May 2023

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 or for the purpose of higher education of his relative. (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 approved by the prescribed authority 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 any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognised by the Central Government or State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority to do so; (d) “initial assessment year” means the assessment year relevant to the previous year, in which the assessee starts paying the interest on the loan; (e) “relative”, in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian.

Deduction in respect of medical treatment, etc Section 80 DDB of Income Tax Act, 1961 deals with tax deductions for medical expenses incurred for specific diseases. Here’s a breakdown in simple language: Who is eligible under Section 80 DDB? Individuals residing in India Hindu Undivided Families (HUFs) What kind of medical expenses are covered under Section 80 DDB? Expenses for the treatment of diseases specified by the government Expenses for self, spouse, children, parents, siblings (for individuals) Expenses for any member of the HUF (for HUFs) How much can be deducted under Section 80 DDB? The lesser of: Actual amount paid for medical treatment ₹40,000 (₹1,00,000 for senior citizens) This deduction is reduced by any: Insurance reimbursement received Employer reimbursement received What are the requirements under Section 80 DDB ? A prescription from a qualified specialist (neurologist, oncologist, etc.) is required. The medical treatment must be for a specified disease. Additional notes: “Senior citizen” refers to individuals 60 years or older. “Dependant” refers to specific family members depending on the individual or HUF. In simpler terms: If you are a resident in India and pay for the medical treatment of specific diseases for yourself or your family, you can deduct up to a certain amount from your taxable income. You need a doctor’s prescription and the disease must be on the government’s list. Insurance or employer reimbursements reduce the amount you can deduct. Examples of section 80DDB Example 1 of section 80DDB Mr. Sharma is a 35-year-old resident of India. He paid the following medical expenses during the previous year: ₹50,000 for his wife’s cancer treatment (a specified disease) ₹10,000 for his annual preventive health check-up He received ₹20,000 reimbursement from his health insurance for his wife’s treatment. Calculation of tax deduction: Medical expenses for specified disease: Actual amount paid: ₹50,000 Maximum deduction allowed: ₹40,000 Deductible amount: ₹40,000 (lesser of actual and maximum) Preventive health check-up: Maximum deduction allowed: ₹5,000 Deductible amount: ₹5,000 (actual amount less than maximum) Total deduction: ₹40,000 (specified disease) + ₹5,000 (preventive check-up) = ₹45,000 Reduction for insurance reimbursement: Total deduction – insurance reimbursement = final deduction ₹45,000 – ₹20,000 = ₹25,000 Therefore, Mr. Sharma can claim a tax deduction of ₹25,000 for the medical expenses incurred during the previous year. Example 2 of section 80DDB Mrs. Gupta is a 63-year-old senior citizen residing in India. She paid the following medical expenses during the previous year: ₹60,000 for her own heart surgery (a specified disease) ₹15,000 for her daughter’s annual health check-up She received ₹5,000 reimbursement from her health insurance for her surgery. Calculation of tax deduction: Medical expenses for specified disease: Actual amount paid: ₹60,000 Maximum deduction allowed: ₹1,00,000 (for senior citizens) Deductible amount: ₹60,000 (lesser of actual and maximum) Preventive health check-up: Maximum deduction allowed: ₹5,000 Deductible amount: ₹5,000 (actual amount less than maximum) Total deduction: ₹60,000 (specified disease) + ₹5,000 (preventive check-up) = ₹65,000 Reduction for insurance reimbursement: Total deduction – insurance reimbursement = final deduction ₹65,000 – ₹5,000 = ₹60,000 Therefore, Mrs. Gupta can claim a tax deduction of ₹60,000 for the medical expenses incurred during the previous year under section 80DDB of Income Tax Act, 1961 Complete legal text of section 80DDB of Income Tax Act, 1961 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 rules63 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 obtains the prescription for such medical treatment from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed : 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 “one hundred 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) [***] (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 years or more at any time during the relevant previous year; (v) [***]

Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability (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 seventy-five 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 “seventy-five thousand rupees”, the words “one hundred and twenty-five 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:— 60[(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,—  (i)  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; or (ii)  on attaining the age of sixty years or more by such individual or the member of the Hindu undivided family, and the payment or deposit to such scheme has been discontinued;] (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. 61[(3A) The provisions of sub-section (3) shall not apply to the amount received by the dependant, being a person with disability, before his death, by way of annuity or lump sum by application of the condition referred to in sub-clause (ii) of clause (a) of sub-section (2).] (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 manner62, 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) 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

