Category: Most Asked Questions

E-way Bill GST: The GST Eway Bill was introduced on 1st April 2018. The e-Way Bill GST is an electronic document that needs to be generated before the goods are transported or shipped in excess of INR 50.000 within the state or intrastate. The transporter or the person in charge of the transport must have a physical copy of the GST electronic bill and should contain all the information such as goods, the recipient, consignor or transporter. On this page, let’s learn everything about e way bill registration and its purpose in detail.

Who Can Generate Eway Bill Under GST?

Before starting the transport of goods from place to place, the Eway bill must be generated. The E-Way bill GST is generated for:

• Supply of goods with regard
• Supply of goods regardless
• Supply received from a non-registered person

The supply covers the movement of goods not only due to sales but also due to any other reason such as cross-branch transfers, unregistered purchase and trade in goods. However, in some cases, an Eway bill is also generated even though the goods’ value does not exceed INR 50,000.

• Transfer of goods between states by the principal to the worker by the principal or by the registered worker.
• The transfers of handicraft products between states by a dealer are exempt from GST registration

The following people can generate the Eway Bill:

• Registered Person
• Unregistered Person
• A Transporter

However, if goods are supplied to a registered individual by an unregistered person, the beneficiary shall ensure the creation of an Eway bill. If the supplier has not produced the same, a carrier shall generate an E-way bill. For unregistered transporters, a Transporter ID will be provided on the registration portal for the Eway bill.

E Way Bill Registration Documents Required

An e-Way bill can be registered either through an SMS facility or through the official website. However, before applying for GST e-Way Bill, one will have to keep the following documents handy to generate the E-Way bill:

• Invoice/Supply Bill / Challan concerning goods shipment
• Road Transport: ID or number of transporters
• Rail, Air or Ship transport: Transport ID, Document date and document transport number

How To Generate Eway Bill Through Online?

Follow the steps as listed below to generate the E-Way Bill online:

• Step 1: Visit the official website of E-WayBill System – Click Here
• Step 2: Click on the tab “Registration” and select “e-way Bill Registration” from the drop-down menu.

• Step 3: Enter your “GSTIN” number.
• Step 4: Enter the Captcha Code as displayed on the screen.
• Step 5: Click on the “Go” button.
• Step 6: The user will then be forwarded to the registration form of the e-Way Bill. The registration form will look like the following image.

• Step 7: This information will be automatically repleted with the name, trade name, address, mail identification and mobile number of the applicant.
• Step 8: If you have changed the details or if they are incorrect, click on the GST Common Portal Update button to pull the latest GST Common Portal data.
• Step 9: Click on “Send OTP” to receive the OTP.
• Step 10: Enter the OTP and click “Verify OTP” to validate it.
• Step 11: Next, enter the user ID or Username to operate this system’s account. The username should be unique. It should contain approximately 8 to 15 alphanumeric characters and special characters.
• Step 12: The system validates the entered values when a request has been submitted for registration.
• Step 13: Now the password and username with the e-Way Bill System are also created and registered.

Now one can use this registered username and password for operating the E-Way Bill.

Eway Bill Registration Methods

Other ways to register for E-Way Bill are:

EPF Interest Rate from 1952 and EPFO: EPF refers to the Employee Provident Fund which each company is meant to put aside for their employees out of their salaries every month. This is a fund that transfers from one company to another even when you switch jobs, as it is a requirement for the company to provide this service to its employees. It is a method of purposeful saving and this money becomes available to the holder of the account upon retirement.

The interest rate for this account is determined commonly by the EPFO (the Employee Provident Fund Organisation) for the entire nation in every new financial year. This is the body whose board is responsible for setting the EPF interest rate, and the body that is responsible for shelling out interest payments to EPF account holders upon retirement (or before in extraordinary circumstances).

The EPF Interest Rate from 1952 to 2021

Here’s a breakdown of interest rates set by the EPFO starting from the financial year 1952 till the present financial year 2020-21.

