List of Investment Available or Approved under Section 80C for Deduction from Income Tax

List of Investment which are eligible for deduction under section 80C of the Income Tax Act. Each investment has specified limits above which income tax deduction in not allowed. Maximum amount of deduction which can be claimed under section 80C of the Income Tax is Rs 1Lakh only. Read who can claim Deduction Under 80C of  Income Tax 

Gross qualifying amount –

  1. Non- commutable deferred annuity payment
  2. Contribution towards statutory and recognized P.F.
  3. Life insurance premium (Government employees paid to the central government employees’ insurance scheme or payment under children deferred endowment assurance policy made by a person)(subject maximum of 20% sum assured)
  4. National savings certificates
  5. Contribution towards 15 yrs. PPF (Public provident fund)
  6. Approved superannuation fund
  7. Notified bonds of national bank of agriculture and rural development (NABARD)
  8. Notified units of mutual fund or UTI
  9. Deposited amount in a fixed deposit for 5 years or more accordance with bank scheme framed or notified by the central government (it shall be minimum Rs. 100 or multiple thereof.
  10. Amount deposited under senior citizens savings scheme
  11. Amount deposited in post office in 5 years deposit scheme
  12. Contribution in any notified deposit scheme pension fund or subscription to home loan account scheme of the national housing bank
  13. Unit-linked insurance plan (ULIP) of Unit Trust of India
  14. Invested amount on equity shares and approved debentures, a public company engaged in infrastructure with power sector or unit of mutual fund proceeds of which are utilized for developing
  15. Paid as tuition fees (not including development fees/Donation/ any other similar type of payments) any university/ college/ educational institute of any two children for full time education
  16. Paid any scheme of Public deposit scheme of HUDCO
  17. Contribution to notified pension fund set up by mutual fund or UTI Payment for unit-linked insurance plan of LIC Mutual fund
  18. Payment of annuity plan of LIC and other insurer.
  19. Any sum deducted from salary of government employee for the purpose of securing him a deferred annuity
  20. Any payment towards the cost of purchase/ construction of a residential property.

Section 80JJAA: Deduction in Respect of Employment Generation

Income Tax Deduction under section 80JJAA for an amount equal to thirty per cent of additional wages paid to the new regular workmen employed by the assessee in such factory, in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided.

CONDITIONS:-

  1. The assessee must be an Indian company.
  2. It must derive profit from an industrial undertaking engaged in the manufacture or production of article or things.
  3. The industrial undertaking should not be formed by the splitting up or reconstruction of an existing undertaking or amalgamation with another industrial undertaking.
  4. A report of C.A must be filed with the return of income.

HOW MUCH DEDUCTION:-

30% of additional wages paid to the new regular workmen employed by the assessee in factory in the previous year for three assessment year including the assessment year in which such employment is provided.

Meaning of “additional wages”:-

  1. In the case of a new industrial undertaking

    Additional wages’ means the wages paid to the new regular workmen in excess of 100 workmen employed during the previous year.

  2. In case of an existing Industrial undertaking –

    Meaning of ‘Additional wages’ Is same of a new industry, but one more thing is to be noted that the additional wages shall not be NIL if the increase in the number of regular workmen employed during the previous year is less than 10% of existing number of workmen employed as on the last day of the preceding year.

Meaning of “regular workmen”:-

It does not include –

  1. A casual workmen
  2. A workmen employed through contract labour
  3. A workmen employed for less than 300 days during the previous year,

Meaning of “workmen”–

Same as Industrial Disputed Act, 1947.

Notes:-

  1. The parliament has used three types of words at different places in the language of section, viz. (I) applying the rule of literal interpretation, we have to very careful while interpreting the language.
  2. The language of section is not properly worded. It admits different interpretations; hence different authors have also made different calculations.
  3. The deduction under this section is in addition of waged allowable to the assessee while computing income taxable under section 28.

