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Can disabled avail tax deductions

You are eligible for deduction under Section 80U of the Income Tax Act. You will have to enclose a valid medical certificate with your return of income.

Print Edition: February 21, 2008

I spent Rs 40,000 on my wife’s surgery. I get Rs 15,000 as medical reimbursement from my employer. Can I get tax benefit on the balance money spent on my wife’s treatment?
—Amit Gulati

Yes, you can claim deduction under Section 80DDB on the expenditure incurred for the medical treatment of your wife. The maximum amount of deduction allowed from gross total income is restricted to Rs 40,000 on condition that no medical reimbursement is received from any insurance company or employer for this amount.

You are eligible to get deduction for only Rs 25,000, as you will claim Rs 15,000 as medical reimbursement from your employer. In order to claim this deduction in your return, you will have to submit Form 10-I from a specialist doctor working in a government hospital in India, confirming the treatment of disease and also that the disease is eligible for deduction. This form does not require the doctor to certify the amount incurred. For that, you will have to produce the hospital bills separately.


I am an NRI investing in mutual funds from my non-resident external (NRE) account. My gains from mutual funds have been credited directly to this account.Am I supposed to pay any taxes on my gains?
—Vishal Gupta

The tax on the gains from mutual funds depends on the period of holding and the kind of mutual fund—whether they are equity funds or non-equity funds. If the units are held for more than 12 months, they would qualify as long-term capital assets. Else, these would be termed as short-term capital assets.

For equity-based schemes, if the sale transaction was entered through a recognised stock exchange in India and securities transaction tax was paid, the short-term capital gain is taxed at 11.33% (10% income tax plus 10% surcharge and 3% education cess on the taxed income) and long-term capital gain will be exempt from tax. For non-equity oriented schemes, short-term capital gains will be taxed at the normal income tax rate applicable to an individual plus the surcharge and education cess.

Long-term capital gains will be taxable at 10% without indexation or 20% with indexation, whichever is lower, plus 10% surcharge and 3% cess. Such long-term gains of NRIs are not eligible for the Rs 1.1 lakh basic exemption threshold. Therefore, for any amount of long-term capital gains income, tax is payable and tax returns would need to be filed. However, the basic exemption limit is available for short-term capital gains and therefore short-term capital gains would not be taxable up to Rs 1.1 lakh, assuming that the NRI has no other income in India.

I am paying Rs 7,500 a month as EMI on an education loan taken by me.The repayment tenure is five years.What is the deduction that is allowable on the loan for the year 2007-8?
—Rakesh Kumar

According to the amendments for the financial year 2007-8, repayment of interest on a loan taken for higher education by an individual for himself or for his spouse and children is eligible for deduction under Section 80E. Higher education means full-time studies for any graduate or post-graduate course in medicine, engineering, management, or post-graduate course in applied sciences or pure sciences including mathematics and statistics.

The full amount of interest paid on such a loan is allowed as a deduction from assessment year 2006-7. The period of deduction cannot exceed eight assessment years, commencing from the year in which the first repayment is made. No deduction is allowed for repayment of the principal amount.

I am a physically challenged person working for a public sector bank.Are there any tax deductions available for me? What are the criteria for claiming such benefits?
—Ramesh Krishnan

You are eligible for deduction under Section 80U of the Income Tax Act. You will have to enclose a valid medical certificate with your return of income. The certificate is issued only for a specified period so you will have to obtain a fresh certificate after the expiry period. The amount of deduction depends on the nature of disability certified by a doctor and is allowed for a maximum amount of Rs 50,000 for disability and Rs 75,000 for severe disability.

Does the repayment of the principal amount of a housing loan qualify for deduction only if the house is self-occupied? Also in case the house is given on rent? Is loan taken for renovation of a house eligible under Section 80C?
—Ashutosh Pritam

The repayment of the principal amount of a loan qualifies for deduction in both cases, that is, in case of a self-occupied house as well as a rented house, under Section 80C up to a maximum amount of Rs 1 lakh. The interest component of the loan is allowed as a deduction under the head “income from house property” under Section 24(b) where the amount is restricted to Rs 1.5 lakh in case of a self-occupied house. However, the full amount of interest can be claimed in case the house is given on rent.

A loan taken for renovation of an existing house, after the issue of completion certificate or after the house has been occupied or let out, is not eligible under Section 80C. However, its interest component is eligible for deduction under Section 24(b) under the head of “income of house property”.

I am a divorcee and as a part of the court settlement with my ex-wife, part of my salary is to be paid to her. My employer has been directed to deduct 60% from my salary and remit the same to her.Will I be taxed for this sum of my salary which is not received by me?
—Ravi Sant

Payment of maintenance expenses to your ex-wife, even under a judicial decree, is a mere application of funds. The salary income is earned by you and these expenses are later deducted from income according to the mandate given by the court and agreed to by you. In other words, income is first earned by you and is later deducted by your employer. Since the money remitted to your wife is from post-tax income, you cannot save any taxes on it.

I have taken an education loan for my son who is doing a course in Bachelor of Business Administration.The fees paid for his education can get me a rebate under Section 80C. Can I still claim a rebate under Section 80E?
—P S Gulati

Yes, you can claim deduction for the full amount of interest paid on a loan taken to pay for the higher education of your son under Section 80E, from financial year 2007-8. You can also claim deduction for the tuition fees paid by you to the university under Section 80C of the Income Tax Act, up to a maximum amount of Rs 1 lakh.

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