80CCC, 80CCD, 80D, - Taxation | Income Tax for assessment (Inter Level) PDF Download

Section 80CCC. Contribution to Pension Fund of Insurance Companies

1. Any individual can claim deduction. Such individual may be Resident in India or NR in India. He may be
an Indian citizen or a foreign citizen.

2. Name of the scheme: Where the deposit is made in any
(a) Pension plan of Life Insurance Corporation (LIC) also known as annuity scheme; or
(b) Pension Plan of any other Private Insurer as approved by Controller of Insurance.
for receiving pension from the fund set up by the said corporation.

3. Amount of deduction allowed : Contribution made or Rs. 1,50,000 whichever is lower is allowed as deduction. However overall deduction u/s 80C + 80CCC + 80CCD (Employee’s contribution) cannot exceed Rs. 1,50,000.

4. Other points
Note 1: The payment or deposit should be made out of income chargeable to tax. (Taxable Income)
Note 2: Lumpsum withdrawal and monthly withdrawal fully taxable both in the hands of assessee or nominee.

P1 a. Deduction u/s 80CCC is available to HUF. (True or False)
b. Deduction u/s 80CCC is available only to resident Individual. (True or False)
c. Mr. X borrowed Rs. 1,10,000 and contributed Rs. 60,000 towards PPF and Rs. 50,000 towards pension plan of HDFC. How much deduction is allowed u/s 80C and 80CCC.

Solutions
a. False. Deduction u/s 80CCC is available only to Individual.
b. False. Section 80CCC is available to both Resident and Non Resident.
c. Rs. 60,000 deduction is allowed u/s 80C and no deduction is allowed u/s 80CCC.

P2 : X, Non-resident individual, furnishes following information. Compute deduction allowed u/s 80C to 80U.

Section 80CCD. Contribution to Pension Fund set up by Central Govt. (NPS)
1. Who can claim deduction : Any Individual (both Govt. employee and Private employee) and self employed person.
2. Name of the scheme : New Pension scheme set up under NPS trusts / Atal Pension Yojna
3. Amount of deduction allowed : The deduction allowed

Note 1: Lumpsum withdrawal fully taxable except where it re-invests in annuity.
4. S 10(12A) : Any payment from the National Pension System Trust to an employee on closure of his account or on his opting out of the pension scheme referred to in section 80CCD, to the extent it does not exceed 40% of the total amount payable to him at the time of such closure or his opting out of the scheme;
5. 80CCD(3). Amount received by nominee on the death of an assessee shall be fully exempt from tax.

P1 : Mr. X, a Central Govt. employee, draws following emoluments. Basic Salary Rs. 30,00,000 p.a. Both the employer and employee contributes 8% of salary annually towards pension scheme of the Central Govt. Other Income 50,000. Compute total income.
Ans: 28,50,000

P2 : Mr. X, a Central Govt. employee, draws following emoluments. Basic Salary Rs. 30,00,000 p.a. Both the employer and employee contributes 12% of salary annually towards pension scheme of the Central Govt. Other Income 50,000. Compute total income.
Ans: 29,10,000

P3 : Mr. X, a Central Govt. employee, draws following emoluments. Basic Salary Rs. 6,000 p.m. Dearness allowance as per the terms of employment Rs. 2,000 p.m. Both the employer and employee contribute Rs. 12,000 annually towards pension scheme of the Central Govt. Compute total income.
Ans: 88,800.

Section 80D. Contribution towards Health Insurance Premium

1. Who can claim deduction : An individual or HUF who contributes towards health insurance premium can claim deduction.
Such individual should take health insurance on self health or the health of his family members. (Family means self, spouse, dependent children and parents whether dependent or not)
In case of HUF who takes insurance on the health of any member of its family. The residential status of an Individual or HUF may be R-OR or R-NOR or NR in India whether Indian citizen or foreign citizen.

2. Name of the scheme : Where the health insurance premium is paid in any
(a) Mediclaim of General Insurance Corporation (GIC) which is approved by Central Govt.; or
(b) Health Insurance Plan of any other Private Insurer which is approved by the Insurance Regulatory & Development Authority.