Reference; Section 80JJAA for Deduction in respect of employment of new workmen

(1) Where the gross total income of an assessee, being an Indian company, includes any profits and gains derived from the manufacture of goods in a factory, there shall, subject to the conditions specified in sub-section (2), be allowed a deduction of an amount equal to thirty per cent of additional wages paid to the new regular workmen employed by the assessee in such factory, in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided.”;

(2) No deduction under sub-section (1) shall be allowed—

“(a) if the factory is hived off or transferred from another existing entity or acquired by the assessee company as a result of amalgamation with another company;”;

(b) unless the assessee furnishes along with the return of income the report of the accountant, as defined in the Explanation below sub-section (2) of section 288 giving such particulars in the report as may be prescribed.

Explanation.—For the purposes of this section, the expressions,—

(i)  “additional wages” means the wages paid to the new regular workmen in excess of one hundred workmen employed during the previous year :

Provided that in the case of an existing factory, the additional wages shall be nil if the increase in the number of regular workmen employed during the year is less than ten per cent of existing number of workmen employed in such factory as on the last day of the preceding year;

(ii) “regular workman”, does not include—

(a) a casual workman; or

(b) a workman employed through contract labour; or

(c) any other workman employed for a period of less than three hundred days during the previous year;

 

Deduction in Respect of Royalty Income of Authors under section 80QQB

Income Tax Deduction under section 80QQB can be claimed by the individual assessee who is author or joint author of the book, maximum deduction under section 80QQB is limited to Rs 3 lakhs.

Eligible assessee

Individual resident in India

Conditions

  1. The assessee should be author or joint author of the book.
  2. The GTI of the assessee should include income derived by him in exercise of his profession on account of any lump sum consideration of the assignment of grant’ of – any of his interests in the copyright of book, of royalties or copyright fees (whether receivable in lump sum or otherwise) in respect of such books. It is further prescribed that the royalty or copyright fees shall include non returnable advance payment on account of such fees.
  3. The books should be work of literary, artistic or scientific nature. No deduction shall be allowed in respect of income from brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, tax books of schools, tracts and other publications of similar nature.
  4. The assessee submits a certificate in form No. 10CCD, from the person responsible for playing the eligible income, along with the return of income. Download the format of the Certificate 
  5. If the eligible income is earned outside India, the assessee has to furnish a certificate in Form No. 10H along with the return of income. Download the Format of the Certificate for Foreign Inward remittance

Deduction

The deduction shall be 100% of income or Rs.300000/-, whichever is less. However following points should be noted –

  • If the royalty or copyright fee (before allowing expenses attributable to such income) is more than 15% of the value of the books sold during the previous year, the excess royalty shall not qualify for deduction. However, this rule will not apply in relation to a lump sum consideration in lieu of all rights of the assessee in the books.
  • If the eligible income is earned outside India, the deduction shall be allowed on so much of the income earned in foreign exchange, which is brought to India within six months from end of the previous year or within the period extended by the RBI.
  • It appears that the limit of Rs. 300000/- is per assessee and not per book.

Additional point:

Where a deduction is claimed under this section, no deduction is respect of such income shall be allowed under any other provision of the Act.

Reference: Section 80QQB of the Income Tax Act.

Deduction in respect of royalty income, etc., of authors of certain books other than text-books.

80QQB. (1) Where, in the case of an individual resident in India, being an author, the gross total income includes any income, derived by him in the exercise of his profession, on account of any lump sum consideration for the assignment or grant of any of his interests in the copyright of any book being a work of literary, artistic or scientific nature, or of royalty or copyright fees (whether receivable in lump sum or otherwise) in respect of such book, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such income, computed in the manner specified in sub-section (2).

(2) The deduction under this section shall be equal to the whole of such income referred to in sub-section (1), or an amount of three lakh rupees, whichever is less :

Provided that where the income by way of such royalty or the copyright fee, is not a lump sum consideration in lieu of all rights of the assessee in the book, so much of the income, before allowing expenses attributable to such income, as is in excess of fifteen per cent of the value of such books sold during the previous year shall be ignored :

Provided further that in respect of any income earned from any source outside India, so much of the income shall be taken into account for the purpose of this section as is brought into India by, or on behalf of, the assessee in convertible foreign exchange within a period of six months from the end of the previous year in which such income is earned or within such further period as the competent authority may allow in this behalf.

