What is Section 80 DDB?
Taxpayers can demand for deduction in medical expenditure for themselves or for their family members/ dependents. Dependent means their spouse, children, parents and siblings. The one who are wholly or partly dependents of such taxpayer for his/ her support & maintenance are eligible to claim for tax deduction.
This facility will be provided for the taxpayers under Section 80DDB of the Income Tax Act of 1961. The details about the tax deduction is provided under Chapter VIA of the Income Tax Act, 1961. It provides reduction in tax for the specified diseases for tax paying citizen and Hindu Undivided Family with the maximum deductible amount of Rs. 40,000/-to Rs. 100000/-.
Who are Eligible to Claim Tax Deduction under Section 80 DDB?
People who are eligible for tax deduction under Section 80 DDB are as follows:
- Individuals/ Taxpayers.
- Hindu Undivided Family (HUF).
- Only Resident of India or Indian citizens are eligible to obtain tax reduction.
- Dependents of an Individual/ Taxpayers and Hindu Undivided Family including their spouse, children, parents, brothers and sisters.
- If the dependent is already insured and receives any payment amount from some insurance company, the insurance or reimbursement amount received should be subtracted from the deduction amount.
- Hindu Undivided Family and the individuals who can claim tax deductions under Section 80 DDB are eligible only when they are residing in India for at least one year before requesting for the claim.
- Tax deduction under this act is not available for companies, private organizations or organizational bodies and their related entities.
- This facility is not applicable for the non- resident Indians.
- One can claim the tax deduction under Section 80 DDB, whether they have paid premium for a health insurance policy or not. The deduction is claimed from their gross total income before arriving at taxable income on which tax is levied.
List of Diseases which are covered under Section 80 DDB:
The Diseases which are covered under Section 80 DDB are as follows:
Neurological diseases like Dementia, Aphasia, Dystonia Musculorum Deformans, Chorea, Ataxia, Motor Neuron Disease, Hemiballismus, Parkinson’s Disease, Malignant Cancers, Thalassaemia, Full Blown Acquired Immuno- Deficiency Syndrome (AIDS), Chronic Renal failure, Hematological disorders and Hemophilia. Thus, the section intends to cover all the medical treatments/ ailments for major illnesses and diseases.
How to claim tax deduction under Section 80DDB?
Taxpayers can claim the deduction under Section 80 DDB at the time of filing Income Tax Returns. They need to get a medical certificate or medical proof that the medical treatment is going on or the prescription form from the doctor or concerned specialist stating that the person is suffering from any disease specified under Section 80 DDB.
If the taxpayer is taking treatment in any of the government hospitals, then the prescription should contain the name and address of the government hospital. The prescription should contain the Patient's name, Patient's age, Name of the Disease, Treatment name, Doctor's/ Specialist's name, Address of the Doctor, Qualification & Register number of the Doctor.
In case of getting certificate from the government hospital, then they have to get certificate from any specialist working full- time in that hospital and those specialist should have a Master degree in General Medicine or an equivalent degree, which is recognized by the Medical Council of India (MCI).
There must be a signature of the Chief doctor of that hospital at the end of the form.
The prescription form must be submitted by the tax payers to the income tax department in addition to the Income Tax Return.
The applicant should furnish a certificate in the prescribed form from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist/ doctors working in a Government hospital.
How to fill up Form No. 10- I?
For claiming tax deduction, the applicant must fill up the 80 DDB Form, which is also called as Form 10- I. The form must be filled according to the rule 11DD.
The steps to be followed while filling up the form 80 DDB are as follows:
Step 1: Fill up the patient's name clearly.
Step 2: Fill up the address of the patient.
Step 3: Enter the father’s name of the patient.
Step 4: Enter the name as well as the address of the person on whom the applicant is dependent and the relationship between them.
Step 5: Enter the name of disease/ ailment. For this refer the rule 11DD.
Step 6: Mention the clause or sub rule and also mention whether the disability is 40% or more for diseases and ailments.
Step 7: Enter the name, address, registration number and the qualification of the specialist issuing the certificate along with the name and address of the government hospital. Before filling this, refer rule 11 DD(2)
Step 7: After ensuring that the information entered are correct, applicants have to fill up the verification section and sign at the bottom with their name and address.
Amount of Deduction:
The deduction amount will be based on two factorsnamely, the age of the patient and the actual amount of medical expenses.
If no reimbursement is received by the applicant either from the employer or insurer, consequently from Rs. 60,000/- expenditure, they can claim a maximum deduction of Rs. 40,000/-.
If the amount of Rs. 20,000/- has been received by the applicant as reimbursement, then they can claim only Rs. 20,000/- as deduction from the balance.
If the reimbursement amount received is Rs. 45,000/- which is higher than the amount of eligible deduction, then they will not be able to claim this deduction.
The actual amount spent for the treatment or the sum of Rs. 40,000/- whichever amount is less is considered.
If the person is a senior citizen, then the maximum amount of deduction is Rs.1 lakh.
If the person is less than 60 years of age, then the amount deducted will be Rs. 40000/-.
If the age of the person is more than 60 years/ Senior Citizen, then the amount deducted will be Rs. 100000/-.
Amendments in Section 80 DBB:
During the Budget section for the year 2018, Finance Minister Arun Jaitley stated a useful offer to the taxpayers by introducing the tax deduction for the expenses of medical treatment of senior citizens and super senior citizens.
Beginning from the year 2018-19, the maximum tax deduction that can be claimed under Section 80 DDB for the medical expenses for the diseases/ ailments, for the senior citizens with the age limit of 60 years and above is Rs. 1,00,000/-.
The limit until then had been Rs. 60,000 for senior citizens with the age limit between 60 years to 80 years and Rs. 80,000 for super senior citizens between the age limit of 80 years and above. This amendment shall be applicable from 01 April 2019 and will accordingly apply in relation to the assessment year of 2019- 20 and the upcoming years.
Generally, the deduction of taxes under this section can be claimed only for expenses incurred on medical treatment in the previous year. In addition to it, the amount is based on the age of the person who claims for the deduction and the one who is taking the treatment. So, it is important to keep all the forms that are spent on the medicines. Also, don’t forget to mention the same in your ITR form.