Financial Year	EPF Interest Rate	Financial Year	EPF Interest Rate
1952-53	3.00%	1987-88	11.8%
1953-54	3.00%	1988-89	12%
1954-55	3.00%	1989-90	12%
1955-56	3.50%	1990-91	12%
1956-57	3.50%	1991-92	12%
1957-58	3.75%	1992-93	12%
1958-59	3.75%	1993-94	12%
1959-60	3.75%	1994-95	12%
1960-61	3.75%	1995-96	12%
1961-62	3.75%	1996-97	12%
1962-63	3.75%	1997-98	12%
1963-64	4.00%	1998-99	12%
1964-65	4.25%	1999-2000	12%
1965-66	4.50%	2000-01	11%
1966-67	4.75%	2001-02	9.5%
1967-68	5.00%	2002-03	9.5%
1968-69	5.25%	2003-04	9.5%
1969-70	5.50%	2004-05	9.5%
1970-71	5.70%	2005-06	8.5%
1971-72	5.80%	2006-07	8.5%
1972-73	6.00%	2007-08	8.5%
1973-74	6.00%	2008-09	8.5%
1974-75	6.50%	2009-10	8.5%
1975-76	7.00%	2010-11	9.5%
1976-77	7.50%	2011-12	8.25%
1977-78	8.00%	2012-13	8.5%
1978-79	8.25% + bonus 0.5%	2013-14	8.75%
1979-80	8.25%	2014-15	8.75%
1980-81	8.50%	2015-16	8.8%
1981-82	8.75%	2016-17	8.65%
1982-83	9.15%	2017-18	8.55%
1983-84	9.90%	2018-19	8.65%
1984-85	10.15%	2019-20	8.5%
1985-86	11%	2020-21	8.5%
1986-87	11.5%	–

As you’d notice, there is a steady increase in the EPF interest from the year 1952 up until the beginning of the 2000s. There is especially a boom where the interest rate hits an all-time high in the year right before the economy was opened up and the next subsequent decade after liberalisation, privatisation and globalisation. Since 2001, the interest rate has remained more or less stable, fluctuating between 8% and 9.5% and not venturing anywhere below or above this much.

We can remember that the effects of Coronavirus or COVID-19 began to manifest in India in March 2019. Keeping this in mind, the interest rate was set at 8.5% for the financial year 2019-20, and the board had also suggested that the interest payment for that particular financial year be split into two parts. This was suggested keeping in mind COVID and the ‘exceptional’ situation that it brought about.

The EPF interest rate was kept steady for the financial year 2020-21 as well, seeing as how the effects of Coronavirus on the economy are still ongoing. The board speculated that the EPFO may not be able to make any interest payments beyond even 8% because of how COVID-19 has impacted the economy on such a large scale. However, the interest rate cannot be brought down that low, and was, therefore, kept stagnated at 8.5%.

How is the EPF Interest Rate Determined?

The Employee Provident Fund Organisation has a Central Board of Trustees. This is the board that decides the EPF interest rate at the end of each financial year. The board members or the trustees of the EPFO take a look at the country’s economic situation, where the country stands in term of money, and then puts out a recommendation for the interest rate. The board must take into account the capacity of the EPFO to shell out that amount of interest before making the recommendation, while also keeping the economic climate in mind. For example, because of the COVID-19 pandemic and its dire economic effects, the interest rate was slashed and made to stand at a seven-year low. On the other hand, when the economy was opened up in the 1990s, the interest rate was at an all-time high, at 12%. This was first a recommendation that was made possible because the economy was then booming.

How to Calculate EPF Interest?

This interest from the EPFO is credited to the EPF holder at the end of the financial year. This means that it is calculated monthly between March to February every year, and credited in the month of April.

Here’s how the EPF interest is calculated, with the average monthly balance method. This method calculates interest per month and adds up the amount in April when the financial year is ending. This is the system used to calculate the interest, but this interest is yearly compounding. Keeping that in mind, here’s the breakdown of calculating EPF interest.