(3) No deduction under this section shall be allowed unless the assessee furnishes a certificate in the prescribed form and in the prescribed manner, duly verified by any person responsible for making such payment to the assessee as referred to in sub-section (1), along with the return of income, setting forth such particulars as may be prescribed.

(4) No deduction under this section shall be allowed in respect of any income earned from any source outside India, unless the assessee furnishes a certificate, in the prescribed form from the prescribed authority, along with the return of income in the prescribed manner.

(5) Where a deduction for any previous year has been claimed and allowed in respect of any income referred to in this section, no deduction in respect of such income shall be allowed under any other provision of this Act in any assessment year.

Explanation.—For the purposes of this section,—

(a) “author” includes a joint author;

(b) “books” shall not include brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, text-books for schools, tracts and other publications of similar nature, by whatever name called;

(c) “competent authority” means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange;

(d) “lump sum”, in regard to royalties or copyright fees, includes an advance payment on account of such royalties or copyright fees which is not returnable

Who can Claim Income Tax Deduction under Section 80C

What are different Income Tax Deduction under section 80C of Inome Tax Act, What’s the limit of Income Tax deduction u/s 80C and investment options as per section 80C of Income Tax Act? Section 80C gives different investment options for claiming Income Tax Deduction. Maximum Deduction amount total income under section 80C is Rs 1Lakhs. Read List of Income Tax Deduction/Exemption under section 80C, 80CCG, 80D, 80DD, 80E,80G, 80GG to 80U

Also Section 80C prescribes different deduction limits and conditions only after fulfilling those conditions person can claim deduction from his income. Deduction can be claimed in respect of payment of Life insurance premium, deferred annuity, contribution to provident fund, and subscription to certain equity shares or debentures. Section 80C of the income tax act provides deduction in respect of specified amount described or paid by the assessee. Read List of Approved Investment for Income Tax Deduction

CONDITIONS:

The following are the main conditions of section 80C-

  • Deduction is available only to an Individual or a HUF.
  • Deduction is available on the basis of specified qualifying investment/ contribution/ deposits/ payments made by the taxpayer during the previous year.

AMOUNT OF DEDUCTION:

The maximum amount deductible under section 80C is Rs. 1, 00,000/- for any sums paid or deposited in the previous year by the assessee.

Income Tax section 80C Tax Saving Investment options for Income Tax Saving and different conditions for claiming these income tax deduction benefits. Click Here For Details Analysis of section 80C of the Income Tax 

  • Investment in Tax Saving Mutual Fund Plan or contribution by an individual to any pension fund set up by any Mutual Fund. Read List of Top Performing Tax Saving Mutual Fund.
  • Income Tax Deduction for Life Insurance Premium by individual for himself and his family with Life Insurance Corporation or any other insurer.
  • Income Tax Deduction for Payment of Deferred annuity for an individual and his family
  • Income Tax Deduction for Payment or contribution/investment to Provident fund, recognised provident fund, approved superannuation fund.
  • Payment or Contribution/investment Unit-linked Insurance Plan 
  • Investment in pension fund set up by, the National Housing Bank
  • Payment of tuition fees for full-time education of any of in the case of an individual, any two children.For Detail Click Here
  • Repayment of installment of loan or borrowed money taken for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head “Income from house property”.For Detail Click Here
  • Term Deposit for 5  year with with a scheduled bank  and scheduled bank”For Detail Click Here
  • Investment in 5 year term deposit by Post OfficeFor Detail Click Here
  • Investment in the Bonds of National Bank for Agriculture and Rural Development (NABARD)For Detail Click Here
  • Investment in an account under the Senior Citizens Savings Scheme Rules, 2004

Deduction in Respect of Repayment of Loan Taken for Higher Education under Section 80E

Deduction in Respect of Repayment of Interest on Loan Taken for Higher Education under Section 80E of the Income Tax Act, 1961

