NOT RECEIVING H.R.A.- ENJOY THE DEDUCTION TOWARDS RENT PAYMENT U/S 80GG

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not receiving HRA
Query 1]
I have read about availability of Deduction u/s 80DD of the Income Tax Act-1961 in your previous column of Tax Talk. Sir, I need your help. My daughter is mentally challenged (down syndrome). Can I get deduction under 80 DD? My company’s accountant has confirmed the availability of deduction up to Rs.1,00,000/- subject to submission of medical bills for this benefit whereas some one told me to merely submit the medical certificate for the deduction .What is your opinion? I shall be thankful if you can highlight the provisions of section 80DD. Whether Bills are required for claiming the deductions? [prhatwar@yahoo.com]
Opinion:
  1. Deduction under this section is available to an individual/HUF who Incurs any expenditure for the medical treatment, training and rehabilitation of a disabled dependant; or
    – Deposits any amount in schemes like Life Insurance Corporation for the maintenance of a disabled dependant. An annuity or a lump sum amount is paid to the dependant or to a nominee for the benefit of the dependant in the event of the death of the individual depositing the money, from the said scheme,
  2. A deduction admissible u/s 80DD is of Rs 50,000/- in normal course. Where the dependant is a person with a severe disability, a higher deduction of Rs 1,00,000/- is allowed.
  3. An individual has to get a copy of the certificate issued by the medical board constituted either by the Central government or a state government in the prescribed form.
  4. The term ‘dependent’, as mentioned above, refers to the spouse, children, parents and siblings of the assessee who are dependant on him for maintenance and who themselves haven’t claimed a deduction for the disability in computing their total incomes u/s 80U.
  5. The dependant for the purpose of section 80DD has to be a “person with a disability”.
  6. Disability” for the purpose of section 80DD have been assigned the same meaning as given in clause (i) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 [and includes “autism”, “cerebral palsy” and “multiple disability” referred to in clauses (a), (c) and (h) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999]. So effectively only expenditure on dependent with specified disability is covered by section 80DD and not on all the disabilities.
  7. Disability” under  section 2(i), as mentioned above, means 40% & above of the following sufferings:
  1. blindness;
  2. low vision;
  • leprosy-cured;
  1. hearing impairment;
  2. locomotor disability;
  3. mental retardation;
  • mental illness;
    [“Mental retardation” means a conditions of arrested or incomplete development of mind of a person, which is specially characterized by subnormality of intelligence]
  1. The deduction available is a fix deduction and is irrespective of the amount actually incur or deposit. As such, no bills/vouchers are require to claim deduction u/s 80DD.
Query 2]
I am working in company situated in MIDC, Butibori, Nagpur & have some queries related to claim of HRA exemption. Few of our employees have been appointed as Retainers in our company & we are paying them consolidated amount as salary against the Bill Raised by them for rendering the services. They are finalizing their IT returns for the previous year 2009-10.
Some of them are living in Rented House & wants to claim the deduction against the rent paid by them. But as we are not paying any HRA as component of salary to them, they can not follow the normal procedure claiming the deduction prescribed U/s 10. Kindly advice us what are the rules to claim the HRA  Deduction in such cases as  IT Return is to be submitt before 31.07.10. [prasad.naib@gmail.com]
Opinion:
An individual who is not in receipt of HRA from the employer can claim deduction of rent from its income u/s. 80GG of the Income Tax Act. Employees, in your case,  may claim deduction u/s 80GG of the I.T.Act-1961.The condition precedent to claiming deduction under this section are that:
  1. He has to complete the declaration in Form No. 10BA.
  2. He or his minor child , spouse or HUF of which he is a member , should not be owner of a house at the place where he ordinarily resides or performs his duties ; or he should not be owner of any house at any other place, the income therefrom is to be determine under section 23(2) (a) or, as the case may be, under section 23(4) (a) ( i.e.income from self-occupied house property )
    Amount of deduction – The deduction admissible shall be the lower of the following:
    (i) house rent incurred in excess of 10% of  “total income”; or
    (ii) Amount at 25% of “total income”; or
    (iii) Rs. 2000 per month
The term “Total income” means total income after allowing all deductions expect the one provided under this section itself.
Query 3]
I have made a Long Term Capital Gain from Sale of Equity Shares of a Private Ltd Co. during FY 2010-11. Kindly advise Rate of Tax on this LTCG without indexation. Also advise whether indexation is optional or otherwise. [dnj27@rediffmail.com]
Opinion:
Long term capital gain arising on transfer of shares of private limited company shall be taxable u/s 112 @ 20%. There is no concessional rate of capital gain tax if the indexation is not do in the present case.
Query 4]
I am an employee of a Government company. Please give details of schedule EI( details of exempt income) of ITR-2
a) For interest income, what is the taxable limit?
b) For dividend income, what is the taxable limit?
c) For long term capital gains tax, How do I show my shares of a company bought for Rs 6000/- in 1993 & presently valued for nearly Rs. 1 Lacs. Till now, I have not shown any share income in returns form. [nilay_am@rediffmail.com]
Opinion:
  1. There is no separate basic exemption limit applicable to interest income as such. In schedule ‘EI’ of ITR, income via interest from PPF/ Interest-free Bonds etc which is exempt from income tax u/s 10 are require to reported.
  2. Dividend income on which Dividend Distribution tax is pay by the company is exempt u/s 10(34).
  3. Mere appreciation in the value of shares held by you doesn’t make you liable for income tax payment. Also, the same is not require to be show in the ITR-2.
not receiving HRA
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