parkinson disease etc. A complete list of such ailments is provided in Rule 11DD.

You need to attach a certificate from the specialist doctor while filing income tax returns.

You can claim for self, spouse, parents, children and siblings.

Section 80DD (Treatment of a dependent with disability)

You can claim deduction up to Rs75,000 for expenditure towards medical treatment, nursing, training rehabilitation and maintenance of a dependent with disability (Rs1.25 lakh for severe disability). Dependent can be spouse, parents, children and siblings.

You need to submit a supporting medical certificate.

Section 80U (Person with disability)

A person with the disability can claim a deduction of Rs.75,000 under Section 80U. In the case of severe disability, the limit goes up to ₹1.25 lakh. There is no relation to treatment costs.

On December 01, 2016 by www.taxexcel.net

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   Download Automated All in One Income Tax Preparation Excel Based Software for Financial Year 2016-17 and Assessment Year 2017-18  ( Prepare at a time Tax Compute Sheet + Individual Salary Structure + Individual Salary Sheet + Form 12 BA + Automatic H.R.A. Exemption Calculation + Form 16 Part A&B and Form 16 Part B)

Section 80c: The maximum tax exemption limit under Section 80C has been retained as Rs 1.5 Lakh only. The various investment avenues or expenses that can be claimed as tax deductions under section 80C are as below;

1.                  Life Insurance Premium: You can get the deduction by depositing or paying life insurance premium in the previous year. You must note here that premium paid on behalf of wife/husband/child or any member of the family were assessed in an HUF. Child includes adult children also, Thus, the deduction is available in respect of premium paid on a policy on the life of a married daughter.

2.                  Provident Fund & Public Provident Fund: You can claim deduction under section 80C for the amount deposit in provident fund also. The annual contribution up to Rs.1,50,000 is eligible for deduction under section 80C. In this section, you can get the total deduction up to Rs. 1,50,000, if your total contribution in PF Rs. 1,50,000 and another contribution (PPF, LIC, ULIP, etc.) is 50,000 or any amount then you will get up to a maximum of Rs.1,50,000 u/s 80C.

3.                  National Saving Certificates (NSC): You can claim deduction under section 80C for the amount deposit in national saving certification along with PPF/LIC/ULIP up to a maximum of Rs.1,50,000 accrued during the year.  There is no TDS deduction for repayment of NSC. Interest accrued during the year (except for the last year) shall be deemed to be reinvested and shall also qualify for deduction u/s 80C.

4.                  Bank Term Deposit Schemes: Amount invested in bank term deposits along with PPF/LIC/NSC/ULIP etc. up to a maximum of Rs.1,50,000 is also eligible for deduction under section 80C. The maturity period for bank term deposit schemes is 5 years.

5.                  Post Office Time Deposit Schemes: You can also opt for post office time deposit to get deduction under section 80C up to Rs.1,50,000. You must note that the deduction is available only to the first holder.

6.                  Mutual Fund Schemes: Some of the schemes of mutual funds are eligible for deduction u/s 80C .The income from mutual funds is also fully exempted u/s 10 (35).

7.                  NABARAD Rural Bonds: The deduction is also available under section 80C for a subscription to notified bonds issued by National Bank for Agriculture and Rural Development.

8.                  ULIP (unit-linked insurance plan): The deduction is also eligible for the amount deposit in the name of himself, his/her wife/husband or his child, and an HUF in the name of its members to any Unit Linked Insurance Plan of UTI.

9.                  Tuition Fees: You can claim the deduction of paying the tuition fee of your two children. Here, you should note that tuition fees eligible paid to any university, college, school or other educational institution situated in India. However, any development fees or donation or payment of similar nature shall not be eligible for deduction.

·         Section 80CCD: Employee can contribute to Government notified Pension Schemes (like National Pension Scheme – NPS).

Deduction under this section is only for individual not for HUF’s. The contributions can be up to 10% of the salary (or) Gross Income and Rs 50,000 additional tax benefit u/s 80CCD (1b) was proposed in Budget 2015. In budget 2016, on withdrawal from the NPS account up to 40% of the accumulated balance shall be exempt from tax and the remaining would be taxed as per the income tax slab in the year of receipt.

Kindly note that the Total Deduction under section 80C, 80CCC and 80CCD(1) together cannot exceed Rs 1,50,000 for the financial year 2016-17. The additional tax deduction of Rs 50,000 u/s 80CCD (1b) is over and above this Rs 1.5 Lakh limit.