Conditions for claiming deduction under section 80E:-

  • The assessee should be an Individual.
  • He had taken a loan from banking company or any notified financial institution.
  • The loan was taken for the purpose of higher education (like Engineering, ,medical, graduation and other all type of studies after passing the senior secondary examination or equivalent)
  • Loan taken for the purpose of pursuing his own or relatives higher education the expression relative has been extended to cover the students for whom the taxpayer is the legal guardian.
  • Amount is paid by the individual during the previous year by the way of interest on such loan
  • Such amount is paid out of his income chargeable to tax     

Amount of deduction under Section 80E:

If the above conditions are satisfied the entire amount paid by the way of interest is deductable under section80E. However, the following point should be noted –

  1. the above deduction is allowed in computing the taxable income of the initial assessment year(i.e. the A.Y. relevant to the previous year in which the assessee starts paying the interest on the loan) and 7 immediately succeeding assessment years(or until the above interest is paid in full, whichever is earlier).
  2. From the assessment year 2006-07, no deduction will be available under sec. 80E in respect of repayment of principal amount.

Reference: Section 80E for Deduction in respect of interest on loan taken for higher education

(1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education.

(2) The deduction specified in sub-section (1) shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest referred to in sub-section (1) is paid by the assessee in full, whichever is earlier.

(3) For the purposes of this section,—

(a)   “approved charitable institution” means an institution specified in, or, as the case may be, an institution established for charitable purposes and notified by the Central Government under clause (23C) of section 10 or an institution referred to in clause (a) of sub-section (2) of section 80G;

              (b)   “financial institution” means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf;

(c)   “higher education” means full-time studies for any graduate or post-graduate course in engineering, medicine, management or for post-graduate course in applied sciences or pure sciences including mathe-matics and statistics;

(d)   “initial assessment year” means the assessment year relevant to the previous year, in which the assessee starts paying the interest on the loan.’.

Deduction in Respect of Contribution to Pension Scheme of Central Government or Any Other Employer under Section 80CCD

Deduction in Respect of Contribution to Pension Scheme of Central Government or Any Other Employer under Section 80CCD of the Income Tax Act, 1961

Conditions for Claiming Deduction under section 80CCD: –

Deduction is available under this section if these conditions are    satisfied –

  1. The Taxpayer is an Individual.
  2. The Taxpayer has paid any amount under notified pension scheme in last year.
  3. A self-employed person can claim the benefits of this deduction.
  4. Or; he is employed by the Central Government or any other employer on or after 1, 2004.

Consequences in 80CCD:

If the elementary conditions are satisfied then certain consequences in sec. 80CCD should be noted-

  1. Employer contribution in the notified pension scheme is deductible under section 80CCD (2). However, no deduction is available in respect of employer’s contribution which is an excess of 10% of his salary.
  2. Employee’s contribution is deductible. However no deduction is available in excess of 10% of his salary.
  3. “Salary” includes dearness allowance’ but exclude all other allowances and perquisites.
  4. The amount of standing to the credit of the assessee in the pension account which has been already claimed by pensioner shall be taxed as income in the year in which year amount received by assessee.
  5. The amount of pension plan received from pension account is used for purchasing an annuity plan in the same previous year and it will be exempt from tax.
  6. No rebate allowed under sec. 88 on such amount on which deduction has been claimed under sec. 80CCD.
  7. Aggregate amount of deduction under section 80C, 80CCC and80CCD cannot exceed amount 1, 00,000.
  8. No deduction available in respect of employer’s contribution which is in exceeds 10% of his/her gross total income.

Reference: Section 80CCD For Deduction in respect of contribution to pension scheme of Central Government

80CCD.  (1) Where an assessee, being an individual employed by the Central  Government or any other employer on or after the 1st day of January, 2004, or any other assessee, being an individual] has in the previous year paid or deposited any amount in his account under a pension scheme notified or as may be notified by the Central Government, he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income, of the whole of the amount so paid or deposited as does not exceed,—

(a)   in the case of an employee, ten per cent of his salary in the previous year; and

(b)   in any other case, ten per cent of his gross total income in the previous year.]

