5 Common Queries on Income Tax Deductions – Check Before Filing ITR!

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INCOME TAX DEDUCTION

Q.1) Under which section interest on deposit in case of senior citizens is allowable as deduction?| What is the upper limit/maximum deduction allowed under section 80TTB?| What is the maximum deduction allowable under section 80TTB?

  • Section 80TTB in respect of interest on deposits in case of a senior citizen, has been introduced by Finance Act, 2018 which is effective from  A.Y  2019-20
  • The deduction under section 80TTB is allowed only to a resident senior citizen i.e individual who is of the age of at least 60 years at any time during the previous year.
  • The deduction is available for any interest income on deposits with the following:
  • Savings accounts with bank or banking companies
  • Savings accounts with post office
  • Savings accounts with a co-operative societies involved in banking business.
  • Interest on fixed deposit
  • Interest on time deposit
  • Any other interest
  • The deduction under section 80TTB is Rs. 50,000 or the amount of interest ,whichever    is lower . deductible from the gross total income of the eligible assessee.
  • Interest earned from saving bank account, fixed deposit or any other interest is considered as income under the head “Income from other sources” and taxable as such. However no deduction is allowed to a partner of firm , member of AOI or BOI in respect of interest income earned from any account held by or on behalf of a firm, an association of person or body of individuals.

Q.2) Can assessee claim deduction under section 80U and 80DD simultaneously?

Section 80DD is eligible for deduction to resident individual in respect of maintenance including medical treatment of a handicapped dependent, being a person with disability. Whereas Section 80U eligible for deduction to individual in respect of a person with disability.

An assessee may claim both deductions simultaneously where assessee is resident individual  himself and is a person with disability(Section 80U) and also has incurred an expenditure for the medical treatment of a dependent person with disability(Section 80DD) or has paid or deposited amount under any scheme framed in this behalf by the LIC or any other insurer, etc.

Q.3) What is the upper limit /maximum deduction under section 80C?

​As per the section 80C of the Act, the deduction is available only to an Individual or a Hindu Undivided Family (HUF) and deduction does not exceed Rs. 1,50,000 during a previous year. Taxpayer is eligible for deduction if contribution/deposits/investments / payment made during the previous year. Tax payer should made investments/deposits out of his taxable income or otherwise.

Q.4) Who is eligible for claiming deduction under section 80C for payment of tuition Fees?

Deduction for payment of Tuition fees is available only to an Individual assessee and not to a HUF assessee. The deduction is available for any sum paid as tuition fee for full time education of his/her children. The deduction can be claimed for the maximum of two children. Children shall include even adopted and step children. Furthermore, payment made for the education of himself/herself (Individual assesse) or spouse or any member of the HUF is not eligible for deduction under section 80C.​ There is no defined age limit of children for claiming deduction of tuition fees.

Q.5) What is the upper limit/maximum deduction available for Hindu Undivided Family (HUF) assessee under section 80D, i.e., for the payment made towards medical insurance?

In the case of Hindu Undivided Family (HUF), deduction under section 80D can be claimed as follows:
a) If the payment is made for medical insurance premium of any member of the HUF then deduction of Rs. 25,000 is allowed. In case the member for whom the premium is paid is a senior citizen or a very senior citizen ,then deduction of Rs. 30,000 (Rs. 50,000 from A.Y 2019-20) is allowed

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b) If the payment is made for medical expenditure for any member of the HUF then deduction of Rs. 30,000 (Rs. 50,000 from A.Y 2019-20) is allowed. This deduction is allowed with a condition that the payment is made for the treatment of a very senior citizen (senior citizen from A.Y 2019-20) provided that payment of medical insurance premium is not made by such person.

Further, as per section 80D the deduction provided under point a) and b) shall not exceed Rs. 30,000 (Rs. 50,000 from A.Y 2019-20).

Further in case of single premium health insurance policies having cover of more than one year, deduction u/s 80D is allowed on proportionate basis for the number of years for which health insurance cover is provided to the extent of specified limit.

 

 

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