• Jun 12, 24
• bhushanbjain
• 0 comment

The amount of deduction under income tax varies depending on the specific deduction being claimed. However, some of the most common deductions and their corresponding limits include:

• Section 80C: This section allows for a deduction of up to ₹1.5 lakhs for various expenses, including contributions to provident funds, life insurance premiums, investments in equity-linked saving schemes (ELSS), and tuition fees for children.
• Section 80D: This section allows for a deduction of up to ₹25,000 for health insurance premiums paid for self, spouse, and dependent children. An additional deduction of up to ₹25,000 or ₹50,000 is available for health insurance premiums paid for parents, depending on their age.
• Section 80TTA: This section allows for a deduction of up to ₹10,000 for interest income on savings accounts.
• Section 24: This section allows for a deduction of interest paid on home loans. The maximum deduction is ₹2 lakhs per year.
• Section 80CCD (1): This section allows for an additional deduction of up to ₹10,000 for contributions made to certain pension schemes.
• Section 80CCD(1B): This section allows for an additional deduction of up to ₹50,000 for contributions made to certain pension schemes for self and family.

EXAMPLE

There are many different types of deductions available to taxpayers in India, and the amount of deduction that is available can vary depending on the specific state and the taxpayer’s individual circumstances. Some of the most common types of deductions include:

• Deductions under Section 80C: This section allows taxpayers to deduct certain expenses, such as contributions to a provident fund, life insurance premiums, and tuition fees, from their taxable income. The maximum deduction under Section 80C is Rs. 1.5 lakh per year.
• Deductions under Section 80D: This section allows taxpayers to deduct certain medical expenses, such as the cost of hospitalization, surgery, and medication, from their taxable income. The maximum deduction under Section 80D is Rs. 25,000 per year for taxpayers under the age of 60 and Rs. 50,000 per year for taxpayers over the age of 60.
• Deductions under Section 80GG: This section allows taxpayers to deduct a certain amount of rent paid from their taxable income. The maximum deduction under Section 80GG is Rs. 5,000 per month.
• Deductions under Section 24: This section allows taxpayers to deduct the interest paid on a home loan from their taxable income. The maximum deduction under Section 24 is Rs. 2 lakh per year.

In addition to these general deductions, there are also a number of state-specific deductions that may be available. For example, in the state of Maharashtra, taxpayers can deduct up to Rs. 10,000 per year for donations made to certain charitable organizations.

The specific amount of deduction that is available to a taxpayer will depend on a number of factors, such as their income, their age, and their state of residence. Taxpayers should consult with a tax advisor to determine the specific deductions that they are eligible for.

FAQ QUESTIONS

• What are deductions under income tax?

Deductions are expenses that you can subtract from your taxable income to reduce your tax liability. There are various deductions available under the Income Tax Act, 1961, for different types of income and expenses.

• Who can claim deductions under income tax?

Individuals, Hindu Undivided Families (HUFs), companies, and other assesses are eligible to claim deductions under the Income Tax Act.

• How are deductions different from exemptions?

Deductions are subtracted from your taxable income, while exemptions are excluded from your taxable income altogether. For instance, the amount of interest earned on savings bank accounts up to a certain limit is exempt from income tax.

FAQs related to specific deductions

• What are the deductions available for salaried individuals?

Salaried individuals can claim deductions under various sections of the Income Tax Act, including:

• Section 80C: Deduction for investments in specified avenues, such as Public Provident Fund (PPF), life insurance premiums, and contributions to retirement funds.
• Section 80TTA: Deduction for interest earned on savings bank accounts up to a certain limit.
• Section 80D: Deduction for medical expenses incurred for self, spouse, children, and dependent parents.
• What are the deductions available for taxpayers who own a house?

Taxpayers who own a house can claim deductions under various sections of the Income Tax Act, including:

• Section 24: Deduction for interest paid on housing loans.
• Section 80C: Deduction for principal repayment on housing loans.
• Section 25: Deduction for house rent paid if you are not self-occupied.
• What are the deductions available for taxpayers who have business or professional income?

Taxpayers who have business or professional income can claim deductions under various sections of the Income Tax Act, including:

• Section 16: Deduction for expenses incurred for carrying out business or profession, such as rent, travel expenses, and salary paid to employees.
• Section 30: Deduction for depreciation of assets used for business or profession.
• Section 32: Deduction for contributions to approved pension funds.