(2) Where, in the case of an assessee referred to in sub-section (1), the Central Government or any other employer] makes any contribution to his account referred to in that sub-section, the assessee shall be allowed a deduction in the computation of his total income, of the whole of the amount contributed by the Central Government or any other employer] as does not exceed ten per cent of his salary in the previous year.

(3) Where any amount standing to the credit of the assessee in his account referred to in sub-section (1), in respect of which a deduction has been allowed under that sub-section or sub-section (2), together with the amount accrued thereon, if any, is received by the assessee or his nominee, in whole or in part, in any previous year,—

(a)   on account of closure or his opting out of the pension scheme referred to in sub-section (1); or

(b)   as pension received from the annuity plan purchased or taken on such closure or opting out,

the whole of the amount referred to in clause (a) or clause (b) shall be deemed to be the income of the assessee or his nominee, as the case may be, in the previous year in which such amount is received, and shall accordingly be charged to tax as income of that previous year.

(4) Where any amount paid or deposited by the assessee has been allowed as a deduction under sub-section (1),—

(a)   no rebate with reference to such amount shall be allowed under section 88 for any assessment year ending before the 1st day of April, 2006;

(b)   no deduction with reference to such amount shall be allowed under section 80C for any assessment year beginning on or after the 1st day of April, 2006.

(5) For the purposes of this section, the assessee shall be deemed not to have received any amount in the previous year if such amount is used for purchasing an annuity plan in the same previous year.

Explanation.—For the purposes of this section, “salary” includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.

Deduction to a Disable Assessee under section 80U of the Income Tax Act

How to claim deduction under section 80U of the Income Tax Act. Section 80U deals with the deduction available to disable person. Person can claim deduction from taxable income based on his physical disability and amount of deduction is dependent on percentage of disability like 40% disable or more than 40% disable or severe disable. Download Format of Doctor Certificate to Claim Income Tax Deduction

Eligible assessee for claiming deduction : Only Resident Individual can claim deduction under section 80U for disability.

Maximum Deduction u/s 80UMaximuum Deduction of Rs.50,000/-. and if the assessee suffers from severe disability, the deduction limit will be Rs. 1,00,000/-. ‘Severe disability’ means disability of 80% or more.

Conditions for Claiming Deduction under Section 80U of Income Tax Act

  1. The assessee should suffer from ‘disability’, autism, palsy or multiple disabilities at any time. During the term ‘disability’ shall have the same meaning as in section 2 of the persons with disabilities (Equal opportunities, protection of right and full participation) Act, 1995.
  2. Further, a certificate of the prescribed medical authority must be filed with the return of income. If the condition of disability requires reassessment of its extent after a period stipulated in the certificate, no deduction shall be allowed for any assessment year relevant to the previous year during which the aforesaid certificate had expired, unless a new certificate is obtained from the medical authority and submitted with the return of income. 

Read what are the other Income Tax Deduction which Tax Payer can Claim as deduction from Taxable Income 

DISABILITY GUIDELINES FOR INCOME TAX DEDUCTION
As per Section 2(t) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 “person with disability” means a person suffering from not less than forty per cent of any disability as certified by a medical authority. As per Section 2 (p), “medical authority” means any hospital or institution specified for the purposes of this Act by notification by the appropriate Government. In pursuance of this, State Governments/UT administrations are required to notify the medical authorities to issue disability certificate.
Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Rules, 1996 required that a disability certificate shall be issued by a medical board duly constituted by the Central/State Government. This required a lot of time and travel by persons with disabilities to the district headquarters. Often full medical boards are not able to meet on a given day causing yet more delay and inconvenience. Therefore Ministry of Social Justice and Empowerment has amended the Persons with Disabilities Rules, 1996 in December 2009 with a view to simplify the process of issuing disability certificates. A doctor can now assess and issue the certificate even at PHC in case of visible disabilities such as amputations, complete paralysis, and blindness. A specialist doctor can do so in other cases. For multiple disabilities however more than one specialist will be necessary.
Ministry of Social Justice and Empowerment has issued guidelines for evaluation of locomotor, visual, hearing, mental retardation and multiple disabilities vide Notification No. 16-18/97-NI I dated 01.06.2001 and mental illness vide Notification No. 16-18/97-NI I dated 18.02.2002.

