Siblings don’t come under I-T’s definition of family

“Friends are the siblings, God never gave us.”
— Mencius

The above quote speaks volumes about the importance of siblings in our lives. Without them, any family unit is incomplete.

Unfortunately this is very feebly recognised by Indian
income-tax laws. This article brings out the paradox in the existing
provisions of income-tax with regard to siblings, in the light of the Direct Tax Code bill being effective from April 1, 2012.

Firstly, deduction is not available in respect of life insurance premium paid on the life of siblings of the assessed, but only in respect of life of the assessed himself, his wife and children.
In the case of education, deduction is available for tuition fee paid only for any two children of the assessed and not siblings.

In addition to tuition fees, any allowance received from one’s employer, as allowance for child’s education or hostel allowance is exempt up to certain limits, which is not extended for siblings.

Talking of an education loan here, income tax provisions allow deduction for interest paid on loan taken on your higher education, your spouse’s or your children and not your siblings.

Also, tax benefits are not extended if health insurance is purchased for any of your siblings. However, provisions allow deduction of an aggregate of Rs35,000 if you buy a health insurance for yourself, spouse, your children and your parents who have completed more than 65 years of age.

This becomes all the more desirable where parents have retired from the active earning life or are no longer alive to support the child and the responsibility falls on the elder siblings.

All the same, there are certain provisions where income-tax Act recognises the importance of siblings.

Leave travel expenses: You can claim exemption in respect of expenses incurred for travelling to any place in India out of the leave travel assistance received by you from your employer. The journey to be undertaken needs to be either on your holidays or on retirement. You can claim this exemption two times in a block of four years.

The persons in respect of whom you can claim this exemption include brothers and sisters in addition to parents, children and spouse provided they are all dependent on you.

Expenses incurred on medical treatment of dependent sibling: Deductions are available in respect of expenses incurred on medical treatment of dependent brother or sister with a specified physical disability. This is also extended in respect of expenses incurred for medical treatment, training and rehabilitation of the sibling with special needs. Deduction is also allowed for securing a life insurance policy purchased for maintenance of such dependent sibling.
The deduction normally is up to Rs50,000 and goes up to Rs1 lakh in case the dependent is suffering from severe disability.
In addition to the above deduction, a further deduction of up to
Rs40,000 is allowed for expenses incurred for the treatment of any of the family persons including your siblings suffering from some acute specified diseases.

However this deduction goes up to Rs60,000 in case the patient is a senior citizen.

Likewise, the present I-T provisions grant an exemption from tax on any payment made by your employer for treatment in a government hospital, or in other recognised hospitals for yourself, your spouse, your parents, children and siblings.

Any reimbursement received up to Rs15,000 from your employer for medical expenditure incurred on the above category of the relatives is also exempt. This limit is proposed to be raised to Rs50,000 under the proposed Direct Tax Code bill introduced in the parliament.

Therefore, it is clear that current legislations do not provide for tax benefits consistently for expenses incurred in respect of brothers and sisters. Therefore the law should provide for tax benefits for expenses incurred in respect of tuition expenses, interest on education loan taken, and cost of medical insurance of the sibling also.

In the light of above, I request the taxmen to bring the provisions in harmony for all the expenses particularly with regards to siblings who are integral part of a large Indian family.

Balwant Jain is CFO, ApnaPaisa.com, a price comparison engine for loans, insurance and investments. He can be reached at balwant.jain@apnapaisa.com.