mEDICAL aLLOWANCE qUERY

MR. X IS 86 YRS OLD AND HIS ONLY SOURCE OF INCOME IS PENSION. HIS EX-EMPLOYER GRANTED TO HIM FROM
JAN'08 A MEDICAL ALLOWANCE OF Rs. 25,000 P.A. THIS, WHEN ADDED TO HIS TOTAL PENSION INCOME, WILL
ATTRACT INCOME TAX. MR. X ALSO HAS A FIVE-YEAR FIXED DEPOSIT OF Rs. 1 LAKH IN A NATIONALIZED BANK.
HE DO NOT HAVE A MEDICLAIM INSURANCE. CAN HE CLAIM DEDUCTION OF Rs. 20,000 UNDER SECTION 80D OF
INCOME TAX ACT ?

The deduction under Sec 80 D for Rs.20,000/- cannot be claimed as he is not in payment of Insurance premium for health coverage.  Medical Allowance from Ex Employer is taxable component to the extent of amont showed as taxalble in form 16.  The interest component is first added to the income then deduction under Sec 80C can be claimed along with other components of Sec 80C.