Deductions available to senior citizens in respect of health insurance premium and medical treatment
Section 80D, inter-alia, provides that a deduction up to Rs 30,000/- shall be allowed to an assessee, being an individual or a Hindu undivided family, in respect of payments towards annual premium on health insurance policy, or preventive health check-up, of a senior citizen, or medical expenditure in respect of very senior citizens. It is proposed to amend section 80D so as to raise this monetary limit of deduction from Rs 30,000/- to Rs 50,000/-.
In case of single premium health insurance policies having the cover of more than one year, it is proposed that the deduction shall be allowed on a proportionate basis for the number of years for which health insurance coverage is provided, subject to the specified monetary limit.
These amendments will take effect, from 1st April 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.
Enhanced deduction to senior citizens for medical treatment of specified diseases
Section 80DDB of the Act, inter-alia, provide that a deduction is available to an individual and Hindu undivided family with regard to the amount paid for medical treatment of specified diseases in respect of very senior citizen up to Rs 80,000/- and in case of senior citizens up to Rs 60,000/- subject to specified conditions. It is proposed to amend the provisions of section 80DDB of the Act so as to raise this monetary limit of deduction to Rs 1,00,000/- for both senior citizens and very senior citizens.
This amendment will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.
[You May Also Refer: Budget 2018 : TDS & manner of payment in respect of Trusts]
Contributions made to certain relief funds and charitable institutions can be claimed as a deduction under Section 80G of the Income Tax Act. This deduction can only be claimed when the contribution has been made via cheque or draft or in cash. In-kind contributions such as food material, clothes, medicines etc do not qualify for deduction under section 80G.
The donations made to any Political party can be claimed under section 80GGC.
W.e.f F.Y. 2017-18, the limit of deduction under section 80G / 80GGC for donations made in cash is reduced from current Rs 10,000 to Rs 2,000 only.
| SECTION 80GG: APPLICABLE FOR ALL THOSE INDIVIDUALS WHO DO NOT OWN A RESIDENTIAL HOUSE & DO NOT RECEIVE HRA |
The Tax Deduction amount under 80GG is Rs 60,000 per annum. Section 80GG is applicable for all those individuals who do not own a residential house & do not receive HRA (House Rent Allowance).
The extent of tax deduction will be limited to the least amount of the following;
- Rent paid minus 10 percent the adjusted total income.
- Rs 5,000 per month.
- 25 % of the total income.
(If you are claiming HRA (House Rent Allowance) of more than Rs 50,000 per month (or) paying rent which is more than Rs 50,000 then the tenant has to deduct TDS @ 5%. The tax could be deducted at the time of credit of rent for the last month of the tax year or last month of tenancy, as applicable.)
| DEDUCTION IN RESPECT OF DONATIONS FOR SCIENTIFIC RESEARCH AND RURAL DEVELOPMENT (SECTION 80GGA) |
Admissible Deductions:-
· Any sum paid by the Assessee to the Research Association which has, as its object, the undertaking of scientific research
· Any sum paid to an Association or Institution which has, as its object, the undertaking of any programme of Rural Development to be used for carrying for carrying out any programme of Rural Development.
· Any sum paid to Research Association which has, as its object the undertaking of research in Social Science or Statistical Research.
· Any sum paid to Public Sector company or a local authority for carrying out any eligible project or scheme.
· Any sum paid to Rural Development fund.
· Any sum paid to National Urban Poverty Education Fund (NUPEF).
Sub-section (2A) has been inserted which provides that no deduction shall be allowed in respect of donation of any sum exceeding Rs. 10000 unless such sum is paid by any mode other than cash.
| DEDUCTION IN RESPECT OF CONTRIBUTIONS GIVEN BY COMPANIES TO POLITICAL PARTIES (SECTION 80GGB) |
This provides of deduction of any sum contributed in the Previous Year by an Indian Company to any Political Party or an Electoral Trust. From the assessment year 2014-15, no deduction shall be allowed in respect of any sum contributed by way of cash.
| DEDUCTION IN RESPECT OF CONTRIBUTIONS GIVEN BY ANY PERSON TO POLITICAL PARTIES (SECTION 80GGC) |
This provides for deduction of any sum contributed in the Previous Year by any Person to a Political Party or an Electoral Trust. It will not be available to a Local Authority and an Artificial Judicial Person. No deduction shall be allowed in respect of any sum contributed by way of cash.
*As amended by Finance Bill 2018
Deduction from gross total income of an individual or HUF, up to a maximum of Rs. 10,000/-, in respect of interest on deposits in savings, account with a bank, co-operative society or post office can be claimed under this section. Section 80TTA deduction is not available on interest income from fixed deposits.