·         Section 80D: Deduction u/s 80D on health insurance premium is Rs 25,000. For Senior Citizens (attained the age of 60 years and above) it is Rs 30,000. For very senior citizen above the age of 80 years who are not eligible to take health insurance, they shall be eligible for medical expenditure up to Rs. 30,000 towards medical expenditure.

Preventive health check-up (Medical checkups) expenses to the extent of Rs 5,000/- per family (Self, spouse, dependent children, and parents) can be claimed as tax deductions. Please note, this is not over and above the individual limits as explained above.

·         Section 80DD: You can claim up to Rs 75,000 for spending on medical treatments of your dependents, who have 40% disability. The tax deduction limit of up to Rs 1.25 lakh in case of severe disability can be availed.

·         Section 80DDB: An individual whose age is less than 60 years can claim up to Rs 40,000 for the treatment of specified ailments (such as AIDS, cancer, and neurological diseases). This can also be claimed on behalf of the dependents. The tax deduction limit under this section for Senior Citizens (attained the age of 60 years and above) is Rs 60,000 and for very Senior Citizens (above 80 years) the limit is Rs 80,000.

To claim Tax deductions under Section 80DDB, it is mandatory for an individual to obtain ‘Doctor Certificate’ or ‘Prescription’ from a specialist working in a Govt or Private hospital.

·         Section 24 (B): The interest component of home loans is allowed as a deduction under Section 24B for up to Rs 2 lakh in case of a self-occupied house.

·         Section 80EE: This is a new proposal which has been made in Budget 2016-17. The first time Home Buyers can claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The below criteria has to be met for claiming tax deduction under section 80EE.

·         The home loan should have been sanctioned in FY 2016-17.

·         Loan amount should be less than Rs 35 Lakh.

·         The value of the house should not be more than Rs 50 Lakh &

·         The home buyer should not have any other existing residential house in his name.

·         Section 80U: If you claim deduction u/s 80DD then you can not claim under this section. A tax deduction is allowed for the tax assessee who is physically and mentally challenged.

·         Section 80GG: As per the budget 2016 proposal, the Tax Deduction amount under 80GG has been increased from Rs 24,000 per annum to Rs 60,000 per annum. Section 80GG is applicable for all those individuals who do not own a residential house & do not receive House rent allowance.

The extent of tax deduction will be limited to the least amount of the following;

·         Rent paid minus 10% the adjusted total income.

·         Rs 5,000 per month.

·         25% of the total income.

·         Section 80G: Contributions made to certain relief funds and charitable institutions can be claimed as a deduction under Section 80G of the Income Tax Act. But the deduction is not allowed for donations made in cash exceeding Rs 10,000.

·         Section 80E: If you take any loan for higher studies, tax deduction can be claimed under Section 80E for interest that you pay towards your Education Loan. This loan should have been taken for higher education for you, your spouse or your children or for a student for whom you are a legal guardian. Principal Repayment on educational loan cannot be claimed as a tax deduction.

There is no limit on the amount of interest you can claim as a deduction under section 80E. The deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier.

·         Section 87A Rebate: If you are earning below Rs 5 lakh, you can save an additional Rs 3,000 in taxes. Tax rebate under Section 87A has been raised from Rs 2,000 to Rs 5,000 for FY 2016-17 (AY 2017-18).

·         Section 80 TTA: Deduction from gross total income of an individual or HUF, up to a maximum of Rs. 10,000/-, in respect of interest on deposits in savings, account with a bank, co-operative society or post office can be claimed under this section. Section 80TTA deduction is not available on interest income from fixed deposits.

On September 06, 2016 by www.taxexcel.net

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1) Download Master of Form 16 Part B for the Financial Year 2014-15 and Assessment Year 2015-16 [Prepare at a time 50 employees Form 16 Part B]

2) Download Master of Form 16 Part B for the Financial Year 2014-15 [This Excel Utility can prepare at a time 100 employees Form 16 Part B]

Modified Income deduction Under Chapter VIA & 80C as per new Finance Budget 2014

HRA exemption = Least of (40% (50% for metros) of Basic+DA or HRA or rent paid - 10% of Basic+DA)

Transport allowance is exempt up to Rs.800/- per month during the month. (Expenditure incurred for covering journey between office and residence.)  For people having permanent physical disability, the exemption is 1,600/- per month.

