Chapter VI of the Income Tax Act, 1961 provides a range of deductions that help in reducing your tax liability. These deductions range from Section 80C to Section 80U. You can claim these deductions from your gross taxable income to arrive at the net taxable income.
Among the different deductions available under Chapter VI A, one deduction is for meeting the expenses of diseases and illnesses. This deduction is available under Section 80DDB. Let’s understand what the deduction is all about and how to claim it –
What is the deduction under Section 80DDB?
If you have a dependent who is suffering from a specified disease (listed by the Income Tax Department), the deduction is allowed for the medical expenses incurred on treatments of such diseases. Section 80DDB of the Income Tax Act, 1961 allows a deduction for the costs of medical treatments for dependents suffering from an illness or disease listed by the income tax department.
Details of deduction available under Section 80DDB
To claim the deduction under Section 80DDB, here are some details that you should keep in mind
- If you have spent money on the medical treatment of a dependent, you can claim the deduction
- The deduction is available in the financial year when you incur the medical costs
- If you have insurance coverage on the dependent and a claim is paid under such an insurance policy, the amount of the claim would be deducted from the deduction amount available.
What is the deduction amount allowed under Section 80DDB?
The amount of deduction that you can claim under the provisions of Section 80DDB depends on your age. If you are aged below 60 years, the amount of deduction would be INR 40,000 or the actual amount of medical costs paid, whichever is lower.
If, on the other hand, you are aged 60 years and above, the amount of deduction allowed would be INR 1 lakh or the amount of medical costs that you have actually incurred, whichever is lower.
Eligibility to claim deduction under Section 80DDB
A taxpayer can claim an 80DDB deduction only if the following eligibility parameters are fulfilled
- The taxpayer is an individual or a Hindu Undivided Family
- The taxpayer is a resident Indian
- The dependent on whose treatment the money has been spent is the spouse, child, parent or sibling.
- The certificate for the disease or illness is taken from a specialist as specified by the Income Tax Act, 1961
Specified specialists to issue a certificate for an eligible deduction under Section 80DDB
As stated above in the eligibility parameters, specified specialists should issue a certificate for the disease or illness for which the treatment has been taken. The eligible specialist depends on the disease suffered and is as follows
|Type of disease or illness||Eligible specialist to issue a certificate|
|Any type of neurological disease where the dependent becomes disabled to the extent of 40% and above, as certified by the specialist. The disease include the following|
* Motor Neurone Disease
* Parkinson’s Disease
* Dystonia Musculorum Deformans
|* A neurologist who possesses a degree of Doctorate of Medicine (D.M) in neurology|
* A neurologist who possesses any equivalent degree that is recognized by the Medical Council of India
|All types of malignant cancers||* An oncologist who possesses a Doctorate of Medicine degree in oncology|
* An oncologist who possesses any equivalent degree that is recognized by the Medical Council of India
|Full-blown cases of AIDS (Acquired Immuno-Deficiency Syndrome)||* A medical specialist who possesses a postgraduate degree in the fields of general medicine or internal medicine|
* A medical specialist who possesses any equivalent degree that is recognized by the Medical Council of India
|Chronic renal failure||* A nephrologist who possesses a Doctorate of Medicine degree in nephrology|
* A nephrologist who possesses any equivalent degree that is recognized by the Medical Council of India
* A urologist who possesses a Masters of Chirurgiae (M. Ch.) degree in urology
|Specified haematological disorders that include the following –|
|* A specialist who possesses a Doctorate of Medicine degree in oncology|
* A specialist who possesses any equivalent degree that is recognized by the Medical Council of India
How to get the certificate from the qualified specialist for deduction under Section 80DDB?
Here are some tips and ways to get the certificate from a qualified specialist so that you can avail of Section 80DDB deduction
- If your dependant is getting treated at a Government hospital, the certificate should be availed from a specialist who works full-time at the hospital. Such a specialist should possess a postgraduate degree in the field of general medicine or any other equivalent degree which the Medical Council of India recognizes
- If your dependant is getting treated at a private hospital, you do not have to avail the certificate from a Government hospital
- The certificate should contain the disease or illness that the dependent has suffered from, the name and age of the dependent taking the treatment, the name, registration number address, and qualification of the specialist who is treating the dependent. In the case of Government hospitals, the name and address of the hospital should also be mentioned on the certificate.
