PERSONAL TAX: Deduction allowed under Section 80D for preventive check-up only

I am a senior citizen of 75 years of age. My wife and I are covered under our company's post-retirement medical scheme. I have been regularly paying annual premium of about Rs 30,000 on a floater policy taken by our company. I also have been claiming exemption in my Return of Income under Sec 80D for the said premium amount being paid by me every year. Am I still eligible to claim from Financial Year 2018-2019 deduction under Section 80D for all medical expenses, that is, regular check-up and medicines purchased? 
– V N VASUDEVAN

Any amount paid by a senior citizen to keep in effect health insurance policy taken by him for self or his family shall be allowed as a deduction under section 80D of the Income-tax Act, 1961 (Act). Earlier, limit to claim such deduction was Rs 30,000 which has been revised to Rs 50,000 with effect from FY 2018-19. The said limit on deduction is inclusive of any amount expended as preventive health check-up only to the extent of Rs 5,000 by cash or otherwise.

Thus, apart from claiming deduction under section 80D of the Act for medical premium, you shall be allowed to claim deduction up to Rs 5,000 in respect of the payments made just for the preventive health check-up, subject to the overall limit. But no deduction can be claimed for the regular expense incurred on periodic check-ups and medicines.

Please note after the amendment to the Finance Act 2018, the medical expenditure incurred by you on your and your wife's health could have been claimed as a deduction under section 80D, provided that no amount was being paid to keep in force an insurance on your and your wife's health.

I am member of a housing society. Our society is 25 years old. Now we decided to do repairs such as structural works in beam/column. The society has already appointed the contractor through the structural engineer's approval. The issue is that, we have started collecting some contribution through our existing monthly outgoing. The final bill will be given to society only after the work is done, or maybe in part. According my knowledge GST will charged by the contractor as an when the bill is raised for payments. But the society insists that the GST is to be paid on monthly bills raised towards the construction installments. When the contractor is already charging GST in every bill that is submitted, why should members again pay separately on the total construction bill? 
– Jagdish Kamath

We understand that the vendor ('contractor') is supplying repairs and maintenance services to the society and the society has made an advance payment against services received. Tax invoice would be subsequently issued by the contractor on the society, as per the agreed billing milestones for the total amount (inclusive of the amount paid in advance), As per GST provisions, GST is payable on receipt of the advance against supply of services to customers and receipt voucher is issued by the vendor. In the instant case, receipt voucher would be issued by the contractor to the society specifying the value of taxable services and amount of tax included in the advance consideration.

Further, at the time of issuance of tax invoice by the contractor, society is liable to pay only the differential amount (taxable value plus applicable GST) to the contractor, that is, amount already paid as an advance would be adjusted while making the final payment. It should be noted that GST is discharged by the society only once and there is no double taxation to the said transaction.

For example: Assuming the total contract is for Rs 1,00,000 plus applicable GST and Rs 40,000 is paid as advance to the contractor. GST would be discharged to the government by the contractor on Rs 40,000 at the time of receipt of advance. Subsequently, tax invoice would be raised for Rs 1,00,000 plus GST and the society would pay the differential amount of Rs 60,000 (that is, 1,00,000-40,000) to the contractor. Applicable GST on Rs 60,000 (already included in the contract price) would be paid by the contractor at the time of issuance of invoice.

The writer is director, Nangia Advisors LLP

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