Rebates
Querist :
Anonymous
(Querist) 04 July 2011
This query is : Resolved
Dear Sir,
Pl guide whether an employee is eligible to claim following rebates:
1. Sec 80E (Interest on Education Loan of his/her ward re-payed).
2. Sec 80D (Medical Insurance Amount paid towards Insurance of his/her ward).
In the circumstances that the ward(s) of the employee are employed.
Please guide.
A V Vishal
(Expert) 04 July 2011
80E. (1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his relative.
From above main points to avail the deduction are:
Eduction loan should be taken by Assessee.
The amount eligible for deduction is repayment of eduction loan interest.
There is no limit for amount of repayment of interest.Unlimited amount of interest can be deducted under this section.
This deduction is available in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest is paid by the assessee in full, whichever is earlier.
Initial Assessment year means previous year in which assessee starts paying the interest amount.
The loan should be taken for the purpose of higher eduction,and higher eduction means " any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognised by the Central Government or State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority to do so;
The loan should be taken from any financial institution or any approved charitable institution.(in simple main Banks are covered)
The loan should be taken for higher study of himself or studies of relative
Relative under this section means the in relation to an individual, means the spouse and children of that individual the student for whom the individual is the legal guardian.
Earlier to previous year 2006-07 the above deduction is available for loan taken and repaid by the assessee himself for his studies only but after finance act 2007 ,"the deduction is available for the purpose of higher education of his relative also.relative, in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian.
There is no deduction available for repayment of principal ,this deduction is available to only for interest repayment.
This deduction is available for individual only and not for other type of assessee .
The loan should be for pursuing higher studies means loans taken not only for tuition or college fees but also loan taken other incidental expenses for pursuing such studies like hostel charges,transport charges etc etc is also covered under this deduction,There is no condition that the course should be in India .
80 E (deduction on Interest on study loan) was available to parents and person himself but now after finance act 2009 it is available to Legal guardian also.
A V Vishal
(Expert) 04 July 2011
Deduction under section 80D is available for medical claim policy By individual for family and HUF for their members . Other details regarding 80D and medical insurance there under is given below
Addition to section 80 C:Section 80D is available other than 100000 deduction available under 80C for life insurance,ppf,gpf,tuition fee,ULIP,House loan repayment etc.
Insurer covered:This deduction is available for medical claim policy which should be framed in this behalf by
by GIC(General insurance Corporation) or by any other insurer but approved by IRDA(Insurance Regulatory Development authority)
Available to :Deduction is available to
Individual (resident or non resident ,Indian Citizen or foreign citizen)
HUF(Hindu undivided Family may be resident or non resident)
Mode of payment:Insurance Premium should be paid by any mode other than by Cash .Means if insurance premium is paid by cash then no deduction is available.Before Assessment year 2008-09 ,only payment by cheque was allowed under this section but from Ay 2008-09 onwards the deduction is allowed by other mode also like online payment which is now a days is very popular or by credit card is also allowed.
Out of Income :The amount should be paid out of the income chargeable to tax.
Proposer of the policy is not must:The premium is to be paid to effect or keep inforce insurance policy ,there is no condition that assessee should be the proposer of the policy ,
Partly contribution: Assessee can partly contribute the premium amount but amount should be paid directly to insurance company and paid through mode other than by cash (see example)
Insurance cover on?:First deduction given below :Insurance Premium may be paid for medical claim insurance policy for assessee himself or spouse or dependent children or any combination of three.
Addition for parents:Second deduction given below:Insurance premium may be paid for medical claim insurance for assessee parents (father or mother or for both)
Deduction upto 40000:Theoretically ,maximum deduction can be claimed for Rs 40000.(detail as given below)
Amount Of deduction : Two type of Deductions are available to Individuals under this section from Assessment year 2009-10
Deduction on Medical insurance premium paid for himself,spouse,dependent children =Rs 15000 maximum.
Deduction on Medical insurance premium paid for parents ,whether dependent on assesee or not =Rs 15000 maximum
Deduction to HUF: Deduction to HUF is available on insurance premium paid for policy taken for of any member of the HUF
Addition deduction for Resident Senior Citizen:In addition to two point above, additional deduction of Rs 5000 is available where assessee or his spouse (wife or husband) or dependent parents or any member of the family in case one and father or mother is a resident in India and a senior citizen in case two.And same in the case of HUF assessee if policy has been taken on member which is senior citizen than additional Rs 5000/- deduction is available also to HUF.
Senior citizen means who is at least of 65 year of age or more at any time during the previous year.
Example : An individual assessee pays (through any mode other than by cash) during the previous year medical insurance premium as under
Rs 12000/- to keep in force an insurance policy on his health and on his wife and dependent children
Rs 17000/- to keep in force an insurance policy on the health of his parents.
According to above provisions he will be allowed of Rs 27000/-(12000/- +15000/-) if neither of his parents is senior citizen .however if any of his parent is a resident senior citizen ,he will be allowed a deduction of 29000(12000+17000) .whether the parents is dependent or not is not a consideration for deciding the deduction under section 80D(from assessment year 2009-10 )(previous year 2008-09)
Further, in the above example ,if cost of insurance on the health of the parents is 30000/- out of which Rs 17000/- is paid (by any non cash mode) by the son and rs 13000/- by the father (who is senior citizen), out of their respective taxable income ,the son get the deduction of Rs 17000/- (in addition to deduction of Rs 12000/- for the medical insurance on self and family) and the father will get deduction under section Rs 13000/-
(Example as given in Finance Act 2008)
Hope it will be now easy to understand the section 80D deduction.
