BUSINESS

New rules for deduction u/s 80DDB for serious ailments

Q: It is understood that deduction for expenses on serious illnesses under Sec. 80DDB was substituted by Finance Act, 2003 with effect from AY 2004-05 for medical treatment of such diseases and ailments as may be specified in the rules in the Form prescribed for the purpose. Since the section is substituted, the rules specifying illnesses had to be reissued. It is understood that it has been so issued and a new Form has also been prescribed. For the benefit of readers who are entitled to claim deduction from current income during financial year 2003-04, kindly appraise the new development.

A: The same illnesses are repeated but for two marginal changes, which may have no effect. There was a qualification in respect of neurological diseases requiring that such diseases should be chronic and protracted with certified disability consequent thereon at 40 per cent. This 40 per cent disability requirement is shifted to the Form of Certificate. As for `cancer', `malignant cancers' now substitute it. The illnesses covered by the substituted rule are:

"(i) Neurological diseases where the disability level has been certified to be of 40 per cent and above, — (a) Dementia;

(b) Dystonia musculorum deformans; (c) Motor neuron disease; (d) Ataxia; (e) Chorea; (f) Hemiballismus; (g) Aphasia; (h) Parkinson's disease; (ii) Malignant cancers; (iii) Full blown acquired immuno-deficiency syndrome (AIDS); (iv) Chronic renal failure; and (v) Haematological disorders: (i) Haemophilia; (ii) Thalassaemia".

The certificate, which was possible from any doctor registered with the Indian Medical Association with Post Graduate qualification, has now to be given by a person having qualification in the branch of specialisation, a Doctorate of Medicine (DM) or M.Ch. in the case of neurology. Where there is no specialist specified in the rule or such specialist is not posted in the Government hospital, where the patient is receiving treatment, certificate may be issued by any other specialist working full-time in the hospital with a Post Graduate degree in General or Internal Medicine recognised by the Medical Council in India.

A new Form 10-I under Rule 11DD is also now prescribed by Notification No. S.O. 1210(E) dated October 17, 2003. Such Form is available in the Gazette and all tax journals, for example, in Income tax Reports (2003) 264 ITR (St.) 36. In the new Form, the specialist certifies that he issues the certificate "after considering the entire history of illness, careful examination and appropriate investigations". The certificate has to be countersigned by the head of the Government hospital to the effect that the signatory is a specialist with Post Graduate degree in general or internal medicine. The Form implies that a doctor in Government Hospital should sign the certificate, even if he were not under treatment in a Government Hospital.

In order that persons with a serious illness are not put to undue hardship, it is necessary that the Government should issue suitable instructions that such certificates are not denied or delayed without proper justification by doctors in Government hospitals qualified to issue such certificates.

S. Rajaratnam

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