Tax Query: Can I claim deduction on PPF or medical insurance payments?

I am a self-employed individual. I contribute to a PPF account in the name of my child, and I also pay a medical insurance premium for my father, who is a senior citizen. How can I claim a tax deduction for the payments?

In the case of a PPF account, the contributions need not be from the account holder. Any other person, even a parent or guardian can contribute and claim a tax deduction. However, do note that the deduction comes under the overall limit of Section 80C, which is Rs 1.5 lakh. Section 80C covers deductions for various tax-savings and payments. 

In case of payment of medical insurance premium for a senior citizen, the person paying can claim the tax deduction. You can obtain a tax deduction of the actual amount paid subject to a maximum permissible limit of Rs 50,000.

Also Read: Tax Query: What is the tax deduction available on interest on house loan for repairs?

I am a salaried individual. How can I claim a tax deduction for donations made to charitable organisations and NGOs? And, can I claim the deduction under the new tax regime for individuals in FY 2020-21?

You can claim a tax deduction on donations to charitable organisations or NGOs subject to:

  1. The trust or the NGO should be having the latest certificate of registration from the income tax department.
  2. The details of the registration certificate are on the face of the donation receipt.
  3. The donation receipt mentions the name, address, PAN of the NGO/trust, date of donation and amount of donation and authenticated.

The amount of tax deduction maybe 100% or 50% of the amount, as prescribed by the tax law.

From the FY 2020-21, in the ongoing year, you can claim deduction only if you choose to remain in the old tax regime. However, in case you opt for the new tax regime, you cannot claim a deduction. The only exception is the donation to PM CARES Fund, which is eligible in the new tax regime.

For any clarifications/feedback on the topic, please contact the writer at sweta.dugar@cleartax.in

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