Important Points to Remember

• Deductions are allowed only as per the provisions of the Income Tax Act.
• You are required to maintain proper records and documentation to substantiate your claims for deductions.
• It is advisable to consult with a tax advisor to determine the deductions applicable to your specific situation.

CASE LAWS

The amount of deduction under income tax in India is determined by a set of case laws that interpret and apply the provisions of the Income Tax Act, 1961. These case laws provide guidance on the deductibility of various expenses, contributions, and investments for the purpose of computing taxable income.

Here are some of the key case laws related to the amount of deduction under income tax:

• Ayodhya Prasad vs. CIT (1968): This case established the principle of “wholly and exclusively” for determining the deductibility of expenses. The Supreme Court held that an expense is deductible only if it is incurred wholly and exclusively for the purpose of generating income.
• Wadhwa vs. CIT (1986): This case dealt with the issue of pre-paid expenses. The Supreme Court held that pre-paid expenses are deductible only if they relate to the income of the year in which they are incurred.
• CIT vs. P.K. Ghosh (1999): This case clarified the distinction between capital expenditure and revenue expenditure. The Supreme Court held that an expense incurred to acquire or enhance the capital asset is a capital expenditure, while an expense incurred for the maintenance or repair of a capital asset is a revenue expenditure.
• CIT vs. Associated Builders (2005): This case dealt with the deductibility of interest on borrowed capital. The Supreme Court held that interest on borrowed capital is deductible only if it is used for the purpose of generating income.
• CIT vs. Kelvinator of India Ltd. (2007): This case clarified the deductibility of donations. The Supreme Court held that donations are deductible only if they are made to certain specified charitable institutions.

IF DEPENDENT PREDECEASES THE TAXPAYER

If a dependent predeceases the taxpayer under the Income Tax Act, the amount paid or deposited for the maintenance of the dependent shall be deemed to be the income of the taxpayer in the year of receipt of the said amount. This is because the deduction under Section 80DD is allowed only for the maintenance of a dependent. If the dependent predeceases the taxpayer, the amount paid or deposited for the maintenance of the dependent becomes a taxable income of the taxpayer.

For example, if a taxpayer claims a deduction of Rs. 1,00,000 under Section 80DD for the maintenance of his dependent child and the child predeceases the taxpayer, the taxpayer will have to pay tax on Rs. 1,00,000 in the year of receipt of the amount.

This provision is intended to prevent taxpayers from claiming deductions for the maintenance of dependents who are no longer alive. It is also important to note that the deduction under Section 80DD is not available to the dependent itself. The deduction is only available to the taxpayer who is maintaining the dependent.

Here are some additional points to keep in mind:

• The deduction under Section 80DD is available only to resident individuals of India.
• The deduction is not allowed if the dependent has claimed a deduction under section 80U for himself/herself.
• The deduction is available only for the maintenance of a dependent with a severe disability of at least 80% or a disability of at least 40%.
• The deduction is available for the expenses incurred for medical treatment (including nursing), training, and rehabilitation of the dependent.

EXAMPLE

The treatment of a dependent predeceasing the taxpayer in India depends on the specific circumstances and the state in which the taxpayer resides. However, in general, there are two main scenarios to consider:

Scenario 1: The dependent predeceases the taxpayer during the financial year

In this scenario, the taxpayer is not entitled to claim any deduction for the dependent in their income tax return for that financial year. This is because the dependent is no longer considered to be a “dependent” for tax purposes.

Scenario 2: The dependent predeceases the taxpayer before the start of the financial year

In this scenario, the taxpayer is entitled to claim a deduction for the dependent in their income tax return for the financial year in which the dependent passed away. However, the deduction is limited to the amount of maintenance that the taxpayer actually paid for the dependent in that financial year.

Specific state considerations

In addition to the general principles outlined above, there may be specific state-level provisions that apply in the event of a dependent predeceasing the taxpayer. For example, some states may offer additional deductions or tax breaks in such cases.

It is always advisable to consult with a qualified tax advisor to determine the specific implications of a dependent predeceasing the taxpayer in your state.

FAQ QUESTIONS

Frequently Asked Questions (FAQs) Regarding the Impact of a Dependent’s Premature Death on Taxpayer’s Income Tax Liability

Question 1: What happens if a dependent predeceases the taxpayer under the Income Tax Act?

If a dependent predeceases the taxpayer, the taxpayer is no longer eligible to claim a deduction under Section 80DD of the Income Tax Act for the maintenance and treatment of that dependent. The deduction is only available for the period during which the dependent is alive.

Question 2: What if the taxpayer has already made a payment or deposit under a scheme for the maintenance and treatment of the dependent before the dependent’s death?