Deduction in respect of health insurance premia Unlocking Tax Deductions for Health Insurance and Medical Expenses In India, Section 80D of the Income Tax Act, 1961 offers a valuable opportunity to reduce your tax burden while prioritizing your health and that of your loved ones. It allows eligible individuals and Hindu Undivided Families (HUFs) to claim deductions for specific health-related expenses, including: Key Provisions: Eligible Individuals: Individuals and HUFs. Deduction Types: Health insurance premiums for self, family, or parents. Preventive health check-ups. Medical expenses for senior citizens (under certain conditions). Maximum Deduction Limits: Individuals: ₹25,000 for self or family (₹50,000 for senior citizens). Individuals: Additional ₹25,000 for parents (₹50,000 if parents are senior citizens). HUFs: ₹25,000 for health insurance premiums of any member. HUFs: Additional ₹50,000 for medical expenses of any member (subject to conditions). Payment Modes: Cash allowed for preventive health check-ups. Non-cash modes for all other eligible expenses. Examples in the Indian Context: Scenario 1: Mr. Singh, 45, pays ₹20,000 towards a health insurance policy for himself and ₹15,000 for his wife. He can claim a deduction of ₹40,000 under Section 80D. Scenario 2: Ms. Sharma, 62, pays ₹30,000 for her health insurance premium and ₹40,000 for her mother’s medical expenses. She can claim a deduction of ₹70,000 (₹50,000 for her premium and ₹20,000 for her mother’s medical expenses). Important Considerations: Senior Citizen Definition: Individuals aged 60 years or above. Eligible Insurance Plans: Those approved by the General Insurance Corporation of India or other authorized insurers. Preventive Health Check-up Limit: ₹5,000 within the overall deduction limit. Cash Payments: Not allowed for health insurance premiums or medical expenses (except preventive health check-ups). Embrace Health and Tax Benefits with Section 80D By understanding and utilizing Section 80D effectively, you can take a proactive approach to healthcare while enjoying significant tax benefits. Stay informed, plan wisely, and safeguard your health and financial well-being. Disclaimer: To learn more one can refer the following resources:1) Income tax efiling website2) Income tax departement website This information is intended for general knowledge purposes only and does not constitute professional tax advice. Consult a qualified tax advisor for accurate guidance tailored to your specific circumstances.   Provision of Section 80D of Income Tax Act, 1961 (1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted such sum, as specified in sub-section (2) or sub-section (3), payment of which is made by any mode as specified in sub-section (2B), in the previous year out of his income chargeable to tax. (2) Where the assessee is an individual, the sum referred to in sub-section (1) shall be the aggregate of the following, namely:— (a) the whole of the amount paid to effect or to keep in force an insurance on the health of the assessee or his family or any contribution made to the Central Government Health Scheme or such other scheme as may be notified by the Central Government in this behalf or any payment made on account of preventive health check-up of the assessee or his family as does not exceed in the aggregate twenty-five thousand rupees; and (b) the whole of the amount paid to effect or to keep in force an insurance on the health of the parent or parents of the assessee or any payment made on account of preventive health check-up of the parent or parents of the assessee as does not exceed in the aggregate twenty-five thousand rupees; (c) the whole of the amount paid on account of medical expenditure incurred on the health of the assessee or any member of his family as does not exceed in the aggregate fifty thousand rupees; and (d) the whole of the amount paid on account of medical expenditure incurred on the health of any parent of the assessee, as does not exceed in the aggregate fifty thousand rupees: Provided that the amount referred to in clause (c) or clause (d) is paid in respect of a senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person: Provided further that the aggregate of the sum specified under clause (a) and clause (c) or the aggregate of the sum specified under clause (b) and clause (d) shall not exceed fifty thousand rupees. Explanation.—For the purposes of clause (a), “family” means the spouse and dependant children of the assessee. (2A) Where the amounts referred to in clauses (a) and (b) of sub-section (2) are paid on account of preventive health check-up, the deduction for such amounts shall be allowed to the extent it does not exceed in the aggregate five thousand rupees. (2B) For the purposes of deduction under sub-section (1), the payment shall be made by—  (i)  any mode, including cash, in respect of any sum paid on account of preventive health check-up; (ii)  any mode other than cash in all other cases not falling under clause (i). (3) Where the assessee is a Hindu undivided family, the sum referred to in sub-section (1), shall be the aggregate of the following, namely:— (a) whole of the amount paid to effect or to keep in force an insurance on the health of any member of that Hindu undivided family as does not exceed in the aggregate twenty-five thousand rupees; and (b) the whole of the amount paid on account of medical expenditure incurred on the health of any member of the Hindu undivided family as does not exceed in the aggregate fifty thousand rupees: Provided that the amount referred to in clause (b) is paid in respect of a senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person: Provided further that the aggregate of the sum specified under clause (a) and clause (b) shall not exceed fifty thousand rupees. (4) Where the sum specified in clause (a) or clause (b) of sub-section (2) or clause (a) of sub-section (3) is paid to effect or keep in force an insurance on the health of any person

