DTC Bill promises to cheer up salaried class
Tax sops on medical expenses, tuition fees proposed
The much-talked about Direct Tax Code (DTC)Bill promises to cheer up salaried class.
It proposes to further enhance the scope for income tax exemption through deductions from gross taxable income on account of savings and expenses like medical treatment and children’s education.
As per the provisions in the DTC Bill, which seeks to replace the archaic Income Tax Act, 1961, with effect from April 1, 2012, one can avail of tax exemption benefits of Rs 50,000 a year on medical reimbursement against the current ceiling of Rs 15,000.
“This is a welcome move. The proposed hike in cap on medical reimbursement up to Rs 50,000 per year for consideration of deduction from taxable income will give some relief to the middle income group given the fact that the cost of medical treatment has gone up considerably,”noted tax expert and the President, All India Tax Advocate Forum (AITAF) M K Gandhi told Deccan Herald.
The DTC Bill also seeks to provide a separate deduction for interest paid on education loans. Of course, the bill does not specifically mention the exact amount eligible for deduction from taxable income on account of interest paid on education loans.
The proposed separate deduction for interest on education loan is over and above tax benefits made available for expenditure on tuition fees of children, the AITAF chief, who has analysed the DTC Bill, said.
Incentives
The DTC Bill proposes tax incentives for individuals up to Rs 50,000 for expenditure on tuition fees of children, pure life insurance premia and health insurance payment. Currently, tax exemption on expenditure up to a maximum of Rs 24,000 per annum can be availed of on account of tuition fees of children.
The bill also proposes separate deduction for payment of expenses of disabled persons or disabled dependents.
Under the overall head of tax exemption on account of savings made under various saving instruments like provident fund, pension fund and pure life insurance policies as well as expenses on health insurance payment and children’s tuition fees, the bill proposes enhanced benefits to tax payers, Gandhi said.
As per the bill, the deduction for individuals on account of tax incentives will be up to Rs 1 lakh for approved long- term savings like provident fund, superannuation fund, gratuity fund and pension fund.
The bill also proposes deduction up to Rs 50,000 for expenditure on tuition fees of children, pure life insurance premium and health insurance payment. Currently, the maximum amount of deduction on account of tax incentives allowed on various heads is up to Rs 1,35,000, the AITAF president explained.
This includes Rs 1 lakh on account of all sorts of savings including payment of life insurance premium and children’s tuition fees plus up to Rs 15,000 on health insurance payment.
Besides, this investment up to Rs 20,000 on infrastructure bonds is exempted from the income tax. The bill does not make clear whether it proposes to give this additional tax benefit of Rs 20,000 over and above Rs 1.5 lakh proposed on investments in other savings as well as specified expenses on tuition fees of children, pure life insurance premium and health insurance payment, Gandhi said.
The bill also proposes to exempt from tax on payment up to Rs 1.5 lakh for interest paid on housing loans.
“This will benefit the salaried class who take loans to buy residential units for self occupation,” the AITAF said.