Reimbursement of Medical bills are exempt for self and dependent family, up to Rs.15,000/- per annum u/s(5) LTA is exempt to the tune of economy class Train/ Air /Recognised public Transport fare for the family to any destination in India, by the shortest route.

LTA can be claimed twice in a block of 4 calendar years. The current block is from 01.01.2010 to 31.12.2013. For claim, it is must to provide originals tickets etc.

U/s 24 There is an Exemption for interest on housing loan. Exemption is limited to Rs. 2,00,000/- per year if the house is self-occupied; There is no limit if the house is rented out.

U/s 80C- Maximum Exemption up to  Rs. 150000/-  Investments up to Rs. 1.5 lac in PF, VPF, PPF, Employee contribution in NPS,Insurance Premium, Housing loan principal repayment, NSC, ELSS, long term bank Fixed Deposit, Post Office Term Deposit, etc. are deductible from the taxable income. Item wise 80C deduction is given below as per the latest amended by the Finance Budget 2014.

• Provident Fund (PF) & Voluntary Provident Fund (VPF) PF is automatically deducted from your salary. your contribution [12% of Basic] (i.e., employee’s contribution) is counted towards section 80C investments. You also have the option to contribute additional amounts through voluntary contributions (VPF). Current rate of interest is 8.5% per annum (p.a.) and is tax-free.
• Life Insurance Premiums: Any amount that you pay towards life insurance premium in Life Insurance Corporation (LIC) or any other Insurance CO.for yourself, your spouse or your children can also be included in Section 80C deduction. If you are paying premium for more than one insurance policy, all the premiums will be included. also premium paid for ULIP will also be treated as Premium paid for Life Insurance Policies.
• Unit linked Insurance Plan : ULIP stands for Unit linked Saving Schemes. ULIPs cover Life insurance with benefits of equity investments.They have attracted the attention of investors and tax-savers not only because they help us save tax but they also perform well to give decent returns in the long-term.

• Public Provident Fund (PPF) is one of the best. Current rate of interest is 8% tax-free and the normal maturity period is 15 years. Minimum amount of contribution is Rs. 500 and maximum is Rs. 1,50,000.(New Change) from Budget 2014
• National Savings Certificate (NSC): National Savings Certificate (NSC) is a 5-Yr small savings instrument eligible for section 80C tax benefit. Rate of interest is  8.58% compounded half-yearly, i.e. If you invest Rs.100, it becomes Rs.150.90 after five years. The interest accrued every year is liable to tax (i.e. to be included in your taxable income) but the interest is also deemed to be reinvested and thus eligible for section 80C deduction.
• Home Loan Principal Repayment & Stamp Duty and Registration Charges for a home Loan The Equated Monthly Installment (EMI) that you pay every month to repay your home loan consists of two components – Principal and Interest.The principal component of the EMI qualifies for deduction under Sec 80C. Even the interest component can save you significant income tax – but that would be under Section 24 of the Income Tax Act. The amount you pay as stamp duty when you buy a house, and the amount you pay for the registration of the documents of the house can be claimed as deduction under section 80C in the year of purchase of the house.
• Tuition  fees  for 2 children  Apart form the above major investments expenses for children’s education (Only Tution Fee (for which you need receipts)), can be claimed as deductions under Sec 80C.
• Equity Linked Savings Scheme (ELSS): There are some mutual fund (MF) schemes specially created for offering you tax savings, and these are called Equity Linked Savings Scheme, or ELSS. The investments that you make in ELSS are eligible for deduction under Sec 80C.
• 5-Yr bank fixed deposits (FDs): Tax-saving fixed deposits (FDs) of scheduled banks with tenure of 5 years are also entitled for section 80C deduction.
• 5-Yr post office time deposit (POTD) scheme: POTDs are similar to bank fixed deposits. Although available for varying time duration like one year, two year, three year and five year, only 5-Yr post-office time deposit (POTD) – which currently offers 7.5 per cent rate of interest –qualifies for tax saving under section 80C. Effective rate works out to be 7.71% per annum (p.a.) as the rate of interest is compounded quarterly but paid annually. The Interest is entirely taxable.
• Pension Funds or Pension Policies – Section 80CCC: This section – Sec 80CCC – stipulates that an investment in pension funds is eligible for deduction from your income. Section 80CCC investment limit is clubbed with the limit of Section 80C – it means that the total deduction available for 80CCC and 80C is Rs 1.5 Lakh.This also means that your investment in pension funds upto Rs.1.5 Lakh can be claimed as deduction u/s 80CCC. However, as mentioned earlier, the total deduction u/s 80C and 80CCC can not exceed  Rs.1.5 Lakh.
• Infrastructure Bonds: These are also popularly called Infra Bonds. These are issued by infrastructure companies, and not the government. The amount that you invest in these bonds can also be included in Sec 80C deductions.
• NABARD rural bonds: There are two types of Bonds issued by NABARD (National Bank for Agriculture and Rural Development): NABARD Rural Bonds and Bhavishya Nirman Bonds (BNB). Out of these two, only NABARD Rural Bonds qualify under section 80C.
• Senior Citizen Savings Scheme 2004 (SCSS): A recent addition to section 80C list, Senior Citizen Savings Scheme (SCSS) is the most lucrative scheme among all the small savings schemes but is meant only for senior citizens. Current rate of interest is 9% per annum payable quarterly. Please note that the interest is payable quarterly instead of compounded quarterly. Thus, unclaimed interest on these deposits won’t earn any further interest. Interest income is chargeable to tax.