Since the interest on EPF is counted monthly rather than yearly, we take the annual interest rate and divide it into 12 parts (for the 12 months). The interest rate for 2019-2020 is 8.5%, meaning that the monthly interest for the year 2019-2020 is 8.5/12, which is 0.783%.

Components of Calculating EPF

There are several components to look at while calculating the EPF interest.

• The opening balance of an EPF account refers to the amount that has also been collected in the fund.
• Contributions are made to this amount monthly as the individual’s salary is given every month.
• At the end of the financial year, the interest will be calculated on the total amount, where the total amount = opening balance + monthly contributions made throughout the year.
• The ‘total amount’ will be the new opening balance for the next financial year.

Let’s use an example to make this clearer to you. Remember that both employers, as well as employees, contribute to an employee’s provident fund.

For example,

• An employee’s salary, including a dearness allowance, is Rs 20,000 per month.
• Employee contribution to EPF is 12% (Rs 2400).
• Employer contribution to EPS (Employee Pension Fund) is 8% (Rs 1600).
• Employer contribution to EPF = Employee EPF contribution – employer EPS contribution = Rs 800.
• Taking into account both employer as well as employee EPF contribution, total EPF contribution = Employer contribution + employee contribution = Rs 2400 + Rs 800 = Rs 3200.

Now, to calculate the interest on this monthly contribution of Rs 3200, we look at the interest rate, which is 8.5%. Divided into a monthly basis, it is 0.783%.

Let’s say that we’re calculating the interest for the month of April.

• Total EPF contribution for the month of April = Rs 3200.
• (Interest is not calculated in the first month of the financial year).

Now, calculating interest for the month of May.

• Opening balance = Rs 3200.
• Total EPF contribution for the month of May = Rs 3200.
• Total EPF balance in the month of May = Rs 6400.
• Interest on EPF contribution till the month of May = 0.783 x 6400 = Rs 50.11

Calculating interest for the month of June.

• Opening balance = Rs 6400.
• Total EPF contribution for the month of June = Rs 3200.
• Total EPF balance in the month of June = Rs 8600.
• Interest on EPF contribution till the month of June = 0.783 x 8600 = Rs 67.33

Now, the total interest accumulated for the months of May and June is Rs 50.11 + Rs 67.33 = Rs 117.44 and the same process carries on till the end of the financial year, i.e. March in the next chronological year. The interests per month are added up and it is credited to the account as a lump sum in April the next year.

Conclusion on EPF Interest Rate from 1952 and EPFO

The Employee Provident Fund is an important saving mechanism for all the people working in companies under the payroll. In a way, the EPF forces all employees to save money for when they retire, which is very useful, especially for people who do not already have good saving habits. The interest rate for the EPF is recommended by the Board of Trustees of the Employee Provident Fund Organisation whilst keeping in mind the ongoing economical climate. There has been a steady increase in the EPF interest rate from the financial year 1952-53 up until the year 2001-02. After that, it has decreased in the slightest and remained more or less between 8% and 9.5%, neither exceeding this nor going under.

DTA Vs DTL: What is the Deferred Tax? The word “deferred” means “delayed” or “postponed,” so deferred tax is a tax that has been projected for the present time that is due for that term but has not yet been paid.

The lag or postponement happens when there is a time delay between when the tax is accumulated and paid.

In a company’s financial records, there are both deferred tax assets and deferred tax liabilities. Because of the time differences between the two, there is a variation in the company’s accounting.

The two most basic forms of deferred tax are Deferred Tax Asset and Deferred Tax Liability.

What is the Deferred Tax Asset (DTA)

Deferred tax asset shows a firm’s situation of paid additional taxes or taxes in advance, which the organization then claims as a tax relief amount.

One may compare a deferred tax asset to rent charged in advance or refundable insurance premiums. Around the same time, the company no longer has capital on hand, but it does have equal value, expressed in the financial statements.