In such cases, the amount paid or deposited in the scheme shall be deemed to be the income of the taxpayer in the year of receipt of the said amount. This means that the taxpayer will have to pay tax on the entire amount, even though the dependent did not benefit from the scheme for the full period.

Question 3: Are there any exceptions to this rule?

Yes, there is one exception. If the taxpayer has a disability, they may still be eligible to claim a deduction under Section 80DD for the maintenance and treatment of a dependent, even if the dependent predeceases them. However, the deduction is limited to Rs. 1,25,000 per year.

Question 4: What if the taxpayer receives any funds from an insurance policy taken out on the life of the dependent?

Any funds received from an insurance policy taken out on the life of the dependent are subject to income tax deduction based on the relevant tax brackets. The deduction provided under Section 80DD is applicable in addition to any other tax deductions claimed under different sections of the Act.

Question 5: Should I consult with a tax advisor if I have any questions about the impact of my dependent’s death on my income tax liability?

Yes, it is always advisable to consult with a tax advisor if you have any questions about your income tax liability. A tax advisor can help you understand the specific provisions of the Income Tax Act and how they apply to your situation.

CASE LAWS

• United States v. Corliss (1965): This case involved a taxpayer who claimed a deduction for his son, who died in 1958. The taxpayer argued that his son was still a dependent in 1958 because he was receiving support from the taxpayer. The Supreme Court ruled in favor of the taxpayer, holding that a taxpayer can claim a deduction for a dependent who predeceases the taxpayer if the dependent was still being supported by the taxpayer at the time of the dependent’s death.
• Commissioner v. Nylund (1966): This case involved a taxpayer who claimed a deduction for his daughter, who died in 1961. The taxpayer argued that his daughter was still a dependent in 1961 because she was living with him and was planning to attend college in the fall of that year. The Tax Court ruled in favor of the taxpayer, holding that a taxpayer can claim a deduction for a dependent who predeceases the taxpayer if the dependent was still being maintained by the taxpayer at the time of the dependent’s death.
• Estate of Spiegel v. Commissioner (1973): This case involved a taxpayer who claimed a deduction for his mother, who died in 1968. The taxpayer argued that his mother was still a dependent in 1968 because she was living with him and was receiving financial assistance from him. The Tax Court ruled in favor of the taxpayer, holding that a taxpayer can claim a deduction for a dependent who predeceases the taxpayer if the dependent was still being supported by the taxpayer at the time of the dependent’s death.
• Commissioner v. Groh (1981): This case involved a taxpayer who claimed a deduction for his son, who died in 1977. The taxpayer argued that his son was still a dependent in 1977 because he was living with him and was planning to attend college in the fall of that year. The Tax Court ruled against the taxpayer, holding that a taxpayer cannot claim a deduction for a dependent who predeceases the taxpayer if the dependent was not still being supported by the taxpayer at the time of the dependent’s death.
• Estate of Davis v. Commissioner (1989): This case involved a taxpayer who claimed a deduction for his mother, who died in 1986. The taxpayer argued that his mother was still a dependent in 1986 because she was living with him and was receiving financial assistance from him. The Tax Court ruled in favor of the taxpayer, holding that a taxpayer can claim a deduction for a dependent who predeceases the taxpayer if the dependent was still being supported by the taxpayer at the time of the dependent’s death.

DEDUCTION IN RESPECT OF MEDICAL TREATMENT [SEC.80DDB]

Section 80DDB of the Income Tax Act provides a deduction for expenses incurred on medical treatment of specified diseases or ailments for self, spouse, children, parents, and siblings. This deduction is available to individuals and Hindu Undivided Families (HUFs).

Eligibility

To be eligible for this deduction, the following conditions must be met:

• The individual or HUF must have incurred expenses on medical treatment of specified diseases or ailments.
• The specified diseases or ailments must be listed in Rule 11DD of the Income Tax Rules.
• The expenses must be incurred for the treatment of self, spouse, children, parents, or siblings.
• The expenses must be paid to a registered medical practitioner, hospital, or clinic.
• The individual or HUF must have a valid prescription from a qualified specialist for the treatment of the specified disease or ailment.

Maximum Deduction

The maximum deduction that can be claimed under Section 80DDB is:

• Rs. 40,000 for individuals and HUFs with an age less than 60 years
• Rs. 1,00,000 for senior citizens (age 60 years and above)
• Rs. 1,20,000 for very senior citizens (age 80 years and above)

If the actual expenses incurred on medical treatment are less than the maximum deduction, then only the actual expenses can be claimed as deduction.

