Finance minister P Chidambaram may have good news for those stung by high medical and education expenses.
The government is mulling a proposal to raise the income tax deduction limit on medical reimbursement from Rs. 15,000 to about Rs. 30,000 keeping in mind the steep rise in medicine and hospital costs.
This will be on the lines of the measure proposed in the first draft direct taxes code (DTC) in 2010, sources indicated.
The tax deduction limit for reimbursement of medical costs has remained frozen at Rs. 15,000 a year for several years.
In addition, the government is also planning to offer a separate exemption limit under section 80C of the Income Tax Act. “The cost of education has gone up sharply over the last few years. A separate deduction limit of Rs. 50,000 per child for amounts spent on education could be granted,” said Homi Mistry, Partner, Deloitte Haskins & Sells.
Presently, all schemes — including children’s education fee — are clubbed with all products for claiming tax deduction of up to Rs. 1 lakh a year under Section 80 C of the Income Tax Act.