Section 80DDB of the Income Tax Act

Section 80DDB of the Income Tax Act, 1961 allows provisions for deductions on tax against the medical treatment of a dependent who suffers from any disease covered under it, as mentioned later in the article. Only Hindu Undivided Family (HUF) and individuals can claim the tax benefits under this section. 

The dependent, in the case of this section, refers to the children, spouse, siblings, and parents of the taxpayer. In addition to this, if the dependent receives a payout from an insurance provider and has medical insurance, the reimbursement amount which they received shall be excluded from the income tax deduction.

Below mentioned is the list of deductions and their limitations under Section 80DDB of the Income Tax Act:

• A maximum amount of Rs. 40,000 can be deducted from tax for the medical treatment of a dependent for the diseases, as mentioned below later in the article.

• A maximum amount of Rs. 1,00,000 can be deducted from tax for the medical treatment of a dependent who is aged above 60 or is a super senior citizen over the age of 80 for the diseases, as mentioned later in the article.

Patients who receive treatment from private hospitals do not require to receive a certificate from a government doctor or hospital. They can receive one from a qualified private doctor. 

Patients who get treated at a government hospital must get a certificate from a specialist who is working full-time in the hospital where they get admitted. The specialist must have completed a post-graduation in General Medicine or any equivalent degree as recognised by the Medical Council of India.

Only individuals and Hindu Undivided Families (HUFs) can claim the tax deductions under section 80DDB of the Income Tax Act, 1961.

The tax deductions can be claimed only - 

• If the entity concerned is a resident of India in that particular financial year

• If the medical expenses are for the HUF or the individual/family member dependent on them. 

The below-mentioned medical diseases and ailments are allowed for tax deductions under section 80DDB:

• Neurological diseases like Ataxia, Aphasia, Hemiballismus, Dementia, Dystonia, Musculo rum Deformans, Chorea, Parkinson’s disease, and Motor Neuron Disease.

• Chronic Renal Failure

• Haematological disorders like Hemophilia and Thalassemia.

• Malignant Cancers

• Full-blown Acquired Immuno-deficiency Syndrome (AIDS)

A doctor’s prescriptions are very important to be able to claim tax deductions under this section. Below mentioned are a few of the prescriptions which are required by the beneficiaries for a few diseases:

Below mentioned details must be mentioned in the certificate of prescription according to the income tax department:

• Patient’s name

• Patient’s age

• Disease name

• Details of the specialist: name, address, qualification, and registration number

• If the patient’s treatment takes place at a government hospital, the hospital’s name and its address must be mentioned in the prescription

Based on the patient’s age, a deductible amount can be claimed under section 80DDB. If the medical expenditure is incurred for a dependent or an individual, or a HUF member, the deductible amount is capped at the amount which is paid or Rs. 40,000, whichever is lower.

A senior citizen would mean an Indian Resident who has completed 60 years of age or more at any particular time during the given previous year. A super senior citizen would mean a resident of India who has finished 80 years of age or more at any particular time during the given previous year. Hence, the deductible amount can be claimed u/s 80DDB as mentioned in the table below:

• You can claim the deduction only with respect to the real expenses as incurred during the given previous year.

• The deductible amount is based on the patient’s age and not on the assessee’s age or the individual who claims the deduction.

• The deductible amount u/s 80DDB excludes the deductible amount as claimed under any other section of Chapter VIA.

The deductible amount can be claimed u/s 80DDB if it is adjusted by an amount as received from the insurance provider against a health insurance policy or reimbursement from the employer. Hence, if a medical treatment expense of Rs. 60,000 is incurred, then a tax deduction of Rs. 40,000 can be claimed under this section.

On the other hand, if the assessee receives Rs. 30,000 from the insurance provider against that expense, the deductible amount which can be claimed by him under this section is considered to be mitigated by that amount. Hence, an amount of Rs. 10,000 (Rs. 40,000 - Rs.30,000) can be claimed by the assessee u/s 80DDB.

Besides, if the amount that the insurance provider receives against the expenditure of Rs. 60,000 is Rs. 50,000, which crosses the upper limit of Rs. 40,000, the assessee will then not be able to be eligible for tax deduction under this section. It must be noted that in such a case as this if the individual who is undergoing the treatment is a senior citizen, he can claim a tax deduction of Rs. 1,00,000.

It was in the Budget 2018 where the proposal to hike the deduction u/s 80DDB for the medical treatment of particular diseases for senior citizens was announced. The amendment of the provisions under this section was proposed to be increased to Rs. 1,00,000 for both senior and super senior citizens from Rs. 60,000 and Rs. 80,000, respectively.

Below mentioned are a few exclusions under this section:

• Treatment for diseases other than the ones mentioned under Section 80DDB of the IT Act will not be eligible for a tax deduction.

• Failure to produce a valid medical certificate from a recognised and licensed doctor can invalidate your tax deduction claim.

• In case the dependent patient is insured and receives reimbursement for their medical treatment, the amount of reimbursement will be deducted from the medical expenses. The patient again will not be eligible for the Section 80DDB deduction.

As per the Finance Act, 2015, an amendment under Section 80DD of the Income Tax Act was proposed for those who suffer from medical diseases in order to claim deductions on tax in a simpler manner. As per this amendment, an assessee could now claim deductions by providing a prescription from a specialist in that field of treatment. This section has helped the public save a lot on their taxes.