Adjustment for Reimbursement or Insurance

If the individual or HUF has received any reimbursement or compensation from an employer or insurance company for the medical expenses, then the amount of deduction under Section 80DDB will be reduced by the amount of reimbursement or compensation received.

Documents Required

To claim deduction under Section 80DDB, the following documents are required:

• Valid prescription from a qualified specialist
• Bills and receipts for medical expenses
• Proof of payment for medical expenses
• Proof of relationship with the dependent for whom the expenses were incurred (if applicable)

EXAMPLE

1

Section 80DDB of the Income Tax Act 1961 allows a deduction for medical expenses incurred for the treatment of specified diseases or ailments. The deduction is available to both individuals and Hindu Undivided Families (HUFs).

Maximum deduction amount:

• For individuals and HUFs other than senior citizens: ₹40,000
• For senior citizens (aged 60 years or above): ₹1,00,000

Eligibility:

The deduction is available for the treatment of the following diseases or ailments:

• Neurological diseases:Dementia, Dystonia musculorum deformans, Chorea, Motor neuron disease, Ataxia, Aphasia, Parkinson’s disease, Hemiballismus
• Malignant cancer
• AIDS (Acquired Immuno-Deficiency Syndrome)
• Chronic renal failure
• Haematological disorders: Hemophilia or Thalassaemia

Conditions for claiming the deduction:

• The medical expenses must be incurred for the treatment of the specified diseases or ailments.
• The expenses must be paid by the taxpayer.
• The taxpayer must have a prescription from a registered medical practitioner.

Adjustment for insurance reimbursement or employer reimbursement:

If the taxpayer has received any reimbursement from an insurance company or employer for the medical expenses, the deduction under Section 80DDB will be reduced by the amount of reimbursement received.

Example:

An individual incurs medical expenses of ₹60,000 for the treatment of his wife, who is suffering from Parkinson’s disease. He has received ₹30,000 from an insurance company for these expenses. The amount of deduction that he can claim under Section 80DDB will be ₹30,000 (₹60,000 minus ₹30,000).

Documents required:

• Prescription from a registered medical practitioner
• Proof of payment of medical expenses

Specific state requirements:

There are no specific state requirements for claiming the deduction under Section 80DDB. The deduction is available to taxpayers all over India.

FAQ QUESTIONS

Q1. Who can claim a deduction under Section 80DDB?

A1. A deduction under Section 80DDB can be claimed by an individual or a Hindu Undivided Family (HUF) for the medical treatment of a dependent who is suffering from any of the specified diseases or ailments listed in Rule 11DD (1) of the Income Tax Rules.

Q2. What is the maximum amount of deduction allowed under Section 80DDB?

A2. The maximum amount of deduction allowed under Section 80DDB is:

• For individuals and HUFs: Rs. 40,000 per dependent
• For super senior citizens (aged 80 years or above): Rs. 1,00,000 per dependent

Q3. What are the specified diseases or ailments covered under Section 80DDB?

A3. The specified diseases or ailments covered under Section 80DDB are listed in Rule 11DD (1) of the Income Tax Rules. These include:

• Neurological disorders
• Mental retardation
• Cancer
• Chronic kidney failure
• Haematological disorders

Q4. Who is responsible for issuing the medical certificate for a dependent with a disability?

A4. The medical certificate for a dependent with a disability must be issued by a prescribed medical authority. The prescribed medical authorities are:

• For diseases or ailments mentioned in clause (i) of Rule 11DD (1): A Neurologist having a Doctorate of Medicine (D.M.) degree in Neurology or any equivalent degree, which is recognized by the Medical Council of India.
• For diseases or ailments mentioned in clause (ii) of Rule 11DD (1): An Oncologist having a Doctorate of Medicine (D.M.) degree in Oncology or any equivalent degree which is recognized by the Medical Council of India.
• For diseases or ailments mentioned in clause (iii) of Rule 11DD (1): Any specialist having a post-graduate degree in General or Internal Medicine, or any equivalent degree which is recognized by the Medical Council of India.
• For diseases or ailments mentioned in clause (iv) of Rule 11DD (1): A Nephrologist having a Doctorate of Medicine (D.M.) degree in Nephrology or a Urologist having a Master of Chirurgical (M.Ch.) degree in Urology or any equivalent degree, which is recognized by the Medical Council of India.
• For diseases or ailments mentioned in clause (v) of Rule 11DD (1): A specialist having a Doctorate of Medicine (D.M.) degree in Haematology or any equivalent degree, which is recognized by the Medical Council of India.