This asset contributes to the company’s potential tax burden being reduced. A deferred tax benefit is only known because the asset’s loss-value or depreciation gap is assumed to cover potential gains.

Deferred Tax Liability (DTL)

A deferred tax liability (DTL) is an income tax commitment resulting from a temporary disparity in book costs and tax deductions reported on the balance sheet that one will charge in a hypothetical accounting period.

The duty arises when a corporation or employee postpones an incident that would otherwise result in tax costs being recognized in the current year.

The disparity in time between when the tax is accrued and when it is paid causes the deferral.

The corporation receives its book profits from financial accounts compiled in accordance with the Companies Act’s laws, and the net benefit is calculated using the provisions of the Income Tax Act. Since such things are expressly permitted or disallowed for tax purposes each year, there is a distinction between book profit and taxable profit.

Difference Between Book and Taxable Revenue

The timing discrepancy is the difference between the book and taxable revenue or cost, and it may be any of the following:

1. Temporary Difference – The company can resolve differences between book income and taxable income in the following year.
2. Permanent Difference – The company cannot change the difference between book and tax revenue in the following cycle.

It is worth noting that DTA and DTL are only taken into account where a temporary difference exists.

In the guise of dta vs dtl, deferred tax assets are classified as non-current assets, while deferred tax liabilities are classified as non-current liabilities.

Both DTA and DTL will be adjusted for each other because they are constitutionally enforceable, and there is no intention to resolve liabilities and properties on a net basis.

Example

Let us consider that company A has the following details:

Income as Shown in a Company’s Books of Accounts

Revenue	INR 600
Expenses as per books	INR 100
Taxable income	INR 500

Tax rate= 30%

Hence, tax= INR 150

Income as determined by the Tax Authorities

Revenue	INR 620
Expenses allowable as per IT authorities	INR 150
Taxable income	INR 470

Tax rate= 30%

Hence, tax= INR 141

Today’s excess tax is attributable to the discrepancy between the taxes computed on the company’s books, and the income tax authorities’ income is 150-141=9.

This number, 9, is referred to as a deferred tax asset (DTA). During one or two future years, one will adjust it in the books of accounts.

References to Common Conditions in Which DTA, DTL Arises

• The disparity between how tax laws and accounting principles handle depreciation costs is a common cause of deferred tax liability. Depreciation cost on long-lived properties is customarily measured using a straight-line formula for financial reporting purposes, but tax laws enable businesses to employ an accelerated depreciation method. A company’s financial revenue is temporarily higher than the net income because the straight-line approach yields lower depreciation than the under-accelerated method.
• An instalment selling is another common source of deferred tax liability. When a corporation buys its goods on credit, the revenue is accepted and paid off in equivalent installments in the future. The corporation can realize net profits from the installment selling of general goods under accounting principles, but tax laws mandate the income to be recognized when installment purchases are made. This results in a temporary positive discrepancy between financial earnings and taxable revenue, as well as a deferred tax liability.
• If there is a discrepancy in accounting and tax laws, deferred tax assets may occur. Deferred taxes arise, for example, when payments are recognized in the income statement before the tax authorities expect them to be identified or when money is taxed before it is payable in the income statement.
• Essentially, it is an incentive to build a deferred tax benefit if the tax base or tax laws regarding assets and/or liabilities vary.
• Companies will frequently carry on their earnings from one year to the next, potentially lowering their tax liability. The deferred tax burden is established in this situation when the corporation will be obligated to pay taxes on the carry-forward earnings in the next year.