It has been proposed to insert a new provision to allow deduction of up to Rs. 50,000 to the senior citizen who has earned interest income from deposits with banks or post office or co-operative banks. Interest earned on saving deposits and fixed deposits both shall be eligible for deduction under this provision.
Deduction under Section 80TTA shall not be available to senior citizens in respect of interest on saving deposits.
Bare Text of Proposed Amendment has been given below for your reference:
Deduction in respect of interest income to senior citizen
At present, a deduction up to Rs 10,000/- is allowed under section 80TTA to an assessee in respect of interest income from savings account. It is proposed to insert a new section 80TTB so as to allow a deduction up to Rs 50,000/- in respect of interest income from deposits held by senior citizens. However, no deduction under section 80TTA shall be allowed in these cases.
This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.
It is also proposed to amend section 194A so as to raise the threshold for deduction of tax at source on interest income for senior citizens from Rs 10,000/- to Rs 50,000/-.
This amendment will take effect, from 1st April, 2018.
| STANDARD DEDUCTION ON SALARY INCOME |
*As amended by Finance Bill 2018
It is proposed to allow a standard deduction up to Rs 40,000/- or the amount of salary received, whichever is less. Consequently, the present exemption in respect of Transport Allowance (except in case of differently abled persons) [Rs 1600*12=Rs 19200] and reimbursement of medical expenses [Rs 15000] is proposed to be withdrawn.
Bare Text of Proposed Amendment has been given below for your reference:
Standard deduction on salary income
Section 16, inter-alia, provides for certain deduction in computing income chargeable under the head “Salaries”. it is proposed to allow a standard deduction up to Rs 40,000/- or the amount of salary received, whichever is less. Consequently, the present exemption in respect of Transport Allowance (except in case of differently abled persons) and reimbursement of medical expenses is proposed to be withdrawn.
These amendments will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.
| NEW DEDUCTION INTRODUCED FOR FARM PRODUCER COMPANIES |
*As amended by Finance Bill 2018
To promote agricultural activities a new section 80PA is proposed to be inserted. This new provision proposes 100% deductions of profits for a period of 5 years to farm producer companies who have the total turnover of up to Rs. 100 crores during the financial year.
For claiming this deduction the gross total income of producer companies should include income from:
| The marketing of agricultural produce grown by its members. |
| The purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members. |
| The processing of the agricultural produce of its members. |
Bare Text of Proposed Amendment has been given below for your reference:
Deduction in respect of income of Farm Producer Companies
Section 80P provides for 100 percent deduction in respect of profit of cooperative society which provides assistance to its members engaged in primary agricultural activities.
It is proposed to extend a similar benefit to Farm Producer Companies (FPC), having a total turnover up to Rs 100 Crore, whose gross total income includes any income from
(i) the marketing of agricultural produce grown by its members, or
(ii) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or
(iii) the processing of the agricultural produce of its members
The benefit shall be available for a period of five years from the financial year 2018-19.
This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.
| 80-JJAA: INCENTIVE FOR EMPLOYMENT GENERATION |
*As amended by Finance Bill 2018
Deduction of 30% is allowed in addition to normal deduction of 100% in respect of emoluments paid to eligible new employees who have been employed for a minimum period of 240 days during the year.
However, the minimum period of employment is relaxed to 150 days in the case of the apparel industry, the same has been extended to the footwear and leather industry.
Manufacturers are often denied the deduction if an employee is employed in 1st year for a period of less than 240 days/150 days, but continues to remain employed for more than 240 days/150 days in the 2nd year. To overcome this difficulty, the requirement of the period of employment has been proposed to be relaxed. Now as per the proposed provision the deductions shall be allowed to the manufacturer in respect of an employee hired in 1st year if he continues to remain in employment in the current year(2nd year) for more than 240/150 days, as the case may be.
Bare Text of Proposed Amendment has been given below for your reference:
The incentive for employment generation
At present, under section 80-JJAA of the Act, a deduction of 30% is allowed in addition to normal deduction of 100% in respect of emoluments paid to eligible new employees who have been employed for a minimum period of 240 days during the year.
However, the minimum period of employment is relaxed to 150 days in the case of the apparel industry. In order to encourage the creation of new employment, it is proposed to extend this relaxation to the footwear and leather industry.
Further, it is also proposed to rationalize this deduction of 30% by allowing the benefit for a new employee who is employed for less than the minimum period during the first year but continues to remain employed for the minimum period in the subsequent year.
This amendment will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.
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