Deduction in respect of contribution to Agnipath Scheme (1) Where an assessee, being an individual enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund on or after the 1st day of November, 2022, has in the previous year paid or deposited any amount in his account in the said Fund, he shall be allowed a deduction in the computation of his total income, of the whole of the amount so paid or deposited. (2) Where the Central Government makes any contribution to the account of an assessee in the Agniveer Corpus Fund referred to in sub-section (1), the assessee shall be allowed a deduction in the computation of his total income of the whole of the amount so contributed. Explanation.—For the purposes of this section,–– (a) “Agnipath Scheme” means the scheme for enrolment in Indian Armed Forces introduced vide letter No.1(23)2022/D(Pay/Services), dated the 29th December, 2022 of the Government of India in the Ministry of Defence; (b) “Agniveer Corpus Fund” means a fund in which consolidated contributions of all the Agniveers and matching contributions of the Central Government along with interest on both these contributions are held.]

Deduction in respect of investment made under an equity savings scheme (1) Where an assessee, being a resident individual, has, in a previous year, acquired listed equity shares or listed units of an equity oriented fund in accordance with a scheme, as may be notified by the Central Government in this behalf, he shall, subject to the provisions of sub-section (3), be allowed a deduction, in the computation of his total income of the assessment year relevant to such previous year, of fifty per cent of the amount invested in such equity shares or units to the extent such deduction does not exceed twenty-five thousand rupees. (2) The deduction under sub-section (1) shall be allowed in accordance with, and subject to, the provisions of this section for three consecutive assessment years, beginning with the assessment year relevant to the previous year in which the listed equity shares or listed units of equity oriented fund were first acquired. (3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—  (i)  the gross total income of the assessee for the relevant assessment year shall not exceed twelve lakh rupees; (ii)  the assessee is a new retail investor as may be specified under the scheme referred to in sub-section (1); (iii) the investment is made in such listed equity shares or listed units of equity oriented fund as may be specified under the scheme referred to in sub-section (1); (iv) the investment is locked-in for a period of three years from the date of acquisition in accordance with the scheme referred to in sub-section (1); and (v) such other condition as may be prescribed. (4) If the assessee, in any previous year, fails to comply with any condition specified in sub-section (3), the deduction originally allowed shall be deemed to be the income of the assessee of such previous year and shall be liable to tax for the assessment year relevant to such previous year. (5) Notwithstanding anything contained in sub-sections (1) to (4), no deduction under this section shall be allowed in respect of any assessment year commencing on or after the 1st day of April, 2018 : Provided that an assessee, who has acquired listed equity shares or listed units of an equity oriented fund in accordance with the scheme referred to in sub-section (1) and claimed deduction under this section for any assessment year commencing on or before the 1st day of April, 2017, shall be allowed deduction under this section till the assessment year commencing on the 1st day of April, 2019, if he is otherwise eligible to claim the deduction in accordance with the other provisions of this section. Explanation.—For the purposes of this section, “equity oriented fund” shall have the meaning assigned to it in the Explanation to clause (38) of section 10.

Deduction in respect of subscription to long-term infrastructure bonds In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, the whole of the amount, to the extent such amount does not exceed twenty thousand rupees, paid or deposited, during the previous year relevant to the assessment year beginning on the 1st day of April, 2011 or to the assessment year beginning on the 1st day of April, 2012, as subscription to long-term infrastructure bonds as may, for the purposes of this section, be notified by the Central Government.

Limit on deductions under sections 80C, 80CCC and 80CCD The aggregate amount of deductions under section 80C, section 80CCC and sub-section (1) of section 80CCD shall not, in any case, exceed one hundred and fifty thousand rupees.

Deduction in respect of contribution to pension scheme of Central Government (1) Where an assessee, being an individual employed by the Central Government on or after the 1st day of January, 2004 or, being an individual employed by any other employer, 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, twenty per cent of his gross total income in the previous year. (1A) [***] (1B) An assessee referred to in sub-section (1), shall be allowed a deduction in computation of his total income, whether or not any deductions is allowed under sub-section (1), of the whole of the amount paid or deposited in the previous year in his account under a pension scheme notified or as may be notified by the Central Government, which shall not exceed fifty thousand rupees: Provided that no deduction under this sub-section shall be allowed in respect of the amount on which a deduction has been claimed and allowed under sub-section (1). (2) Where, in the case of an assessee referred to in sub-section (1), the Central Government 57[or the State 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 57[or the State Government] or any other employer as does not exceed— (a) fourteen per cent, where such contribution is made by the Central Government 57a[or the State Government]; (b) ten per cent, where such contribution is made by any other employer, 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) or sub-section (1B), in respect of which a deduction has been allowed under those sub-sections 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 sub-section (1B); 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: Provided that the amount received by the nominee, on the death of the assessee, under the circumstances referred to in clause (a), shall not be deemed to be the income of the nominee. (4) Where any amount paid or deposited by the assessee has been allowed as a deduction under sub-section (1) or sub-section (1B),— (a) 58[***] (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.