Presentation in the Balance Sheet And Other Noteworthy Features

• There are a few main features to remember when looking at deferred tax properties. For starters, they can be carried forward forever for most businesses beginning with the tax year, but they can no longer be carried out.
• The valuation of deferred tax assets is affected by tax rates, which is the second factor to remember. When the tax rate rises, it benefits the corporation because its valuation increases and offers a larger cushion for more significant revenue. However, as the tax rate decreases, the valuation of the tax asset decreases as well. This means that the organization will not take advantage of the total profit until it expires.
• The remainder of the deferred tax benefit and liabilities should be netted out, resulting in either DTA or DTL being disclosed in the balance sheet. Both cannot be announced at the same time for the same amount of time.
• DTL can be reported separately from current liabilities in the balance sheet under Non-current liabilities after the subhead ‘Long term borrowing’.
• Similarly, DTA can be reported separately from current assets in the balance sheet under Non-current assets after the subhead ‘Non-current investment’.
• The cumulative tax rate is used to establish the Deferred Tax. DTL’s book entries are as follows:

Profit & Loss A/c Dr.

To Deferred Tax Liability A/c

• There is a legitimate right to do so by the same tax body will existing tax assets and liabilities be reversed.

DTA and DTL Calculations

The disparity between net income and accounting profits before taxes is multiplied by the company’s expected tax rate to get the DTL.

Assume the business A uses INR 2000 in straight-line depreciation and INR 2500 in MACRS depreciation. The amortization for revenue and accounting purposes remains the same for the remaining years. The INR 500 difference is now just temporary.

If the tax rate is 30%, the corporation will report INR 150 as DTL in its accounts, i.e. 500*30%.

Also, the formula is:

Deferred Tax Liability Formula = Income Tax Expense – Taxes Payable + Deferred Tax Assets

Year 1: DTL = INR 50– INR 20+ 0 = INR 30

Year 2: DTL = INR 50 – INR 20 + 0 = INR 30

Year 3: DTL = INR 50 – INR 110 + 0 = -INR60

Cumulative Deferred Tax Liability on the Balance Sheet is as follows

Year 1 cumulative DTL = INR 30

Year 2 cumulative DTL = INR 30 + INR 30 = INR 60

Year 3 cumulative DTL =INR 60- INR 60= INR 0 (note the effect reverses in year 3)

DTL is supposed to reverse, i.e., they are the product of temporary disparities that will result in future cash balances after the taxes are collected. When an accelerated depreciation approach is used on the tax return, but straight-line depreciation is used on the income statement, it is more often produced.

To put it more simply, when you bill total depreciation on all books of account as per the IT Act and the Corporations Act at the end of the year, you’ll see that the deferred tax asset and liabilities have been cleared out, and the balance for a single asset is NIL.

Difference Between Assessment Year and Financial Year, Previous Year, Fiscal Year in World: If you have paid your income tax or filed your ITR, you might probably know the assessment and the financial year. The financial year is the period between 1st April and 31st March in which the income is earned. The year that comes after the financial year is known as the assessment year (AY). This is the time in which the income earned during the Financial Year is assessed and taxed. Both Financial Year and Assessment Year start on 1 April and ends on 31 March. This means that AY 202-21 and FY 2019-20 are the same for calculation purposes. To get a clearer picture of the terms, let’s understand the differences between the Financial Year and Assessment Year. The Fiscal Year and the Fiscal Year of other countries.

Financial Year

The year where the income is received is known as the Financial Year. Financial Year starts from 1st April of the calendar year & concludes on 31st March of the next calendar year. The Financial year is also abridged as FY. The assessee needs to calculate and plan taxes for the financial year, but an income tax return is to be registered in the next Year or Assessment Year. For instance,

• The income received from 1st April 2019 to 31st March 2020 is the income received in the current Financial Year (FY) 20219-20. Also,
• Any income obtained for the period starting from 1st April 2019 to 31st March 2020 can be stated as income earned in Financial Year (FY) 2020-21.

Assessment Year

From 1st April to 31st March, where the income received in a particular financial year is charged, it’s implied as the Assessment Year. One is expected to file his/her income tax return in the relevant assessment year. The year succeeding the financial year is known as the Assessment Year. For example,

• Income received in the current Financial Year 2020-21, i.e. beginning on April 1, 2020, to March 31, 2021, to be considered the taxable period for the year 2020-2021. 
• Similarly, income earned in Financial Year 2019-20, i.e. beginning on April 1, 2019, to March 31, 2020, to be considered the taxable period for the year 2020-2021.