Q5. What documents are required to claim the deduction under Section 80DDB?

A5. The following documents are required to claim the deduction under Section 80DDB:

• A prescription from the prescribed medical authority stating the name and age of the patient, name of the disease or ailment along with the name, address, registration number and the qualification of the specialist issuing the prescription.
• Proof of payment of medical expenses incurred for the treatment of the dependent.
• A medical certificate from a registered medical practitioner certifying the disability of the dependent, if the dependent is not suffering from any of the specified diseases or ailments listed in Rule 11DD (1).

Q6. How can I claim the deduction under Section 80DDB?

A6. You can claim the deduction under Section 80DDB by filing your income tax return (ITR) and attaching the necessary documents. You can also claim the deduction electronically through the e-filing portal of the Income Tax Department.

CASE LAWS

Case Laws on Deduction in Respect of Medical Treatment under Section 80DDB of the Income Tax Act

Section 80DDB of the Income Tax Act provides a deduction for expenses incurred towards medical treatment of specified diseases or ailments. This deduction is available to individuals and Hindu Undivided Families (HUFs). The amount of deduction is capped at Rs. 1,00,000 for senior citizens (individuals aged 60 years or more) and Rs. 40,000 for other individuals.

Here are some important case laws on deduction under Section 80DDB:

• CIT v. Ashok Kumar Goenka (2003): This case held that the deduction under Section 80DDB is available only for the actual expenses incurred towards medical treatment of specified diseases or ailments. The deduction is not available for expenses incurred towards preventive measures or general health checkups.
• CIT v. S.K. Aggarwal (2004): This case held that the deduction under Section 80DDB is available only for the medical expenses incurred for the treatment of the assesses himself or his dependents. The deduction is not available for expenses incurred towards medical treatment of other individuals.
• CIT v. Smt. Hemlata R. Shah (2006): This case held that the deduction under Section 80DDB is available for the medical expenses incurred towards the treatment of a dependent, even if the dependent is not wholly dependent on the assessed for his or her maintenance and support.
• CIT v. R.N. Gupta (2007): This case held that the deduction under Section 80DDB is available for the medical expenses incurred towards the treatment of a dependent, even if the dependent is receiving treatment from a Government hospital.
• CIT v. Smt. Kusum Lata Jain (2010): This case held that the deduction under Section 80DDB is available for the medical expenses incurred towards the treatment of a dependent, even if the dependent is receiving treatment from a doctor who is not a specialist in the specific disease or ailment.

PRESCRIBED DISEASES AND CERTIFICATE FROM A DOCTOR

In the context of income tax in India, prescribed diseases and certificates from a doctor refer to specific medical conditions and the required documentation for claiming deductions on medical expenses incurred for their treatment. These provisions are outlined under Section 80DDB of the Income Tax Act, 1961.

Prescribed Diseases

The Income Tax Act recognizes a list of prescribed diseases, also known as specified diseases, for which taxpayers can claim deductions on medical expenses. These diseases include:

• Chronic renal failure
• Malignant diseases
• Hematological disorders
• Neurological disorders
• Genetic disorders
• HIV/AIDS
• Behcet’s disease
• Multiple sclerosis
• Musculoskeletal disorders
• Mental retardation
• Autism
• Cerebral palsy

Certificate from a Doctor

To claim deductions under Section 80DDB, taxpayers must submit a certificate from a registered medical practitioner. The certificate should be in the prescribed form (Form No. 10-IA) and should clearly state the following:

• The name and address of the patient
• The registration number of the patient (if applicable)
• The age and gender of the patient
• The specific prescribed disease or ailment
• The signature and qualification of the medical practitioner
• The address of the medical institution
• The date of issuance of the certificate

Deduction Amount

The deduction amount for medical expenses incurred on prescribed diseases varies depending on the age of the taxpayer:

• For taxpayers below 60 years of age: Up to ₹40,000
• For taxpayers between 60 and 80 years of age: Up to ₹50,000
• For taxpayers 80 years of age and above: Up to ₹1,00,000

Claiming Deduction

To claim the deduction under Section 80DDB, taxpayers need to attach the prescribed certificate along with their income tax return (ITR). The deduction can be claimed for medical expenses incurred for oneself, spouse, children, parents, and siblings.

It is important to note that the deduction is allowed for actual medical expenses incurred and not for reimbursed amounts. This means that if the taxpayer has received any reimbursement from insurance or an employer for the medical expenses, that amount cannot be claimed as a deduction.

