Deductions on the medical treatment of specified diseases have become increasingly essential in current times. With the prevalence of illnesses and higher healthcare costs, it is crucial to be aware of the deductions available under Section 80DDB of the Income Tax Act.
What is Section 80DDB?
Section 80DDB of the Income Tax Act allows taxpayers to claim deductions for expenses incurred while receiving medical treatment for specified diseases for themselves or their dependents. The deduction is available to both resident and non-resident Indians and is over and above the deduction limit under Section 80C.
Which diseases are specified under Section 80DDB?
Section 80DDB allows deductions for the medical expenses of the below-mentioned diseases:
1. AIDS
2. Cancer
3. Chronic renal failure
4. Hemophilia
5. Thalassemia
6. Neurological diseases such as Parkinson’s, dementia, and other specified diseases.
The deduction limit under Section 80DDB
Taxpayers can claim up to Rs. 40,000 for normal treatments of specified diseases for themselves or their dependents, while senior citizens can claim up to Rs. 1 lakh. The limit applies to the actual cost incurred and not overall treatment cost.
For instance, Mr. Rao, a 60-year-old senior citizen, incurs Rs. 1.5 lakh for the cancer treatment of his wife. His yearly income is Rs. 10 lakh. He can claim a deduction of Rs. 1 lakh on incurred medical expenses, which means his taxable income would be Rs. 9 lakh.
Eligibility Criteria under Section 80DDB
1. The taxpayer is a resident of India.
2. The taxpayer has incurred expenses on medical treatment for the specified disease for themselves or their dependents.
3. The taxpayer has a prescription for the same from a specialist doctor.
Mode of payment for Expenses incurred under Section 80DDB
The payment can be made by any mode inclusive of cash payment to the government, a prescribed hospital, or a medical practitioner for the treatment of the disease specified under Section 80DDB.
Conclusion
With the rise in healthcare costs, the government has provided deductions under Section 80DDB of the Income Tax Act to help taxpayers with treatment costs for specified diseases. It is important to note that the mode of payment as well as the specified diseases are crucial criteria for determining eligibility. The deduction limit depends on the age of the person and the incurred cost on the treatment. Taxpayers must keep receipts and prescriptions from specialist doctors for claiming the deduction, and seek professional guidance if necessary.
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