The Hindu Business Line : Which treatments are exempt?

Three months ago, I had spent Rs 32,000 towards the laser surgery of my father’s eyes. Will the amount spent by me towards the laser surgery be eligible for deduction under Section 80DDB or under any other Section? — Komaravel K.

Section 80DDB 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 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, haemiballismus, aphasia, Parkinsons disease, malignant cancers, Full blown acquired immuno-deficiency syndrome (AIDS), chronic renal failure, haematological disorders, haemophilia and 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 80DDB cannot be availed of by you. Apparently, the said ailment, laser surgery in the eyes, will not fall within the categories mentioned under the said rule and therefore no deduction can be claimed by you.

I am drawing a monthly salary of Rs 25,000 and I invest in mutual funds and insurance to claim tax exemption.

My friend has suggested me to invest in real estate, by purchasing a flat. If I take a loan for Rs 10 lakh, I will be paying around Rs 10,000 as EMI. Will I be able to get any tax benefit in respect of the EMI paid by me? — Nowsath

The principal repayment out of the EMI will qualify for deduction under Section 80C in computing your total income. The interest payment, out of the EMI, will qualify for deduction under Section 24 in computing your income from house property.

If the property is self occupied, and assessed as such, the maximum deduction that can be claimed in respect of the interest would be Rs 1.5 lakh. While if it is let out, the deduction in respect of interest can be claimed without any ceiling limit.

I am working in Bangalore and staying in a rented house. I also own a house, which is occupied by my parents.

Since both the houses are in Bangalore, can I get exemption under Section 10(13A) in respect of the HRA, as well as the deduction in respect of interest and principal repayment towards my housing loan? — Mali

There should be absolutely no difficulty in claiming the exemption under Section 10(13A), in respect of the house rent allowance. The only condition for claiming this exemption is that you should be in receipt of HRA and should also be paying rent.

Therefore, so long as you are in receipt of HRA, this exemption should be available to you.

In so far as claiming the tax benefits under Section 24 and under Section 80-C in respect of the interest on the housing loan and the principal repayment on such loan, there should again be no difficulty in such claim. The issue that may, however, arise is whether the property in which your parents are staying can be treated as self occupied so as to take the net annual value of the same as NIL.

It appears that this should also be possible and it is not required that the assessee himself should be in occupation of the house property to get this benefit.

As long as his/her parents are living in such house property and there is no rental income earned, the same should be possible.

My father is 65 years old and is suffering from ataxia. He is being treated at private and government hospitals.

Can I claim deduction under Section 80DDB for his treatment and if so what would be the eligible amount of deduction? — S. Ramesh

Section 80DDB read with Rule 11DD provides for claiming a deduction in respect of medical treatment of certain diseases and ailments. The treatment undergone by your father for ataxia fits into the diseases and ailments mentioned in the said Rule.

You will, therefore, be able to claim deduction in respect of the expenditure on medical treatment.

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).

I constructed a house in 1984 at a cost of Rs 1.75 lakh. I am planning to sell the same for Rs 18 lakh. I intend to purchase a new house only after two years.

Can I invest the money in fixed deposits until that time or what could be done to avoid capital gains tax? — B.N. Sharma

Section 54 allows an exemption on the sale of a residential house and reinvestment in another residential house.

The reinvestment in the new residential house should be by way of purchase within one year before or two years after the date of transfer or by way of construction of the new residential house, which should be completed before the expiry of three years from the date of transfer of the capital asset. This exemption is available subject to satisfying the following conditions:

The assessee is an individual or HUF.

The gain arises from the transfer of a residential house being a long-term capital asset.

The income from such asset is chargeable to tax under the head income from house property.

The exemption would be available to the following extent:

If the amount invested is more than or equal to the capital gain, the whole of the capital gain.

If the amount invested is less than the capital gain, then to the extent invested.

For the purpose of claiming the exemption under Sections 54, the amount not invested towards purchase of the new asset within one year before the date of transfer or which is not utilised for the purchase or construction of the new asset before the due date for furnishing the return of income for the relevant assessment year may be deposited before the due date for furnishing the return of income, in any bank or institution in a specified account known as “Capital Gains Account Scheme”.

The proof of having so invested the same should be furnished along with the return of income and if this is done, this amount invested will be deemed to have been utilised for the purpose of purchase or construction of the new asset.

The amount so invested may be withdrawn for the purpose of purchase or construction of the new asset within the specified time.

If within three years from the date of transfer of the original asset, the money so invested is not utilised for the purpose of investment in the new asset, the same shall be treated as income of the year in which the three year period from the date of transfer of the original asset expires.

You cannot avoid capital gains tax if you invest the sale proceeds in fixed deposits.

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