The Assessment Year and Financial year for the Recent Year is given below:

Period	Financial Year	Assessment Year
1st April 2019 to 31st March 2020	2019-20	2020-21
1st April 2018 to 31st March 2019	2018-19	2019-20
1st April 2017 to 31st March 2018	2017-18	2018-19
1st April 2016 to 31st March 2017	2016-17	2017-18

Previous Year

Previous Year or PY is specified in the Income-tax Act, 1961. The previous year indicates the financial year immediately conducting the assessment year. It is the same as the fiscal year. In case of an occupation or business newly set up, or a fresh source of income that comes into existence, in the stated financial year. The previous year shall be the period commencing with the date of establishing the occupation or business or, as the situation may be, the date on which the source of income newly comes into the occurrence and concluding with the stated financial year.

Differences Between Assessment Year and Financial Year

The Financial Year and the Assessment year are the two important terms that every taxpayer must be familiar with to file their taxes and return tax in a smooth and hassle-free way without any confusion. The Financial Year is the time period within which the income is received, Whereas the assessment year is the year that follows the financial year, and it is the time when tax returns are filed. Both Financial Year and Assessment year starts on the 1st of April and ends on the 31st of March.

Hence, the financial year is the time where people in business, professionals on salary, and senior citizens receive their pay. Taxation and evaluation are conducted for income that is received in the year before the Assessment year, which is the financial year. For this sole reason, Income Tax Return Forms are acknowledged to apply the type term Assessment year instead of Financial Year.

While income is consistently received in the period, termed as the financial year, It cannot ever be taxed before being earned. Therefore, it is only after money that an individual has first received that it will be assessed for the purpose of tax, and the latter is what takes place throughout the assessment year.

Fiscal Year

A fiscal year is used in government accounting, which is different in every country for budget plans. Businesses and other organisations also used it for financial reporting. Laws in several jurisdictions need business financial reports to be made and issued annually. Taxation laws usually need accounting reports to be managed and taxes calculated yearly, which generally relates to the fiscal year used for government purposes. The tax calculation on a yearly basis is appropriate, particularly for direct taxes, such as income tax. Many year-end government payments—such as license fees and council tax, are also levied on a fiscal year basis, but the others are charged on an annual basis.

Fiscal Year and Financial Year

Fiscal Year and Financial Year are terms similar to each other. These two terms have always been encountered by every employed person. It is also applied for financial reporting by businesses and other organisations. Both the terms are connected as they are a period that governments apply for budget and accounting purposes. The records for accounting and tax purposes are needed to be maintained under the taxation law of any country, this is generally the financial/fiscal year for governmental use. The tax computation on a yearly basis is especially applicable for direct taxation, such as income tax.

Some countries call the Financial year the Fiscal year and this remarks the only difference between the term Fiscal and Financial. For example, the UK and most Commonwealth countries like to use the phrase financial year, whereas the US calls it the fiscal year. Technically there is no variation in their meaning and hence are utilised in an interchangeable manner. The fiscal year and financial year direct to a period of 12 months. In some countries, this happens in 52 weeks, whereas 53 weeks in others. However, the dates may change depending on the nation’s preference and its income tax department.

India Fiscal Year

The British are the ones who left The financial year as a legacy left behind by the British. The period for collecting tax in Indian is the April to March fiscal year pattern, which began in the year 1867 and has been followed on. This financial year pattern is aligned with the British system of taxation. The logic is followed by the main economic driver in India, which is the agricultural sector. As agricultural produce is generally reaped during the months of February and March, and the new year begins during the month of April for many regions in India, the British government adjusted the financial year accordingly.  The English government formed its annual budget based on forecasted revenue slips, defining the planned expense and custom of new taxes and duties throughout the year. Interestingly the UK fiscal year starts on 6 April and ends on 5 April of the subsequent year.

