Welfare measures for senior citizens and others

Limits under section 80DDB revised

Under the existing provisions of section 80DDB, a deduction of Rs. 15,000/- is allowed in the computation of total income of an individual suffering from chronic and protracted diseases and terminal ailments or to any individual or HUF, on whom such individual is dependant. Considering the expensive nature of treatment involved is diseases specified in the provision, this limit is proposed to be raised to Rs. 40,000/- with effect from 1st day of April, 2000. The amount of deduction under the amended provision shall be worked out after reducing the amount, if any, received under any scheme by way of medical insurance.

The proposed amendment will take effect from the 1st day of April, 2000 and will accordingly apply in relation to assessment year 2000-2001 and subsequent years.

Deduction for medical treatment and insurance premia etc. raised

Certain measures have been introduced to provide relief to senior citizens. The limit of Rs. 40,000/- under section 80DDB is proposed to be raised to Rs. 60,000/- in case the assessee or the dependent happens to be a senior citizen. Similarly, under the existing provisions of section 80D, a deduction upto Rs. 10,000/- is available for payment to effect or keep in force an insurance on the health of the assessee or his family members. In case the payment to effect or keep in force an insurance on the health of the assessee or his family members. In case the payment is to effect or keep in force an insurance on the health of such assessee or other eligible family members. In case the payment is to effect or keep in force an insurance on the health of such assessee or other eligible family members who are senior citizens, the deduction is proposed to be raised to Rs. 15,000/-

The proposed amendment will take effect from the 1st day of April, 2000 and will accordingly apply in relation to assessment year 2000-2001 and subsequent years.

Exemption of leave salary of non-government employees revised to the limit of salary of ten months

Under the existing provisions the amount of encashment of earned upto a period of eight months is exempt under section 10 (10AA) of the Income-tax Act. Pursuant to recommendation of the Fifth Pay Commission, the limit has been raised to ten months in cases of employees of the Central or a State government.

The limit applicable to non-government employees is also required to be raised as a result of the higher amount being exempt in the case of Central Government employees in consequence to the recommendation of the Fifth Pay Commission.

Since the amendment to Clause (10AA) was necessitated as a result of the recommendation of the Fifth Pay Commission in the case of Central Government employees, which became effective from 1.7.1997, this amendment is also proposed to be retrospectively applicable with effect from 1.7.1997.

Provision under section 80DD modified

Under the existing provision of section 80DD, a deduction for the amount incurred on maintenance of handicapped dependant or payment made for such person under a specified scheme of LIC or UTI is allowed subject to an overall limit of Rs.40,000/-. Reservation have been expressed that the provision in its present from may create difficulties for such assessees as it may lead to a situation where evidence for expenditure may be insisted upon by the Assessing Officers. In order to mitigate any such hardship of the guardians of a handicapped person, its is proposed to allow a deduction of the amount of Rs. 40,000/- in such cases.

The proposed amendment will take effect from the 1st day of April, 2000 and will accordingly apply in relation to assessment year 2000-2001 and subsequent years.

Pension of gallantry award winners exempt in certain cases

To recognise the services rendered by the members of defence forces who have been awarded the Param Vir Chakra, the Maha Vir Chakra and the Vir Chakra, for demonstration of exceptional courage and valour during a war, the pension and family pension of such gallantry award winners is proposed to be exempted from income-tax. Similar exemption would also be available to other gallantry award winners, to be notified by the Central Government.

The proposed amendment will take effect from the 1st day of April, 2000 and will accordingly apply in relation to assessment year 2000-2001 and subsequent years.