Tax Advice

New Delhi: Advice by SC Vasudeva

Q. I am a senior citizen and Govt. pensioner. My son is completely handicapped (means 100 per cent). Please intimate whether I am entitled to rebate of Rs 50,000 for the year 2005-06 for handicapped dependent or Rs 75,000. Also confirm the I.T. exemption of senior citizen, whether it is Rs 1,85,000 or Rs 2,35,000 or Rs 15,000 tax.
- B.K.Chopra, Chandigarh

A. You are entitled to a deduction under section 80DD of the Act, if you have incurred an expenditure for the medical treatment (including nursing), training and rehabilitation of a dependent being a person with a disability. The deduction to the extent of Rs 50,000 is allowable in case the dependent is suffering from a disability and Rs 75,000 if he is suffering from a severe disability. The Income-tax return is to be accompanied with certificate in from 10-IA duly certified by a medical authority as defined in clause (p) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act 1995.

In case of a senior citizen, the Finance Act 2006 provides a limit of Rs 1,85,000 being the maximum amount up to which is not chargeable from a senior citizen.

Section 80U

Q.  With effect from 01.04.2004, Section 80U has become rather complicated, even with regard to assesses with permanent disability. For definition of “Medical Authority” and “form and manner” of obtaining a medical certificate, one has to refer to two other acts and a number of Gazette notifications not easily available. I will be grateful for following classifications:

1. What precisely is “Medical Authority”? Is an army Medical Unit included in the definition of the turn? )I am an ex-serviceman).
2. Is a fresh medical certificate required to be obtained (and attached to the Income tax return) every year, even in case of permanent disability, which does not require periodical disability, which does not require periodical re- assessment?.
3. In what form is the medical certificate to be obtained, is Form 101 to the Income-tax Rules 1962 to be suitably modified for this purpose?

- K.P. Anand, Hissar

A. (a) Section 80U of the Income-tax Act 1961 (the Act) defines the term ‘medial Authority’ as under:
Medical Authority” means the medical authority as referred to in clause (p) of Section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act 1995 (1 of 1996), or such other medical authority as may, by notification, be specified by the Central Government for certifying “autism”, “cerebral palsy”, “Multiple disabilities”, “Persons with disability” and “severe disability” referred to in clauses (a),(c), (h), (j) and (o) of Section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999).

Section 2 (p) of the Persons With Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act 1995, defines medical authority as any hospital or institution specified for the purpose of that Act by notification by appropriate government.

The term appropriate government under the aforesaid Act means -

1. In relation to the Central Government of any establishment wholly or substantially financed by that government, or a Cantonment Board constituted under the Cantonment Act, 1942 (2 of 2 1924).
2.  In relation to a state government or any establishment wholly or substantially financed by that government or any local authority, other than a Cantonment Board, the state government;
3. In respect of the Central Co-ordination Committee and the Central Executive Committee, the Central Government.
4. In respect of the State Co-ordination committee and the State Executive Committee, the state government.

It would thus be observed that any establishment wholly or substantially financed by a Cantonment Board would be a medical authority specified under Section 2 (p) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act 1995.

It would thus be essential for you to check up the Army Medical Unit as to which of the Army hospital which is financed (wholly or substantially) by the Cantonment Board, has been so specified for the purpose of certifying disability as well as serve disability.

(b) Sub rule 3 of Rule 11 A of the Income-tax Rules 1962 (the Rules) provides that where the condition of the disability is temporary and requires reassessment after a specified period, the certificate shall be valid for the period starting from the assessment year relevant to the previous year during which the certificate was issued and ending with the assessment year relevant to the previous year during which the validity of the certificate expires.

This Rule, therefore, gives an indication that in case of permanent disability it may not be necessary to provide a fresh medical certificate every time since the certificate itself would indicate the fact of permanent disability.
(c) The relevant from is 10-IA as prescribed in Rule 11 A of the Rules.

IT return

Q.   I am retired Army officer getting disability pension for life. As per Central Board of Direct Taxes latter No. 200/50/99-IIA-I dated 2 July 2002. My disability as well as service pension is totally exempted from Income-tax, and income from other source did not quality for I.T. My age is 70 years.

Till last year I was filling my I.T. return only under those six conditions i.e. like keeping telephone, own house, foreign visit etc. Since this condition has been waved off by Govt. recently and my pension is exempted from I.T. Income from other source does not quality for I.T. required to file income tax return.
- Lt. Col S.S. Chhina (retd), Mohali

A. The fact that disability pension is exempt from tax is evident from the circular attached along with your letter. In case of person, whose total income before allowing the deductions under chapter VI-A of the Act does not exceed the maximum amount charge required to file a return of income. The limits so prescribed by the Finance Act 2006 are as under:

1. Senior citizen: Rs 1,85,000.
2. Working women who is not a senior citizen Rs 1,35,000.
3. All other cases: Rs 1,00,000.

You are not required to file a return of income in case you satisfy the above condition.

Source: Deduction up to Rs 75,000 admissionable for severe disability. The Tribune, Daily, New Delhi, 20 November 2006.