Taxpayer Cannot Claim Standard Deduction On Consultancy Income

It seems you have been employed as an employee, but have been engaged as a consultant and, therefore, what you receive from the company is not salary, but consultancy charges. As such, you will not get any benefit of standard deduction.  However, you can claim expenses incurred on conveyance etc. against the professional charges received. 

The deduction under Section 80D of the Income-tax Act, 1961 is available to senior citizens for Rs. 50,000 in a year in respect of medical insurance premium and preventive health check-up. Deduction can also be claimed for regular medical expenses, such as hospitalisation, medicine, and pathological test cost and doctors’ consultation charges, if the senior citizen does not have a health insurance policy. 

So, under Section 80D, you can either claim deduction for medical insurance premium and preventive health check-up, or for medical expenses, but not for both. Please note both of you and your spouse can claim this deduction of Rs 50,000 separately in your individual income tax returns (ITRs). So, if your medical expenses exceed Rs 1 lakh, you both can divide it equally and claim it individually under Section 80D. This deduction is not available if the payment is made through cash. Deduction in either case is available if you opt for the old tax regime.

Since form 16 is issued by the employer only after the annual returns of deduction of tax at source (TDS) have been filed with the income tax department, it will not be possible for your employer to issue you a revised form No. 16 now unless they agree to file a revised TDS return. 

However, you can claim the HRA exemption while filing your ITR. However, please note that for claiming this exemption of HRA, you will have to prove that you had actually paid rent for the property occupied by you, which is not owned by you, if your case is selected for detailed scrutiny. In case you are not able to prove the payment, you may face serious consequences. I would advise you to refrain from doing such things. However, you can start paying rent to your parents by cheque prospectively and claim HRA benefits. Please note that HRA benefit is available only if you opt for the old tax regime. HRA benefit is not available under the new tax regime.

Since this is just a loan transfer between two persons there is no problem as such from the income tax angle, but under the Foreign Exchange Management Act (FEMA), a resident of India cannot lend money in foreign currency to another resident through LRS. The LRS is primarily for remittances outside India for various permissible purposes, including gifts and loans to close relatives residing abroad. It is not intended for lending within India in foreign currency between residents.