Deduction in Respect of Maintenance Including Medical Treatment of a Handicapped Depended under Section 80DD

Income tax deduction under section 80DD in respect of maintenance including medical treatment of a handicapped depended, who is a person with disability

The following conditions should be satisfied:-

  • The taxpayer should be an individual or a HUF, resident in India.
  • The taxpayer opted both or any of the following options-

Option 1

Option 2

The taxpayer has incurred an expenditure

For the purpose of training and rehabilitation of dependent or his medical treatment

The taxpayer deposit in life insurance e corporation or any other insurer for maintenance of dependent

  • For claiming the deduction the assessee shall have to furnish a copy of the certificate issued by medical authority alongwith return of income in form no. 10-IA or in the case of disability requires reassessment, a fresh certificate from medical authority for claiming deduction. Download the Format of Certificate/Form 10-IA
  • The scheme provides for payment of an annuity or lump-sum amount for benefit of the dependent in the event of the death of disable person of the individual or a HUF.
  • Disable person means-
  1. In a HUF, dependent means a member of a family.
  2. A person who is dependent upon such individual or a HUF for maintenance or support.
  3. In the case of Individual, spouse, children, parents, brothers, sisters are dependent.
  4. Person with disability means a person having disability of not less than 40%.
  5. Who has not claimed any deduction under section 80U in relating previous year.
  6. Disability shall have meaning assigned to it in sec. 2(i) of the person with disabilities ACT, 1995.

Amount of deduction:

Where such dependent is a person with severe disability of 80% or above, shall be allowed for higher deduction 1,00,000 and the fixed deduction is Rs. 50,000 if conditions specified above are satisfied.

Reference: Section 80DD of the Income Tax Act

Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability.

80DD. (1) Where an assessee, being an individual or a Hindu undivided family, who is a resident in India, has, during the previous year,—

(a)  incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or

(b)  paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or any other insurer or the Administrator or the specified company subject to the conditions specified in sub-section (2) and approved by the Board in this behalf for the maintenance of a dependant, being a person with disability,

the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of a sum of fifty thousand rupees from his gross total income in respect of the previous year:

Provided that where such dependant is a person with severe disability, the provisions of this sub-section shall have effect as if for the words “fifty thousand rupees”, the words “one hundred thousand rupees” had been substituted.

(2) The deduction under clause (b) of sub-section (1) shall be allowed only if the following conditions are fulfilled, namely:—

(a)  the scheme referred to in clause (b) of sub-section (1) provides for payment of annuity or lump sum amount for the benefit of a dependant, 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;

(b)  the assessee nominates either the dependant, being a person with disability, or any other person or a trust to receive the payment on his behalf, for the benefit of the dependant, being a person with disability.

(3) If the dependant, being a person with disability, predeceases the individual or the member of the Hindu undivided family referred to in sub-section (2), an amount equal to the amount paid or deposited under clause (b) of sub-section (1) shall be deemed to be the income of the assessee of the previous year in which such amount is received by the assessee and shall accordingly be chargeable to tax as the income of that previous year.

(4) The assessee, claiming a deduction under this section, shall furnish a copy of the certificate issued by the medical authority in the prescribed form and manner, along with the return of income under section 139, in respect of the assessment year for which the deduction is claimed:

Provided that where the condition of disability requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any assessment year relating to any previous year beginning after the expiry of the previous year during which the aforesaid certificate of disability had expired, unless a new certificate is obtained from the medical authority in the form and manner, as may be prescribed, and a copy thereof is furnished along with the return of income.

