Section 80DD for Medical Treatment of Handicapped Dependents

If you are incurring expenditure for the treatment of your handicapped dependent, you could claim a deduction under section 80DD.

Available Deduction - Rs 50000, or actual expenditure incurred, whichever is lesser. For severe handicap conditions Rs. 1,00,000 is the deduction limit.

Scope of Deduction - Deduction can be claimed for dependent parents, spouse, children and siblings. Dependents must not have claimed any deduction for their disability.

Deductions are permissible in either of the following cases.

a) Costs incurred for medical treatment, training or rehabilitation of a disabled dependent, including amount spent for nursing.

b) Amount paid towards an insurance scheme for the maintenance of your disabled dependent in case of your untimely death.

Meaning of Disability- Disability means a person suffering from 40% or more of any of the below disabilities. A severe disability condition is 80% or more of the disabilities.

a) Blindness and Vision problems

b) Leprosy-cured

c) Hearing impairment

d) Locomotor disability

e) Mental retardation or illness

Key factors

a) Individuals would need to produce a copy of the disability certificate as issued by the central or state government medical board to claim deduction.

b) Insurance policy obtained must be in your name and should be a policy for life. It could pay either an annuity or a lump sum amount for the benefit of the dependent on your death.

c) If the disabled dependent predeceases you, the policy amount is returned to you, and treated as income for the year in which you receive it, thus fully taxable in your hands.

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Income Tax Deductions - Donations Section 80G

Section 80G offers a tax deduction for donations to certain prescribed funds and charitable institutions. Here are the details of the section.
 
Eligible Assesses
This section is applicable to all assessees, who make an eligible donation, whether an individual, HUF, NRI or a company.
 
Deduction Limit
The extent of deduction is either 50% or 100% of the contribution, depending on the charitable institution donated to.
  
For certain funds, the aggregate deduction is limited to 10% of the “Adjusted Gross Total Income”. So, in such cases, even if you do make a donation larger than 10% of your Adjusted Gross Total Income, the donation amount eligible for claiming a deduction would be capped at 10% of the Adjusted Gross Total Income.
 
The Adjusted Gross Total in this case, is the gross total income minus long-term capital gain, short term capital gain and all deductions u/s 80CCC to 80U except any deduction under this section.
 
Scope of Deduction

• The donation may be paid either out of taxable or exempted income.
• Only donations made in cash or cheque are eligible for deductions. Donations made in kind, in the form of food, clothing, medicines etc are not eligible.
• Donations to foreign charitable trusts or to political parties are not eligible for any deduction.
• For donations made to Indian Olympic Association, any association notified u/s 10(23) for development of infrastructure for sports or games, or for sponsorship of sports or games, only a company is eligible for deduction.
• Donations made to not all charitable institutions qualify for a deduction. Here is a list of approved charitable institutions and funds that qualify for a deduction.

                 

Donations with 100% deduction without any qualifying limit:

1. Prime Minister’s National Relief Fund
2. National Defence Fund
3. Prime Minister’s Armenia Earthquake Relief Fund
4. The Africa (Public Contribution - India) Fund
5. The National Foundation for Communal Harmony
6. Approved university or educational institution of national eminence
7. The Chief Minister’s Earthquake Relief Fund, Maharashtra
8. Donations made to Zila Saksharta Samitis.
9. The National Blood Transfusion Council or a State Blood Transfusion Council.
10. The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund.

             

Donations with 50% deduction without any qualifying limit.

1. Jawaharlal Nehru Memorial Fund
2. Prime Minister’s Drought Relief Fund
3. National Children’s Fund
4. Indira Gandhi Memorial Trust
5. The Rajiv Gandhi Foundation

       

Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income

1. Donations to the Government or a local authority for the purpose of promoting family planning.
2. Sums paid by a company to Indian Olympic Association

      

Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income

1. Donation to the Government or any local authority to be utilized by them for any charitable purposes other than the purpose of promoting family planning.

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Section 80D in Respect to Health Insurance Premiums

Investments made towards payment of health insurance premiums, qualify for a tax deduction under section 80D.

Available Deduction - For individuals less than 65 years of age, amount of health insurance premium paid or Rs. 15,000, whichever is lesser. For senior citizens above 65 years, amount of health insurance premium paid or Rs. 20,000, whichever is lesser.

A further deduction of Rs 15,000 could be claimed, for buying health insurance policy for your parents (Rs 20,000 if either of your parents is a senior citizen). This is irrespective of whether they’re dependent on you or not. No deductions can be claimed for in-laws.

Scope of Deduction - Individual assesses can claim deduction for premiums paid towards health insurance of self, spouse, parents and children.

For HUF assesses, premium paid for insuring the health of any member of the HUF, can be used for deduction.

Key Factors to keep in mind

1.      The premium may be paid by any mode of payment, other than cash.

2.      The health insurance premium that you pay must be from the taxable income applicable for the year you claim. Premiums should not be from gifts received by you.

3.      Part payment of premium is allowed. For example, suppose your parents contribute 50% of their health insurance premium and you pay the balance 50% of their premium. In such a case, you could avail the deduction for the amount contributed by you and your parents too could avail deduction for their contribution.

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