The Hindu Business Line : Deduction under Section 80 DDB

Section 80 DDB allows a deduction to a resident individual if he incurs expenditure on medial treatment of a disease or an ailment specified by the board if the treatment is for himself or a dependent of his.

The deduction will be the amount actually incurred or Rs 40,000 whichever is less (Rs 60,000 if the patient is a senior citizen).

For claiming this deduction, the assessee must furnish a certificate in the prescribed form from a specialist working in a Government hospital.

The diseases and ailments are prescribed in Rule 11DD are: Neurological diseases where the disability level has been certified to be of 40 per cent and above; Dementia; Dystonia Musculorum Deformans; Motor Neuron Disease; Ataxia; Chorea; Hemiballismus; Aphasia; Parkinsons Disease; Malignant Cancers; Full blown acquired immuno – deficiency syndrome (AIDS); Chronic renal failure; Hematological disorders; Hemohilia; Thalassaemia.

Unless the ailment which is suffered for undergoing the surgery and for which the surgery was undergone falls within these classifications, the deduction under Section 80 DDB cannot be availed of by you. Apparently, the said ailment will not fall within the classifications in the said rule and stated above and therefore no deduction can be claimed by you.

I am working in HCL Technologies and I am also doing B.E. course (part-time) at Anna University, Chennai.

I am paying a fees of Rs 26,610 per annum as tuition fees. Will I be able to get any tax benefit in respect of the fees paid by me? — Anthony Samy

No deduction can be claimed under Section 80C in respect of the fees paid to the University for doing a part time course in B.E. Section 80C only allows a deduction in respect of the tuition fee paid to an university, college or school or other educational institution situated in India for full time education of any two children of an individual.

Since you have stated that you are not undergoing full time education and since the fees is paid for your education, the said fees paid to the university will not qualify for deduction under Section 80C.

No deduction is provided for in respect of the said expenditure under any other Sections.

I am working in USA under H1-B Visa since June 2006 and I will be staying there till June 2008.

Though I do not have any salary income in India for the financial year 2007-08, I have an interest income of Rs 10,000 earned through a bank.

I had lent a sum of Rs 4 lakh to my friend, who had invested the money in a property in his name and also earned a profit of Rs 4 lakh from the sale of the said investment. He is to pay me a sum of Rs 2 lakh as interest towards the sum lent by me. I understand that my gross total income for the year will be Rs 2.10 lakh.

What will be my tax implications if I distribute my Rs 1 lakh income in the following manner: Rs 70,000 in public provident fund; Rs 10,000 in equity linked savings scheme and Rs 20,000 in life insurance policies. — Dinsil

From the facts given by you it is apparent that for the financial year 2007-08 i.e. the assessment year 2008-09 you will be a non resident in accordance with Section 6 of the Income Tax Act.

This being so, the income of Rs 2.10 lakh received by you in India will alone be taxable in India.

Against such income of Rs 2.10 lakh you will be entitled to claim a deduction of Rs 1 lakh under Section 80C in respect of the investments/payment made by you and stated by you in your query.

The balance of total income for the assessment year 2008-09 will be Rs 1.10 lakh.

The basic exemption for an individual being Rs 1.10 lakh, no tax will be payable by you for the said assessment year.

I propose to buy a piece of land and also construct a house. I wish to take a loan for both (land and house) from a bank.

Will I be able to claim the tax benefits on both the loans taken from the bank? — Sobhan

There should be no difficulty on claiming the interest on loan taken for the construction of the house as a deduction under Section 24 and also the deduction under Section 80C in respect of the principal repayment of the loan taken for the construction.

As regards the interest on loan taken for the purchase of a plot on which, a house is to be constructed, the same should also qualify for the deduction under Section 24 and further that the principal repayment of such loan should also qualify for the deduction under Section 80C.

This view has been expressed for the reason that it would only be fair that this view be taken given that the objective of purchase of the plot is to be build a house and further that a house cannot normally be purchased or constructed without purchase of a plot of land.

In this context reference had also been made to Circular No 667 dated October 18, 1993, of the board rendered in the context of Sections 54 and 54F, which are exemptions available in computing capital gains.

Under this circular, the board has clarified that the cost of the plot on which a residential house is situated should also be taken into account in computing the amount to that is eligible for exemption under Sections 54/54F.

These sections provide for an exemption on reinvestment in a residential house. Given the background, it may be clarified that no deduction can be claimed under Section 24 until such time as the construction of the house is complete.

The interest up to the end of the previous year immediately preceding the previous year of completion of construction will however qualify as pre-construction period interest which can be claimed as a deduction in 5 equal annual instalments commencing from the year in which the construction of the house is completed but within the overall ceiling limits if the house is self occupied.

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