Explanation.—For the purposes of this section,—

(a) “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 (58 of 2002);

(b) “dependant” means—

(i)  in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;

(ii)  in the case of a Hindu undivided family, a member of the Hindu undivided family,

dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year;

(c)  “disability” shall have the meaning assigned to it in clause (i) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) 49[and includes “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 (44 of 1999)];

(d)  “Life Insurance Corporation” shall have the same meaning as in clause (iii) of sub-section (8) of section 88;

(e)  “medical authority” means the medical authority as referred to in clause (p) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) or such other medical authority as may, by notification, be specified by the Central Government for certifying “autism”, “cerebral palsy”, “multiple disabilities”, “person with disability” and “severe disability” referred to in clauses (a), (c), (h), (j) and (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999);

(f)  “person with disability” means a person as referred to in clause (t) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) or clause (j) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999);

(g)  “person with severe disability” means—

(i)  a person with eighty per cent or more of one or more disabilities, as referred to in sub-section (4) of section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996); or

(ii)  a person with severe disability referred to in clause (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999);

(h)  “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 (58 of 2002).

Deduction in Respect of Expense done for Medical Treatment of Specified Disease under Section 80DDB of the Income Tax Act

Individual or HUF assessee can claim income tax deduction under section 80DDB of the income tax act. Income Tax Deduction under 80DDB allowed for actual expenditure for medical treatment of Neurological Diseases (with disability of more than 40%), Malignant Cancers, Acquired Immuno-Deficiency Syndrome (AIDS), Chronic Renal failure and Hematological disorders. Expenditure under section 80DDB allowable deduction even for family members. Maximum Income Tax Deduction under section 80DDB is Rs 40000/- and Rs 60000/- if expenditure done for senior citizen dependent. Please note that if assessee has received any amount from insurance company than deduction will be reduced by such insurance receipt.

Conditions for Claiming Income Tax Deduction u/s 80DDB

  1. The taxpayer is an individual or a Hindu undivided family and resident in India.
  2. Paid any amount for medical treatment for specified disease or ailment as prescribed by the board.
  3. The taxpayer who is part of HUF made expenditure incurred for wholly/mainly dependent family member for her/his medical treatment.

Maximum Amount of Deduction Claimed under section 80DDB

  1. The amount of deduction Rs. 40,000 or amt. actually paid whichever is lower.
  2. Deduction under this section shall be reduced by the amount received, if any under insurance from an insurer or reimbursed by employer
  3. Where the amount in respect of assessee who is dependent or a senior citizen, then Rs. 60,000 or actual expenditure whichever is less.

NOTE:

Deduction under this section shall be reduced by the amount received if any under insurance from an insurer, or reimbursed by an employer by an employer for the medical treatment of the person referred to above.

Other points:

The following points shall be noted –

  1. For the purpose “Government hospital” includes a departmental dispensary (whether full time or part time) established and run by a department of the Govt. for the employees, a hospital maintained by a local authority and any other hospital with which arrangement have been made by the Govt. for the treatment of Govt. servants.
  2. The requirement are only of working in a Government hospital. It does not require employment in a Govt. hospital on regular basis. A surgeon rendering honorary service at a Govt. hospital is as such a surgeon working in a Govt. hospital – Snehlata C. ChandrakantChalisshazar v. Tmanvi 1999 Tax LR 759 (Guj.)

Reference: Section 80DDB of the Income Tax Act,1961

Deduction in respect of medical treatment, etc.

80DDB. Where an assessee who is resident in India has, during the previous year, actually paid any amount for the medical treatment of such disease or ailment as may be specified in the rules made in this behalf by the Board—

(a)  for himself or a dependant, in case the assessee is an individual; or

(b)  for any member of a Hindu undivided family, in case the assessee is a Hindu undivided family,

the assessee shall be allowed a deduction of the amount actually paid or a sum of forty thousand rupees, whichever is less, in respect of that previous year in which such amount was actually paid :

Provided that no such deduction shall be allowed unless the assessee furnishes with the return of income, a certificate in such form, as may be prescribed, from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed, working in a Government hospital :

Provided further that the 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 in clause (a) or clause (b) :

Provided also that where the amount actually paid is in respect of the assessee or his dependant or any member of a Hindu undivided family of the assessee and who is a senior citizen, the provisions of this section shall have effect as if for the words “forty thousand rupees”, the words “sixty thousand rupees” had been substituted.