- The certificate is not required to be submitted in Form 101
Diseases and ailments covered under Section 80DDB
Section 80DDB allows deduction from the taxable income if your dependant suffers from any of the following diseases and ailments as specified by the Income Tax Act, 1961
- Any type of neurological disease where the dependent becomes disabled to the extent of 40% and above, and the disability and its severity is certified by the specialist. The disease include the following
- Motor Neurone Disease
- Parkinson’s Disease
- Dystonia Musculorum Deformans
- All types of malignant cancers
- Full-blown cases of AIDS (Acquired Immuno-Deficiency Syndrome)
- Chronic renal failure
- Specified haematological disorders that include the following –
Documents required for claiming deductions under Section 80DDB
A valid deduction under Section 80DDB of the Income Tax Act, 1961 is available if you fulfil the specified eligibility parameters and submit the required documents. Such documents include the following
- A document that acts as proof that a treatment allowed under Section 80DDB is required. This document is the prescription issued by a recognized medical practitioner
- A document establishing the fact that the treatment has been availed of
- The medical certificate issued by the relevant specialist depending on the disease as mentioned earlier
Details which should be mentioned in the prescription
The prescription is an important document that you have to submit to claim a deduction under Section 80DDB. It acts as proof of treatment needed. The prescription, however, should contain the following details
- The name of the patient
- The age of the patient
- The disease or ailment that the patient suffers from
- The name of the specialist overseeing the case
- The qualification of the specialist
- The registration number of the specialist
- The address of the specialist
Amendment to Section 80DDB in the Union Budget 2018
The Government constantly updates and amends the income tax laws to keep them relevant in changing times. In the Union Budget of 2018, the then Finance Minister, Mr. Arun Jaitley, made changes in the provisions of Section 80DDB. As per the amendments, the limit of deduction available to individuals aged 60 years and above was enhanced to INR 1 lakh. Prior to the budget, the limits were as follows
- Senior citizens aged between 60 and 79 years – INR 60,000 or the actual medical costs incurred, whichever is lower
- Super senior citizens aged 80 years and above – INR 80,000 or the actual medical costs incurred, whichever is lower
However, in the budget of 2018, the distinction in limits between senior and super senior citizens was eliminated. The limit was enhanced to INR 1 lakh to taxpayers aged 60 years and above.
Things to remember when claiming deduction under Section 80DDB
Here are some important points that you should keep in mind with regards to Section 80DDB
- You can claim a deduction only if you have incurred medical costs for a dependant in the financial year
- If the cost of the treatment is lower than the deduction limit, the deduction would be allowed up to the costs incurred
- The limit of deduction does not include the limits allowed under other sections listed under Chapter VI A of the Income Tax Act, 1961
Alternative methods to save on tax
The deduction under Section 80DDB of the Income Tax Act, 1961 is available only if you have a dependant and the dependant suffers from any illness listed under the section. Besides this, there are other alternative methods to claim tax deductions from your taxable income. These include the following
- Tax saving under Section 80C
You can invest in life insurance plans, ELSS schemes, NPS, NSC, PPF, EPF, 5-year fixed deposits and other eligible avenues to claim a deduction of up to INR 1.5 lakhs from your taxable income.
- Tax saving under Section 80D
You can invest in a health insurance policy to claim deductions up to INR 1 lakh from your taxable income.
- Tax saving under Section 80TTA
The savings account interest income, up to INR 10,000 can be claimed as a deduction under this section.
- Section 80 TTB
Senior citizens can claim a deduction of up to INR 50,000 on the interest income from fixed deposits with banks and post offices.
These and other income tax provisions help you plan your taxes effectively.
So, know what 80DDB deduction in income tax is all about and how you can use it to reduce your tax liability.
Since the cancer is not malignant in nature, it would not be an eligible illness for the deduction under Section 80DDB. So, you would not be able to claim a deduction in your income tax returns.
No, your nephew or niece is not considered as dependents under Section 80DDB in income tax.
There is no restriction on the dependent’s age for claiming a deduction under the provisions of Section 80DDB.
No, the certificate should contain only the details of the patient and the details of the specialist.
The deduction amount would be limited to INR 40,000 if your age is below 60 years. If, however, you are aged 60 years and above, you can claim the entire amount as a deduction since the maximum limit is INR 1 lakh.