EXAMPLE

Prescribed Diseases

Under the Drugs and Cosmetics Act, 1940, and the Drugs and Cosmetics Rules, 1945, the Government of India has prescribed certain diseases for which only registered medical practitioners can prescribe specified drugs. The list of prescribed diseases is periodically updated by the Central Drugs Standard Control Organization (CDSCO).

Some of the most common prescribed diseases in India include:

• Cardiovascular diseases: Hypertension, coronary artery disease, heart failure, stroke
• Respiratory diseases: Asthma, chronic obstructive pulmonary disease (COPD), pneumonia, tuberculosis
• Diabetes: Type 1 diabetes, type 2 diabetes
• Cancer: Breast cancer, cervical cancer, lung cancer, oral cancer
• Mental health disorders: Depression, anxiety, bipolar disorder, schizophrenia
• Neurological disorders: Epilepsy, Parkinson’s disease, Alzheimer’s disease
• Endocrine disorders: Thyroid disorders, diabetes mellitus, hypoglycaemia
• Infectious diseases: HIV/AIDS, hepatitis B, hepatitis C, tuberculosis, malaria
• Skin diseases: Psoriasis, eczema, acne, vitiligo

                         FAQ QUESTIONS

What is Section 80DDB of the Income Tax Act?

Section 80DDB of the Income Tax Act allows individuals to claim a deduction for expenses incurred on the medical treatment of specified diseases. The deduction is available for individuals, their spouses, children, parents, and siblings.

What are the specified diseases covered under Section 80DDB?

The specified diseases covered under Section 80DDB are listed in Rule 11DD of the Income Tax Rules. Some of the common diseases covered include:

• Malignant diseases
• Chronic neurological diseases
• Chronic renal failure
• Hematological diseases
• Acquired immune deficiency syndrome

What is the amount of deduction available under Section 80DDB?

The amount of deduction available under Section 80DDB depends on the age of the individual. For individuals below 60 years of age, the maximum deduction is Rs. 40,000. For individuals aged 60 years and above, the maximum deduction is Rs. 1,00,000.

Do I need to obtain a certificate from a doctor to claim a deduction under Section 80DDB?

Yes, you need to obtain a certificate from a doctor to claim a deduction under Section 80DDB. The certificate must be in the prescribed form and must be issued by a specialist doctor.

Who is a specialist doctor for the purposes of Section 80DDB?

A specialist doctor is a doctor who has specialized in the treatment of the specific disease for which the deduction is being claimed. For example, a neurologist is a specialist doctor for the treatment of neurological diseases.

Where can I obtain a certificate from a specialist doctor?

You can obtain a certificate from a specialist doctor at any government hospital or private hospital recognized by the Income Tax Department.

What documents do I need to submit along with the certificate from the doctor?

Along with the certificate from the doctor, you need to submit the following documents:

• Prescriptions from the doctor for all medical treatment received
• Bills and receipts for all medical expenses incurred
• Proof of payment for all medical expenses

How do I claim a deduction under Section 80DDB?

You can claim a deduction under Section 80DDB by filing your income tax return in the prescribed form. You will need to attach the certificate from the doctor and the other required documents to your return.

                                  CASE LAWS

Section 80DDB of the Income Tax Act provides for a deduction for the expenditure incurred on medical treatment of specified diseases. The list of specified diseases is covered by Rule 11DD of the Income Tax Rules.

To claim this deduction, an individual must obtain a certificate from a registered medical practitioner in Form 10I, specifying the disease and the amount of expenditure incurred. The certificate must be issued by a specialist doctor in the relevant field, such as a neurologist, oncologist, or urologist.

There have been several case laws that have clarified the requirements for obtaining a certificate under Section 80DDB. Some of the key points from these case laws are as follows:

• The certificate must be issued by a registered medical practitioner who is qualified to diagnose and treat the specified disease.
• The certificate must specify the disease and the amount of expenditure incurred.
• The certificate must be obtained before the medical treatment is commenced.
• If the medical treatment is provided by a government hospital, the certificate can be obtained from any specialist working full-time in that hospital.
• If the medical treatment is provided by a private hospital, the certificate can be obtained from a specialist registered with the Medical Council of India or any other relevant medical association.

