Human touch in the Income Tax Act-1961

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Income Tax Act-1961

Like food, shelter & education, Medical expenses have also become an integral part & parcel of life. Income tax Act carries a bit of human touch & offers tax benefit on medical grounds under various provisions of the Act. Here is a compilation of tax benefit to the taxpayers towards medical expenditure.

 

a] Deduction u/s 10 to salaried taxpayer towards medical reimbursement by employer:

In case of salaried employee, Section 10 provides exemption towards the medical reimbursement provided by an employer to an employee for the medical expenses incurred on self as well as on the family members for any disease, up to a maximum of Rs 15,000/- per year. This deduction is available only to the salaried class of taxpayers. Even private sector employee can take the benefit of exemption.

b] Deduction u/s 80D towards health insurance premium paid:

Section 80D provides for deduction towards health insurance premium  (mediclaim policy) paid. Exemption limit for self and family is Rs 25,000 per year & Rs 25,000 also per year for parents. Mediclaim insurance premium should be paid through cheque to claim the exemption. Preventive health check up is also eligible for deduction up to Rs. 5,000/- p.a. Medical expenditure on the health of super senior citizens (80 & above) is eligible for deduction up to max of Rs. 30,000/- (Rs. 50,000/- from AY 2019-20).  Maximum amount eligible for deductions u/s 80D is Rs. 30,000/- for AY 2018-19 & Rs. 50,000/- for AY 2019-20.

 

c] Deduction u/s 80DD::

Section 80DD offers deduction to an individual/HUF if (i) any expenditure is incurred on the medical treatment (including nursing), training and rehabilitation of a dependant with a disability or (ii) amount is paid/deposited under a scheme framed in this behalf by an insurer for the maintenance of a dependant with a disability.

The deduction admissible is a fixed sum of Rs. 75,000/- for normal disability & Rs. 1,25,000/- for severe (80% or more) disability. It’s an adhoc deduction & not dependant on actual expenses. Even if actual expense on above mentioned disabled dependent relative is less, still full amount of deduction would be available.

What is considered as disability and Severe Disability?


The following disability are eligible for deduction u/s 80DD:·
. Blindness

 . Low vision

  • Leprosy-cured
  • Hearing impairment
  • Locomotors disability
  • Mental retardation
  • Mental illness
  • Autism
  • Cerebral palsy
  • Multiple disabilities
    [A person with disability means a person suffering from not less than 40% of any of the above disabilities. Severe disability means 80% or more of one or more of the above disabilities.] Meaning of Dependant:
    i] For individuals, spouse, son / daughter, parents, brothers & sisters
    ii] For HUFs, any member of the HUF can be a disabled dependant.
    The disabled person should be wholly or mainly dependant for his / her support and maintenance, and should not have claimed deduction under section 80U.

 

d] Deduction u/s 80U:

If the person with disability is not dependant and have independent source of income then such taxpayers can claim deduction u/s 80U. Deduction is a fixed sum of Rs. 75,000/-. A higher amount of Rs. 1.25 Lakh is available as deduction if the person is suffering with severe disability (80% or above). [Deduction u/s 80DD is available to the person who is incurring expenditure on the medical treatment of a dependant].

 

e] Deduction u/s 80DDB:

Section 80DDB provides for deduction on expenses towards medical treatment of certain specified diseases or ailment as prescribed by the CBDT.

Specified diseases for the purpose of section 80DDB are:

  1. Nurological diseases with disability of 40% & above including (a) dementia (b) Dystinia Musculorum Deformans (c) Motor Neutron Diseases (d) Ataxia (e) Chorea (f) Hemiballismus (g) Aphasia (h) Parkinsons.
  2. Malignant Cancers
  3. AIDS
  4. Chronic Renal Failure.

Deduction is available to resident individual taxpayers on the amount actually incurred for the medical treatment of self or wholly/mainly dependent husband/wife, children, parents, brothers and sisters of the individual. HUF is also eligible for deduction. Deduction admissible is lower of Rs. 40,000/- or amount actually incurred. In case of treatment of senior citizen, deduction admissible could be Rs. 60,000/-(Rs. 1 Lakh from AY 2019-20 onwards). In case of super senior citizen (80 years and more), deduction could be up to Rs. 80,000/- (Rs. 1 Lakh from AY 2019-20 onwards). [Deduction u/s 80DDB would be reduced by the amount received, if any, under insurance from an insurer or reimbursed by an employer for the medical treatment of the person referred above].

In the present scenario, Knee replacement, Bypass surgery etc are too common. But these are not specified diseases for the purpose of section 80DDB & so expenditure on it is not eligible for any tax benefits. It would be desirable if CBDT stretches the scope of section 80DDB so as to offer tax sops for expenditures on bypass surgery, knee replacement etc.

[Readers may forward their feedback & queries at taxtalknew@gmail.comOther articles & response to queries are available at www.theTAXtalk.com ]


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