The Hindu Business Line : Deductions on medical treatment

I am suffering from chronic renal failure and undergoing treatment for the same. I am already getting about 80 per cent of the total money spent for the treatment as reimbursement from my employer.

Will I be entitled to get the benefit of deduction under Section 80DDB? — P.P. Giri

Section 80DDB allows a deduction to an individual or HUF for expenses incurred on the medical treatment of certain diseases and ailments, in case of an individual for himself or a dependant and in case of a HUF for any member of the HUF.

The diseases and ailments are mentioned in Rule 11DD and it also includes chronic renal failure. The deduction under this Section, which is available to a resident of India, restricts the deduction to the amount actually paid or a sum of Rs 40,000 whichever is less and where the person undergoing the treatment is a senior citizen, to the amount actually paid or a sum of Rs 60,000 whichever is less. The Section requires a certificate in the prescribed form to be furnished from a specialist.

This Section further provides that the deduction will be reduced by the amount if any received from an insurer under an insurance or reimbursed by an employer. In your case, since you are reimbursed 80 per cent of the expenses, the balance of 20 per cent of the expenses subject to the monetary limits stated above can be claimed as a deduction.

I understand that deduction in respect of the repayment of principal amount towards housing loan can be claimed up to a maximum of Rs 1 lakh and payment of interest on housing loan can be claimed up to a maximum of Rs 1.50 lakh.

Is it correct? If so, under what Sections of the Income Tax Act, these deductions are available? The loan is in my name and if my brother remits the EMI, will he be able to claim the deductions against his taxable income.

If the same can be done, do I need to give any declaration to make it clear that my brother remits the EMI payments? — Krishna Sharma

You are correct in your understanding that interest on housing loan can be claimed up to a maximum of Rs 1.50 lakh. This ceiling limit would, however, apply only in case where the property is self-occupied and where the loan is taken on or after April 1, 1999, for purchase or construction of the house property and the purchase or construction is completed within three years from the end of the financial year in which the loan was taken.

If the property is self occupied and if these conditions are not satisfied, the deduction in respect of interest would be subject to a maximum limit of Rs 30,000.

If the property is let out, the interest can be claimed as a deduction without any ceiling limit. These are provided for in Section 24 of the Income Tax Act. The principal repayment can be claimed under Section 80C as a deduction provided the loan is taken from the bank or a housing finance company or from the employer or certain other specified institutions.

It may be noted that the deduction under Section 80-C is restricted to a maximum limit of Rs 1 lakh and that this Section provides for a deduction in respect of certain payments and investments, which also includes the principal repayment of housing loan. The deduction under Section 24 in respect of interest and under Section 80C in respect of the principal repayment of housing loan can be claimed only by the owner of the house property i.e. by the person who is to offer the income from the property under the head income from house property and who has taken the loan is also paying the interest and repaying the principal.

In your case, if the loan is taken by you and your brother pays the EMI, the question of claim of these deductions by your brother does not arise, since the loan is not taken by him. This will be so even if you give a declaration that it is only your brother who repays the principal and also pays the interest on the housing loan.

A and B jointly owns house property X and B individually owns house property Y. Both the houses are located in the same city. Can A stay in house Y on payment of rent to B and claim exemption in respect of the house rent allowance under Section 10(13A) despite owning house X jointly with B in the same city. — S.S. Roy

It appears that the point that you are trying to raise is as to whether exemption under Section 10(13A) can be claimed by A even when he already owns a part of the house property in the same city where he has taken the property on rent.

There should be no difficulty on his claiming such exemption. In this connection, you may notice that Section 10(13A) does not place any restriction on the individual claiming the exemption where he already owns a property in the same place or city and where he has also taken a property on rent.

For the purpose of claiming the exemption under Section 10(13A) the requirements are that the individual should be in receipt of house rent allowance and should be actually paying the rent. No further conditions need to be satisfied to claim the exemption.

You may also notice that Section 80GG, which allows a deduction in respect of rent paid in the case of a person being an individual or HUF in certain cases and not being in receipt of house rent allowance, does place a restriction on the ownership of a property by such individual, his spouse or minor child or in case of HUF by any member of the family in the same place where such individual ordinarily resides or performs duties of his office or employment or carries on his business or profession.

The absence of a similar condition in Section 10(13A) would further go to show that the exemption can be claimed even if this condition is not satisfied.