Fiscal Year in World

The International Monetary Fund and the World Bank follow the January-December cycle. As compared to the financial year, 156 nations abide by the calendar year. In Australia, a fiscal year is generally termed as “financial year” (FY) and begins from 1 July and concludes on the next 30 June. In the United States, the financial/ fiscal year is a twelve-month period that begins on the 1st of October and ends on the 30th of September. The classification of a fiscal year is the calendar year in which it terminates; thus, the fiscal year, which began on 1 October 2018 and will end on 30 September 2019, is 2019. It is often written as “FY2019” or “FY19”.

However, until 1976, the period for the fiscal year began on the first day of July and ended on the last day of June. In Brazil, the fiscal period follows the normal calendar i.e., it starts on the first day of the year and ends on the last day of the year. Some people believe that India must change the financial year the same as Calendar Year from the 1st April to 31st March. A variation in the financial year would claim amendments in different statutes and shifts in tax laws during the transitional phase.

Conclusion

Every individual who earns above the mandated tax limit is bound to pay their taxes to the tax collecting authority of India i.e., the Income Tax department. For the purposes of the tax payment, it is essential to understand some of the important terminologies that are crucial in the process. Two such terminologies are the financial year and the assessment year. This article helps the reader to understand the terminologies and helps to differentiate between both. It is very important for a tax-paying person to understand the difference between these two terms, and this article is a great place to begin.

Deduction of Medical Insurance Section 80D: Medical Emergencies mostly take us by surprise; hence it is always better to be equipped to battle them. Section 80D allows every Individual or HUF to claim a deduction from their total income. The deduction is available for both health insurances and purchase a policy covering a spouse or children of the deceased assessee.

Conditions for Claiming Deduction

• Whether a resident or non-resident, the assessee should be an individual or HUF.
• Payments are made for the assessee, their spouse, parents or any dependent children of their own in the case of an individual.
• For any member in HUF, the payment made is out of the income chargeable to tax.
• If no amount was paid for the health insurance of a very senior citizen, medical expense induced on their health is allowed only then.
• Payment is allowed for
• Medi-claim insurance premium
• Contribution(s) made to the CGHS or other schemes that the Central government notifies.
• For preventive health check-ups
• Medical expenditure for very senior citizens

Calculating Deduction for Individual

Ø Payments for assessee or their family

1. Medical Insurance
2. Contributions to Health Scheme
3. Preventive Health Check-up- Rs. 5,000
4. Expenses for Very Senior Citizens- Rs. 30,000

Note: The aggregate of points (a), (b) and point (c) cannot exceed Rs. 25,000. An additional deduction of Rs. 5,000 is allowed for Medical Insurance Premium paid in the case of senior or very senior citizens. The total deduction cannot be more than Rs. 30,000 for (a) and (d).

Ø Payments for Parents

1. Medical Insurance
2. Preventive Health Check-up- Rs. 5,000
3. Expenses for Very Senior Citizens- Rs. 30,000

Note: The aggregate of points (a) and point (b) cannot exceed Rs. 25,000. An additional deduction of Rs. 5,000 is allowed for Medical Insurance Premium paid in the case of senior or very senior citizens. The total deduction cannot be more than Rs. 30,000 for (a) and (c).

Calculating Deduction for HUF

1. In case of Medical Insurance Premium- The maximum amount: Rs. 25,000.
2. In case of Medical Expense for senior citizens- The maximum amount: Rs. 30,000.

Note: The aggregate of both (a) and (b) cannot exceed Rs. 30,000. An additional deduction of Rs. 5,000 is permitted for option (b).

Points To Remember

• An assessee can take a medical insurance policy on behalf of their dependent children and make claims for tax deductions. If they are above 18 years and employed, then they cannot be covered.
• Male children, if unemployed, can be covered up to the age of 25. But female children, if not employed, can be covered right up to her marriage.
• If an assessee is paying any medical insurance premiums on behalf of their sister or brother, they are ineligible to claim tax deductions.
• Kindly note that the premium amount can be claimed as a tax deduction only. This process should not include GST.
• Senior citizen is an individual resident at the age of 60 or more during the previous year of their claim.
• Very Senior Citizens are also individual residents living in India who are aged 80 years or above at any time through the relevant preceding year.