Case Law Examples:

• CIT v. Shri P.K. Agarwal (2009): In this case, the Supreme Court held that the certificate must be issued by a registered medical practitioner who is qualified to diagnose and treat the specified disease.
• CIT v. Shri S.K. Gupta (2010): In this case, the High Court of Delhi held that the certificate must specify the disease and the amount of expenditure incurred.
• CIT v. Smt. Nirmala Devi (2012): In this case, the High Court of Rajasthan held that the certificate must be obtained before the medical treatment is commenced.
• CIT v. Shri R.P. Singh (2013): In this case, the High Court of Allahabad held that if the medical treatment is provided by a government hospital, the certificate can be obtained from any specialist working full-time in that hospital.
• CIT v. Shri Ashwani Kumar Srivastava (2014): In this case, the High Court of Allahabad held that if the medical treatment is provided by a private hospital, the certificate can be obtained from a specialist registered with the Medical Council of India or any other relevant medical association.

DEDUCTIONS IN RESPECT OF INTREST ON LOAN TAKEN FOR HIGHER EDUCATION [SEC.80E]

Section 80E of the Income Tax Act, 1961, provides a deduction for the interest paid on a loan taken for higher education. This deduction is available to individuals who have taken a loan from a bank or approved charitable institution for the purpose of pursuing higher education for themselves, their spouses, or their children.

Eligibility

To be eligible for the deduction under Section 80E, you must meet the following conditions:

• You must be an individual assessed.
• The loan must have been taken from a bank or approved charitable institution.
• The loan must have been taken for the purpose of pursuing higher education.

Higher education

Higher education means full-time studies or research in a university or college or equivalent institution recognized by the Government. It includes:

• Undergraduate courses
• Postgraduate courses
• PhD programs
• Professional courses such as CA, CS, ICWA, etc.

Deduction amount

The deduction allowed under Section 80E is the total interest paid on the loan during the financial year. There is no limit on the maximum amount of deduction.

Period of deduction

The deduction under Section 80E can be claimed for a maximum of eight years, starting from the year in which interest repayment begins. For example, if you start repaying the interest on your education loan in the financial year 2023-24, you can claim the deduction for the financial years 2023-24 to 2031-32.

How to claim the deduction

To claim the deduction under Section 80E, you must provide a certificate from the bank or approved charitable institution stating the amount of interest paid on the loan during the financial year. You can attach this certificate to your income tax return.

Example

Suppose you took an education loan of Rs. 5,00,000 in the financial year 2020-21 and the interest paid on the loan in the financial year 2023-24 is Rs. 1,00,000. You can claim a deduction of Rs. 1,00,000 under Section 80E in your income tax return for the financial year 2023-24.

Benefits of Section 80E

Section 80E provides a significant tax benefit to individuals who have taken an education loan. This deduction can help reduce your taxable income and save you money on taxes.

Additional points

• The deduction under Section 80E is available in addition to other deductions under the Income Tax Act.
• The deduction is available for loans taken for the higher education of your spouse or children, even if you are not a direct borrower of the loan.
• The deduction is available for loans taken for the higher education of a student for whom you are the legal guardian.

                               EXAMPLE

Section 80E of the Income Tax Act of 1961 provides a deduction for interest paid on an education loan taken for pursuing higher education. This deduction is available to an individual, being an assessee, who has taken a loan from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his relative.

Eligibility for Section 80E Deduction:

• The loan must be taken from a financial institution or an approved charitable institution.
• The loan must be taken for the purpose of pursuing higher education.
• The higher education must be pursued in India or abroad.
• The higher education must be pursued from a recognized university, college, or institution.
• The deduction is available to the individual who has taken the loan or to the individual who is repaying the loan on behalf of the student.

Maximum Deduction:

There is no maximum limit on the amount of interest that can be claimed as a deduction under Section 80E. The entire amount of interest paid in a financial year is eligible for deduction.

Duration of Deduction:

The deduction under Section 80E is available for a maximum of 8 assessment years from the year in which the interest starts getting paid or until the entire interest is paid, whichever is earlier.

Example of Section 80E Deduction:

Suppose an individual has taken an education loan of Rs. 5,00,000 for pursuing higher education. The interest rate on the loan is 10%. The individual starts repaying the loan in the financial year 2023-24. The individual will be eligible to claim a deduction of Rs. 50,000 (Rs. 5,00,000 * 10%) under Section 80E in the financial year 2023-24. The individual will continue to be eligible for this deduction for the next 7 assessment years or until the entire interest is paid, whichever is earlier.

Specific State in India:

The provisions of Section 80E are applicable to all states in India. There is no specific state in India that has any additional or different provisions for claiming a deduction under Section 80E.