3. Amount of deduction allowed : Deduction allowed is
(a) Upto Rs. 25,000 paid during the relevant PY in case of insurance is for the benefit of self, spouse and dependent children. (Rs. 30,000 in case any of them is a resident senior citizen aged atleast 60 years) +
(b) Upto Rs. 25,000 paid during the relevant PY in case of insurance is for the benefit of his parents dependent or not dependent (Rs. 30,000 in case any of them is a resident senior citizen aged atleast 60 years)

Note 1 : Any payment made on account of medical expenditure in respect of a resident very senior citizen, if no payment has been made to keep in force an insurance on the health of such person, as does not exceed upto Rs. 30,000 shall be allowed as deduction under section 80D.

4. Deduction to individual for preventive health check up is also allowed to the extent of Rs. 5,000. And extra deduction of upto Rs. 5,000 for parent whether dependent or not dependent. (This payment even if made in cash deduction is allowed).

Note 1 : Overall deduction including preventive health check up can be of maximum Rs. 25,000 / Rs. 30,000 / Rs. 50,000 / 55,000 or Rs. 60,000 as the case may be.
Note 2 : If health insurance premium is paid in cash deduction is not available.
Note 3 : The payment or deposit should be made out of income chargeable to tax. (Taxable income)

w.e.f. AY 11-12
Any contribution paid to Central Govt. Health Scheme (CGHS) / similar health schemes by an individual, is eligible for deduction.

P1 :
1. The employer can claim deduction u/s 80D for taking health insurance of employees. (True or False)
2. Can an employee claim deduction for the payment of health insurance premium made by the employer in his behalf ?
3. Mr. X takes health insurance of his Non-Resident father aged 66 years. Maximum deduction available is Rs. 30,000 since his father is a senior citizen. (True or False)
4. How is family u/s 80D different from family as stated in provisions for medical facilities?

Solution
1. False, since deduction u/s 80D is available if insurance is taken on health of family members. However employer can claim deduction u/s 36 as business expenditure.
2. No, since section 80D says the payment should be made out of income chargeable to tax and mediclaim insurance premium paid by employer is exempt in the hands of employee.
3. False. To claim deduction of Rs. 30,000 two conditions have to be satisfied. First he should be senior citizen and secondly his residential status should be Resident in India therefore Rs. 25,000 deduction is allowed.
4. Section 80D : Family means self, spouse, dependent children or parents. Medical facilities : Family means self, spouse, dependent or not dependent children or dependent parents.

P2: (A) X, resident individual, furnishes following information. Compute deduction allowed u/s 80D.

(B) Compute deduction u/s 80D if the age of X’s father is 59 years?
(C) Compute deduction u/s 80D if Mediclaim insurance premium of GIC is paid out of agricultural income?
(D) Compute deduction u/s 80D if Mediclaim insurance premium payment is made in cash?
Ans: (A) 27,000; 33,000; 29,000; 31,500; (B) 27,000; 23,000; 29,000; 30,500; (C) Agricultural income is exempt
from tax and since the payment should be made out of income chargeable to tax therefore deduction u/s 80D is
not available; (D) deduction u/s 80D is not available.
 

P3 : Mr. Mathur, aged 52 years, paid medical insurance premium of Rs. 13,000 to insure his health as well as the health of his wife, Roli. He also paid medical insurance premium of Rs. 28,000 during the year to insure the health of his mother, Smt. Lakshmi, aged 75 years, who is not dependent on him. He contributed Rs. 5,200 to Central Government Health Scheme during the year. He has incurred Rs. 4,500 in cash on preventive health check-up of himself and his spouse and Rs. 5,000 by cheque on preventive health check-up of his mother. Compute the deduction allowable under section 80D.
Ans: 52,700.

P4 : Basic Salary Rs. 6,00,000. LIP paid by employer on behalf of employee Rs. 7,000. Staff group insurance paid by ER Rs. 4,000. Accident Insurance premium paid by ER Rs. 1,000. Mediclaim insurance premium paid by employer on behalf of employee Rs. 6,000. Other Income Rs. 3,00,000. PPF contribution Rs. 90,000. Compute total income.
Ans: 8,10,000.