  

U/s 80CCD -The Finance Act, 2011 provides that contribution made by the Central Government or any other employer to NPS (up to 10 per cent of the salary of the employee in the previous year)shall be excluded while computing the limit of Rs. 1,50,000.The contribution by the employee to the NPS will be subject to the limit of Rs. 1,00,000.

U/s 80CCG - Rajiv Gandhi Equity Savings Scheme is a new exemption available for investment in stock markets (direct equity). Avaialble only for those with gross income less than 12 lacs and only for first time investors in stock market. Exemption available at 50% of investment subject to maximum of Rs.50,000/- invested. Investments are locked-in for three years

U/s 80D Medical Insurance Premium (such as Mediclaim & Critical illness Cover)& Health Check up Upto Rs. 5000, premium is exempt up to Rs. 30,000/ per year (Rs.15,000/- for self,spouse and children ) (Rs. 15000/- for Parents. If the premium includes for a dependent who is (Senior Citizen) above 60 years of age, an extra Rs. 5,000//- can be claimed.

U/s 80DD Deduction in respect of medical treatment of handicapped dependents is limited to Rs. 50,000/- per year if the disability is less than 80% and Rs. 1,00,000/- per year if the disability is more than 80%

U/s 80DDB Deduction in respect of medical treatment for specified ailments or diseases for the assesse or dependent can be claimed up to Rs. 40,000/- per year. If the person being treated is a senior citizen, the exemption can go up to Rs. 60,000/-. but any amount received under Medical Insurance Policy will be reduced from the amount of deduction allowed. The Diseases and ailments specified under rule 11DD are.

1. neurological diseases being demetia, dystonia musculorum deformans, motor neuron disease, ataxia, chorea, hemiballismus, aphasia and parkisons disease,
2. cancer,
3. AIDS,
4. Chronic renal failure,
5. hemophilia, and 
6. thalassaemia.

U/s 80E Interest repayment on education loan (taken for higher education from a university of self & dependents) is completely tax exempt

U/s 80G Donations given for certain charities are tax exempt. Some(NGO,Trust etc.) are exempt to the tune of 50%, whereas Govt funds are 100%.

U/s 80GG If you are not getting  HRA, but living in rented house, an exemption is available. This will be calculated as minimum of (25% of total income or rent paid - 10% of total income or Rs. 24,000/- per year)

U/s 80U who suffers from not less than 40 per cent of any disability is eligible for deduction to the extent of Rs. 50,000/- and in case of severe disability to the extent of Rs. 100,000/-

U/s 80TTA introduced through Finance Act, 2012. Section 80TTA provides a deduction of up to Rs. 10,000 on your income from interest on saving bank accounts.

U/s 87A Tax Rebate Rs.2,000/- who's taxable income less than 5 Lakh.

Click to download Automatic All in One TDS on Salary for Govt and Non-Govt employees with Form 16 Part A&B and Part B for the Financial Year 2014-15

On December 21, 2014 by www.taxexcel.net

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