Circular No. 775-Income Tax Dated 26-3-1999

Whether it would be sufficient if the employee furnishes a medical certificate from a Government Hospital and a declaration in writing duly signed by the claimant certifying the actual amount of expenditure on account of medical treatment (including nursing) training and rehabilitation of the handicapped dependent and receipt/acknowledgement for the amount paid or deposited in the specified schemes of LIC or UTI

1. Section 80DD, substituted for sections 80DD and 80DDA by the Finance (No. 2) Act, 1998, lays down that the deduction on ac­count of expenditure incurred by way of medical treatment (in­cluding nursing), training and rehabilitation of a handicapped dependant or amount paid or deposited in specified schemes of Life Insurance Corporation or Unit Trust of India for the mainte­nance of handicapped dependant, shall be limited to Rs. 40,000 in the aggregate while computing the total income of the parent or the guardian of such handicapped dependant.

2. It has come to the notice of the Board that some of the DDOs are asking the employees to submit medical vouchers/bills in connection with the expenses incurred on the medical treatment of their handicapped dependant apart from a certificate from the Government hospital regarding the permanent physical disability or mental retardation of the handicapped dependant.

3. It is clarified that it would be sufficient if the employee furnishes a medical certificate from a Government hospital and a declaration in writing duly signed by the claimant certifying the actual amount of expenditure on account of medical treatment (including nursing) training and rehabilitation of the handi­capped dependant and receipt/acknowledgement for the amount paid or deposited in the specified schemes of LIC or UTI. Therefore, DDOs may not insist upon production of vouchers/bills by the employees for having incurred expenditure on medical treatment of their handicapped dependants for allowing the deduction under section 80DD for the purpose of computing tax deductible at source.

4. This clarification is applicable for the purpose of Tax Deduc­tion at Source from salaries under section 192 of Income-tax Act, 1961 during the Financial year 1998-99 and onwards.