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In today's modern era, we spend a lot of money on health-care, be it for ourselves or our family.
So does our Government by taking steps towards public welfare. And these steps are taken in the form of income tax deductions, new laws etc.
Whenever it comes to any social issue, lawmakers always try to provide more & more benefit to public.
As a result, income tax laws provide various sections under which one can claim deduction of expenditure incurred on health and save taxes.
Let's discuss these sections one by one.
Deduction in respect of Medical treatment & maintenance of Handicapped dependent relative
any member in your family is suffering from a disability & is dependent on you then you can claim deduction of expenditure on such person u/s 80DD.
An individual as well as HUF is eligible for this deduction.
| Disability | Amount of Deduction |
|---|---|
| Normal Disability | ₹75,000 |
| Severe Disability | ₹1,25,000 |
Sec 80DD deduction is available to you as a flat deduction irrespective of actual expense incurred.
Here is an example to understand this section more clearl
Example: Ram is taking care of his younger brother Shyam. Shyam is suffering from disability and is totally dependent on his elder brother.
Ram incurs expenditure on his medical treatment every year. In FY 2017-2018, he spent ₹45,000 for medical treatment of his younger brother. How much amount is allowed to Ram for deduction₹
Amount of Deduction – Ram is eligible for 80DD deduction for FY 2017-18 of ₹75,000 if Shyam has normal disability. In case Shyam is severely disabled then deduction will be of ₹1,25,000, irrespective of actual expenditure incurred by him.
In case Ram had incurred ₹1,45,000 for Shyam's medical treatment, then he would have been eligible for deduction of ₹75,000 (normal disability) or ₹1,25,000 (severe disability).
*Both terms Disability & Severe Disability have been defined below u/s 80U.
To claim this deduction, you need to furnish Form 10-IA along with your return.
Deduction in respect of Medical Treatment of Specified Diseases or Ailments
If an Individual or HUF incurs any expenditure on the treatment of Specified Diseases for self or dependent relative can take tax benefit under this section.
Dependent relative means spouse, children, brother, sister, mother or father.
Amount of Deduction: Lower of
| A | Actual expense incurred on treatment | xxxx |
| B | Specified deduction amount | xxxx |
| Lower of A or B | xxxx | |
| Less | Insurance amount received (if any) reimbursed by an employer for the medical treatment of employee | xx |
| Amount of Deduction Available | xxxx |
*Specified deduction amount means:
| Citizen | ₹40,000 |
| Senior Citizen | ₹60,000 |
| Very Senior Citizen | ₹80,000 |
It is important to note that, from FY 2018-19, very senior citizen category has been omitted. Now, whether it is Senior/Very Senior Citizen both will get deduction of ₹1,00,000/-.
An example to understand the concept of Section 80DDB.
Example: Mohan (age 35 years) is suffering from a specified disease. He incurs expenditure for his medical treatment by himself. What is the maximum 80DDB exemption limit for F.Y 2018-19 available to Mohan ₹
(i) If Mohan spent ₹25,000?
Amount of deduction:
| A | Actual expenditure incurred | ₹25,000 |
| B | Maximum Limit | ₹40,000 |
| Lower of A or B | ₹25,000 |
(ii) In case Mohan spent ₹95,000 & he also received ₹25,000 under an insurance claim.
Amount of deduction:
| A | Actual expenditure incurred | ₹ 95,000 |
| B | Maximum Limit | ₹ 40,000 |
| Lower of A or B | ₹ 40,000 | |
| Less | Insurance Claim | ₹ 25,000 |
| Amount of deduction | ₹ 15,000 |
In case (ii) Mohan has received an amount of ₹25,000 under an insurance policy. Therefore such amount shall be reduced from amount of deduction.
To claim deduction u/s 80DDB, you need to furnish Form 10-I certificate along with your return.
*Senior citizen means person who is of 60 years or more at any time during the previous year.
*Very senior citizen means person who is of 80 years or more at any time during the previous year.
Deductions for handicapped person
A person with disability being a resident individual, who has been certified as a person with disability by the medical authority, is eligible for deduction under this section.
| Disability | Amount of Deduction |
|---|---|
| Normal Disability | ₹75,000 |
| Severe Disability | ₹1,25,000 |
You need a certificate (Form 10-IA) issued by medical authority to claim deduction under this section. It is suggested to keep this certificate in handy, in case return is picked up for scrutiny by assessing officer.
*Disability means
| Blindness | Mental retardation |
| Low vision | Mental illness |
| Leprosy-cured | Cerebral Palsy |
| Hearing impairment | Autism |
| Locomotor disability |
*Severe disability means a person with disability level of 80% or more. And suffering from one or more of the above mentioned disability.
All the above deductions are available only if you are an Indian resident during the previous year. In simple words, these deductions are not applicable to a Non Resident.
In case the disability assessment certificate has expired, one would still be able to claim such deductions in the year in which the certificate expires. However, a fresh certificate would be required from the succeeding year for claiming the benefits u/s 80U.
There are other sections as well which will help you in saving more taxes. While filing your income tax return, be cautious to claim all deductions available to you and achieve maximum tax benefit.
In case, you still have any problem in following return filing procedure, just hire our eCAs to assist you in this regard.
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