Have You Claimed Your Medical Expenses This Year?

Broadly, the medical expenses that can be claimed under the Income Tax Act 1961 (‘the Act”) in the income tax return[1] of an individual/HUF, comprise of the following:

  • Health Insurance/ Preventive Medical Check-up for Self and Family;
  • Maintenance or Medical Treatments for Disabled Dependents;
  • Medical Treatment for Dependents with Specified Diseases; and
  • Deduction for Person with Disability.

 

Health Insurance/Preventive Medical Check-up for Self and Family

As per section 80D of the Act, the taxpayer, being an individual or an HUF, can claim a deduction on premium paid towards medical insurance with the General Insurance Corporation of India or any other insurer approved by the Insurance Regulatory and Development Authority (IRDA) and medical expenditure incurred for

  • Self;
  • Spouse;
  • Parents;
  • Dependent children; and
  • Members of the HUF.

The deduction can be claimed from the following payments made by the taxpayer:

  1. A medical insurance premium paid for any of the foregoing;
  2. Actual expenditure incurred during the year on account of preventive/diagnostic health check-up for the health of any of the above;
  3. Medical expenditure incurred on the health of senior citizens (aged 60 years or above), whether taxpayer or any his/her family member, who are not covered under any health insurance scheme;
  4. The contribution is made to the Central Government Health Scheme, or any scheme as notified by the Government.

The above referred payments (barring the expenditure incurred on preventive health check-up) need to be mandatorily made through non-cash modes to avail the benefit.

The deduction in a year, would be subjected to the aggregate limits, as follows:

Particulars Premium Paid (Rs)   Maximum Tax Exemption u/s 80D (Rs)
  For
Self, Spouse and Dependent children
For Parents  
Individual, Spouse, dependent children, and parents < 60 years 25,000 25,000 50,000

Individual, Spouse, Dependent Children < 60 years

but parents > 60 years

25,000 50,000 75,000
Individual/Spouse, and parents > 60 years 50,000 50,000 100,000
Members of HUF 25,000 25,000 25,000

Note:

  • The above amount is inclusive of the preventive health check-up limit of Rs. 5,000 (Rupees Five Thousand only). The taxpayer can avail this tax benefit on the payment made towards the preventive health check-up undertaken for the taxpayer, spouse, children and parents.
  • If medical expenses are incurred for senior citizens (either self, spouse, dependent children or parents) not covered under any medical insurance, then the taxpayer can claim deduction for the said expenses incurred under the above limit of Rs 50,000.
  • If both the taxpayer and the parents are aged more than 60 years, for whom the medical covers has been taken, the maximum deduction that can be availed under this section is Rs 100,000. If the medical expenditure done on senior citizens (taxpayer/family and parents) are not covered under any health insurance, the taxpayer can claim a deduction for the said expenses within the said limit.

Based on the above reading, the maximum claim u/s 80D could be up to Rs 100,000 in a year.

Maintenance or Medical Treatments for Disabled Dependents

An individual or an HUF resident in India can claim for deduction under section 80DD of the Act in respect of the following:

  • expenditure for the medical treatment (including nursing), training and rehabilitation of a dependent, being a person with disability[1]; or
  • the amount paid to Life Insurance Corporation (LIC) or any other insurer or administrator or specified company in respect of a scheme for the maintenance of a dependent, being a person with disability.

Subject to a fixed deduction of Rs 75,000 if the disability is 40% or higher but less than 80% and Rs 125,000 if the disability is severe (80% or higher).

However, the deduction is subjected to the following conditions:

  • To claim the same, one must produce a certificate of disability from a prescribed medical authority to be filed on Form No. 10-IA[2] with the return of income.
  • The disabled individual should not have taken deduction under Section 80U.
  • It is essential that they should be wholly or mostly dependent on the taxpayer for their support as well as maintenance.

 

Medical Treatment for Dependents with Specified Diseases or Ailment

As per section 80DDB of the Act, an individual or an HUF resident in India can claim for the deduction of medical treatment of the specified diseases or ailments (Ref: Rule 11DD of the Rules), subject to:

  • Rs 40,000 per annum or the actual amount paid (whichever is less)
  • For senior citizens, Rs 100,000 per annum or the actual amount paid (whichever is less)

 

Deduction for Person with Disability

Section 80U of the Act provides deduction to people suffering from a disability[3]. As per this section, individuals suffering from a disability of at least 40% can claim tax benefit of Rs 75,000 per financial year (Rs 125,000 in case of severe disability of 80% and more). The taxpayer has to file Form No. 10-IA[4] producing certificate of disability from a prescribed medical authority with the return of income to claim the deduction.

The above deductions available to taxpayers should be carefully studied and optimised while finalising the income tax return.

For further advice and detailed assistance kindly contact any of the following individuals Fox Mandal and Associates:

Sandip Mukherjee – sandip.mukherjee@foxmandal.in

Salusalini Jha – salusalini.jha@foxmandal.in

Nikhil Bhise – nikhil.bhise@foxmandal.in

Akshita Bhandari – akshita.bhandari@foxmandal.in

References:

[1] Due date for filing FY 2021-22 tax return for individuals is 31st July, 2022.

[1] As defined in Sec2(i) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995

[2] Ref: Rule 11A of the Income Tax Rules

[3] As defined in Sec2(i) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995

[4]  Ref: Rule 11A of the Income Tax Rules

Here is a detailed list of medical expenses that an individual/HUF can claim while filing the annual income tax return under the Income Tax Act, 1961. 

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