Explanation.—For the purposes of this section,—

(i)  “dependant” means—

(a)  in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them,

(b)  in the case of a Hindu undivided family, a member of the Hindu undivided family,

dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance;

(ii)  “Government hospital” includes a departmental dispensary whether full-time or part-time established and run by a Department of the Government for the medical attendance and treatment of a class or classes of Government servants and members of their families, a hospital maintained by a local authority and any other hospital with which arrangements have been made by the Government for the treatment of Government servants;

(iii)  “insurer” shall have the meaning assigned to it in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938);

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

Specified diseases and ailments for the purpose of deduction under section 80DDB.

11DD.  (1) For the purposes of section 80DDB, the following shall be the eligible diseases or ailments :

(i)   Neurological Diseases where the disability level has been certified to be of 40% and above,—

(a)   Dementia ;

(b)   Dystonia Musculorum Deformans ;

(c)   Motor Neuron Disease ;

(d)   Ataxia ;

(e)   Chorea ;

(f)   Hemiballismus ;

(g)   Aphasia ;

(h)   Parkinsons Disease ;

(ii)   Malignant Cancers ;

(iii)   Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

(iv)   Chronic Renal failure ;

(v)   Hematological disorders :

(i)   Hemophilia ;

(ii)   Thalassaemia.

 

Deduction in Respect of Medical Insurance Premia Section 80D of the Income Tax Act

Deduction and benefit under section 80D in respect of Payment of Medical Insurance Premium and  contribution to eligible schemes approved by central Government. Benefit under Section 80D of the Income Tax Act, 1961 can be claimed for insurance premium paid for family members also. Maximum amount of deduction under section 80D is Rs 15000/- and section 80D is applicable only to individual and HUF.

So any Individual or HUF assessee can claim deduction of Rs 15000 under section 80D of the Income Tax Act for health insurance premium for himself and his family.

Conditions

  • The assessee is an individual (may be Resident or Non Resident or Indian citizen/or foreign citizen) or a HUF (Resident or Non Resident)
  • The insurance premium for himself or his family is paid or any contribution made to the scheme must be in accordance with the scheme framed in this behalf by the General insurance Corporation of India and approved by the Central govt. or in accordance with the scheme framed in this behalf by any other insurer and approved by Insurance Regulatory and development authority.
  • Any payment made for the preventive health check of assessee or his family, then deduction is limited to Rs.15,000/-
  • The premium can be paid by any mode “other than cash” in the previous year out of his income chargeable to income tax.
  • Family means the spouse and dependent children of the assessee.
  • Maximum deduction available under this section is Rs.15000 and additional amount of Rs. 5000 is deductible when policy is taken on the health of a senior citizen i.e. resident in India and 60 years or more).

Recent Amendment by Finance Bill 2013 in section 80D of the Income Tax Act: For giving benefits to individual who are contributing to the schemes of state government which are similar in nature to Central Government Health Scheme.

In section 80D of the Income-tax Act, in sub-section (2), in clause (a), after the words “Central Government Health Scheme”, the words “or such other scheme as may be notified by the Central Government in this behalf” shall be inserted with effect from the 1st day of April, 2014.

Reference: Section 80D of the Income Tax Act, 1961

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, other than cash, 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 any payment made on account of preventive health check-up of the assessee or his family as does not exceed in the aggregate fifteen 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 fifteen thousand rupees.

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

The following sub-sections (2A) and (2B) shall be inserted after sub-section (2) of section 80D by the Finance Act, 2012, w.e.f. 1-4-2013 :

(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), 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).

(3) Where the assessee is a Hindu undivided family, the sum referred to in sub-section (1) shall be the 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 fifteen 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, the provisions of this section shall have effect as if for the words “fifteen thousand rupees”, the words “twenty 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-five 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).