Up to Rs 50k rebate for elders u/s 80D

SC Vasudeva

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Q. Kindly refer to queries published in The Tribune on 29/4/19 and 6/5/19 regarding deduction under Section 80D of the Income Tax Act. In this context, I may mention that a Central Govt employee/pensioner is also eligible under Central Govt Health Scheme (CGHS) for cashless OPD and indoor treatment from empanelled private Hospitals. During this treatment, sometimes an employee has to spend over and above the cashless package of CGHS Scheme being of essential/better nature as per advice of attending doctor of empanelled hospital. Can this amount be deducted/ exempted to the extent of Rs 50,000 or so under the I-T Act. For example, I had spent Rs 30,000 duly receipted over and above cashless package of CGHS in respect of eye operation done in October and November 2018. Can I claim deduction of Rs 30,000 under Section 80D from my total income for FY 2018-19 while filing the I-T teturn. I am a senior citizen of 64 years. — SS Bedi

A.   Maximum deduction allowable to a senior citizen under Section 80D of the Income Tax Act is Rs 50,000 which includes any contribution made to the Central Government Health Scheme (CGHS) or any other medical expenditure incurred for his treatment.  Therefore, in case the contribution paid by you towards CGHS and the amount incurred on eye operation exceeds Rs 50,000, the allowable deduction would be limited to Rs 50,000 only.

Q. My father-in-law had a property (residential house of 1,000 sq yards) in Chandigarh. He had eight children. After his death, my wife got 1/8th share in 2005. She died in 2017 and after her death, ownership rights of her share was transferred to me and my two sons. Now, we have sold our share for Rs 1.01 crore and received Rs 34 lakh each (approximately). From the deal, Rs 1,01,000 was deducted and deposited as TDS (income tax) in the form 26 QB (16 B). My queries are as follows:

1. What is the tax liability on each of us on sold share of the house and the amount (Rs 34 lakh) received by each one of us?

2. In which manner the amount is to be utilised?

3. Is TDS deposited refundable and how?

4. Which IT return form needs to be filed? We are all government servants and taxpayers.

— Tarlok Singh

A.    Your queries are replied hereunder:

(a)  The tax liability in respect of the capital gain arising on the sale of 1/8th share in immoveable property can be computed in case either the cost of the immoveable property or fair market value of the property as on 1.4.2001 is available. The fair market value as on 1.4.2001 is relevant in case the immoveable property was purchased/constructed prior to 1.4.2001. In case it was purchased/constructed later, the cost of the immoveable property as on the date of purchase or construction along with the cost of the land as on that date should be available so that benefit of cost inflation index can be availed. The indexed cost or fair market value, as the case may be, has to be deducted from the sale consideration so as to ascertain the amount of long- term capital gain. These details not being available, the amount of capital gain and tax liability thereon cannot be computed.

(b)  Each one of you can utilise the amount of capital gain for the purchase or construction of a residential house in India.  The purchase can be effected within one year before or two years after the date of sale. In case option of the construction is exercised, a residential house will have to be constructed within three years after the date of sale of 1/8th share in immoveable property.

(c) The amount of TDS deposited would be proportionately adjustable against the tax payable by each one of you.

(d) ITR return form will have to be determined on the basis of other income being earned by you and your sons.

Q.   I and my wife are senior citizens. Both of us are assessees. My son, not a senior citizen, is also an assessee. I have following queries on Section 80D. Kindly advise.

I was hospitalised in July 2018. As none of us had any medical insurance, total expenditure of Rs 5,10,625 was incurred on hospitalisation and was paid as follows:

1.   Self: Rs 20,000 by cash

2.   Wife: Rs 90,000 by credit card

3.   Son: Rs 4,10,625 by debit card

According to my understanding of Section 80D, following deductions can be claimed:

A. (i) My son can claim a deduction of Rs 50,000 towards medical expenses incurred by him on his father treatment in AY 2019-20.

(ii) My wife can claim a deduction of Rs 50,000 towards medical expenses incurred by her on her spouse.

(iii) The Act says one can incur cash expenses only on preventive health check-up. But I remember having read somewhere that senior citizens may spend in cash for meeting their medical expenses. Should that be the case, can I claim rebate of Rs 20,000 spent in cash during my hospitalisation and can I also claim another Rs 30,000 spent in cash on medical tests and purchase of medicines for myself and my wife during FY 2018-19. I have all the receipts totaling more than Rs 30,000.

B. My son can claim a total deduction of Rs 25,000 towards medical insurance and preventive health check-up for self (expenses incurred were Rs 27,000 + Rs 4000).

C. Do we need to upload hospital bills and/or proof of payments made by credit/debit card and receipts of purchase of medicines and medical tests (incurred in cash by senior citizens). Please advise.

— Ram Dyal Mahajan

A.   The total expenditure of Rs 5,10,625 has been incurred on your hospitalisation. There was thus no expenditure incurred on preventive health check-up of the parents of the assessee by your son.  The deduction under Section 80D of the Income-tax Act, 1961 (The Act) is allowable to an assessee (whether a senior citizen or otherwise) if the payment has been made in cash only in respect of medical expenditure on preventive health check-up. 

Your presumption with regard to the allowability of the deduction to the extent of Rs 50,000 incurred by a son for the medical treatment of his parent is correct and such an expenditure would be allowable to him as deduction against his total income. Similarly, deduction to the extent of Rs 50,000 would be allowable to your wife being the amount of medical expenditure incurred by her on any member of the family.  Your son can claim deduction of an amount (not exceeding Rs 25,000) towards the amount paid to keep in force an insurance on the health of his parent or parents or any payment made on account of  preventive health check-up.

There is no necessity to upload the bills.  These can be kept ready for being furnished when the department asks.