My 5-year-old son has cerebral palsy and is unable to walk. I have been spending Rs 5,000 a month on his treatment for quite some time now. I came to know that I can get tax benefit on it though I am not sure how?
— Rajiv Yadav
According to the prevailing income-tax provisions, where a resident individual has incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant (includes son) with a specified disability, then the individual incurring the expenditure will be allowed a deduction of a sum of Rs 50,000 from his gross total income of that year. Where the disability is 80 per cent or more, the deduction amount shall be Rs 1,00,000. Since specified disabilities includes cerebral palsy, you can claim a deduction of Rs 50,000/1,00,000 for the expenditure incurred by you on the medical treatment of your son. Please note that to claim the deduction, it is mandatory to procure a certificate from a specified medical authority in the prescribed form and manner and the same needs to be filed with the return of income.
I have invested in the dividend pay-out option of a balanced fund and a tax-saving fund. Are the dividends from these funds taxable? Kindly clarify.
— A.R. Ramanarayanan
Any income received during the year from mutual funds in respect of units held with the mutual fund, are exempt from income-tax in the hands of the unit holder. The income distributed by a mutual fund to its unit holders is subject to dividend/income distribution tax. The tax is levied on the fund and not on the unit holder. Therefore, the dividend received by you under both the options (Dividend payout options and tax saving fund) is not taxable in your hands. This exemption is available under Section 10 (35) of the Income Tax Act, 1961.
(The author is a practising chartered accountant)
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