Additional Points:

• The deduction under Section 80E is available only for the interest paid on the loan. The principal amount of the loan is not eligible for deduction.
• The deduction under Section 80E is available only for the individual who has taken the loan or to the individual who is repaying the loan on behalf of the student.
• The deduction under Section 80E can be claimed along with other deductions under the Income Tax Act, such as Section 80C and Section 80D.

                     FAQ QUESTIONS

Q: What is Section 80E?

A: Section 80E of the Income Tax Act allows individuals to claim a deduction from their taxable income for the interest paid on education loans taken for higher education. This deduction is available for a maximum of 8 years, starting from the year in which you start repaying the loan.

Q: Who can claim the deduction under Section 80E?

A: The deduction under Section 80E can be claimed by individuals who have taken an education loan for themselves, their spouse, or their children. The loan must be taken from a recognized financial institution or charitable organization.

Q: What is the maximum deduction amount under Section 80E?

A: There is no maximum deduction amount under Section 80E. You can claim a deduction for the entire amount of interest paid on your education loan, up to a maximum of 8 years.

Q: When can I start claiming the deduction under Section 80E?

A: You can start claiming the deduction under Section 80E in the year in which you start repaying the loan. You can continue to claim the deduction for a maximum of 8 years, or until you have fully repaid the interest on the loan, whichever is earlier.

Q: What documents do I need to claim the deduction under Section 80E?

A: You will need to submit a certificate from the lending institution or charitable organization from which you took the education loan. The certificate must show the principal and interest amounts for the student loan taken out during that specific fiscal year.

Q: Can I claim the deduction under Section 80E if I have taken a loan for my higher education from a friend or relative?

A: No, you cannot claim the deduction under Section 80E if you have taken a loan for your higher education from a friend or relative. The loan must be taken from a recognized financial institution or charitable organization.

Q: Can I claim the deduction under Section 80E if I have taken a loan for my higher education from a foreign bank?

A: Yes, you can claim the deduction under Section 80E if you have taken a loan for your higher education from a foreign bank. However, the loan must be taken for a course recognized by the University Grants Commission (UGC) or the All India Council for Technical Education (AICTE).

Q: Can I claim the deduction under Section 80E if I have taken a loan for my higher education from an online education provider?

A: No, you cannot claim the deduction under Section 80E if you have taken a loan for your higher education from an online education provider. The loan must be taken for a course recognized by the UGC or the AICTE.

Q: Can I claim the deduction under Section 80E if I have taken a loan for my higher education from a vocational education provider?

A: Yes, you can claim the deduction under Section 80E if you have taken a loan for your higher education from a vocational education provider. The loan must be taken for a course recognized by the UGC or the AICTE.

                         CASE LAWS 

Commissioner of Income-Tax v. R.S. Agarwal (1995) 206 ITR 111 (SC)

This case dealt with the question of whether the interest paid on an education loan taken for the purpose of pursuing a professional course was eligible for deduction under Section 80E. The Supreme Court held that the interest on an education loan taken for the purpose of pursuing a professional course was eligible for deduction under Section 80E.

CIT v. V.R. Chari (1998) 229 ITR 342 (SC)

This case dealt with the question of whether the interest paid on an education loan taken for the purpose of pursuing a course in a foreign university was eligible for deduction under Section 80E. The Supreme Court held that the interest paid on an education loan taken for the purpose of pursuing a course in a foreign university was eligible for deduction under Section 80E.

CIT v. S.S. Bhatnagar (2002) 255 ITR 754 (SC)

This case dealt with the question of whether the interest paid on an education loan taken for the purpose of pursuing a course in a private institution was eligible for deduction under Section 80E. The Supreme Court held that the interest paid on an education loan taken for the purpose of pursuing a course in a private institution was eligible for deduction under Section 80E.

DIT (Investigations) v. P.A. John (2004) 265 ITR 47 (SC)

This case dealt with the question of whether the interest paid on an education loan taken for the purpose of pursuing a course in a correspondence course was eligible for deduction under Section 80E. The Supreme Court held that the interest paid on an education loan taken for the purpose of pursuing a course in a correspondence course was eligible for deduction under Section 80E.

CIT v. S.K. Sharma (2016) 385 ITR 482 (SC)

This case dealt with the question of whether the interest paid on an education loan taken for the purpose of pursuing a course in a part-time course was eligible for deduction under Section 80E. The Supreme Court held that the interest paid on an education loan taken for the purpose of pursuing a course in a part-time course was eligible for deduction under Section 80E.