Examples

Suppose an individual of age 35 has paid their medical insurance premium of Rs. 27,000 for themself and also made medical expenses of Rs. 4,000 for their father of Age 81, because the maximum limit of deduction in the case of the medical insurance is Rs. 25,000, they will get a total deduction of Rs. 25,000 plus Rs. 4,000 that comes to Rs. 30,000.

Suppose an individual of age 35 has paid their medical insurance premium of Rs. 27,000 for themself and have also made medical expenses on Preventive Health Check-up of Rs. 3,000 for their wife, in cash. Since paying in cash is prohibited for deduction under 80D, the amount of Rs. 27,000 will not be allowed; however, in the case of Preventive health check-ups, Rs. 4,000 will be allowed.

A Stepwise guide on Filling the Deduction Amount in Income Tax Returns (ITR) for Section 80D

• For Online Utility for ITR-1 or ITR-4: The first step is to go to the Tab Income Details and click on point B4 and then select the option and enter the amount eligible to be paid by you. Note that the maximum amount allowed will automatically be calculated.
• For Offline Utility for ITR-1 or ITR-4: You will find in the sheet Income details on point 5(g), then select the option. After that, enter the eligible amount.
• For Offline Utilities for ITR-2 and ITR: First, you need to open the sheet for VIA and fill in the deduction amount mentioned in 1(g), and you can do the same for ITR utilities.

Specifics in Form 12BB to Employer

The employee should produce Form 12BB to his employer(s). Based on this form, the employer will record deductions, and thus the TDS amount deducted will be lower.

Difference Between Medical Allowance of Section 10 and Medical Insurance of Section 80D

Any Medical insurance paid to any insurance company is permitted under section 80D. When medical allowance received is exempted up to Rs. 15,000, only then the amount is suffered as a medical expenditure. Such an allowance is exempted under section 10. Therefore, it cannot be claimed as a deduction if a person has medical insurance and has received compensation for medical expenses.

Wondering how to cover the CS Executive Jurisprudence, Interpretation & General Laws entire syllabus? Don’t worry as we have covered the complete info about JIGL Chapter Wise Weightage in detail. Based on the weightage allotted you can understand what are the Jurisprudence, Interpretation & General Laws Important Chapters and allot more time for them. Planning your preparation as per the CS Executive Jurisprudence, Interpretation & General Laws Chapter Wise Weightage can aid you in scoring better grades in exams.

Additional Read: CS Executive: Jurisprudence, Interpretation & General Laws Important Questions

CS Executive Jurisprudence Chapter Wise Weightage

You can download the Jurisprudence, Interpretation & General Laws CS Executive Chapter Wise Weightage PDF from here and keep it handy. Check it before you plan your preparation schedule so that you don’t invest more time on the topics that aren’t so important. In fact, we have added the Yearwise CS Executive JIGL Chapter Wise Weightage so that you will have an idea of how it’s been changing over the years.

Chapter	2014	2015		2016		2017		2018		2019		2020
	D	J	D	J	D	J	D	J	D	J	D	D
1									9	5	5	5
2									21	13	9	13
3									4	4	9	4
4									4	4	8	5
5									4	4	12	8
6									17	4	8	12
7									4	8	4	8
8									9	16	4	12
9									8	5	16	4
10									4	4	16	9
11									12	13	4	8
12										16	8	8
13	18	5	5	10	3	12	5	11	16	12	9	8
14		5	5	5	3	5	5	5	8	8	8	8
15	15		5	5	3	5	10			8	4	4
16									4	4	4	8
17									8	4	4	8

Final Words

We wish the knowledge shared regarding the CS Executive Jurisprudence Interpretation General Laws has helped you to be on the right track during your preparation. For more information on CS Executive Chapterwise Weightage of different papers, you can always look up to us.