Section 80DDB Deduction
There are many tax-saving instruments available for individual taxpayers that help save on unnecessary tax payments under the Income Tax Act, 1961.
Taxpayers can claim several deductions and make use of exemptions available as per the Income Tax Act guidelines. One such tax-saving section is Section 80DDB.
What is Section 80DDB?
Section 80DDB provides tax exemptions for medical expenses and specific ailments and applies to both individuals and Hindu Undivided Family (HUF).
As per Section 80DDB, there is a detailed list of diseases for which an individual taxpayer can claim deductions, thereby saving on tax while filing income tax returns.
Under Section 80DDB, tax deductions can be claimed under Chapter VI-A with regards to expenses incurred for medical treatment of family members suffering from any of the specified lists of diseases.
Features of Section 80DDB
This is known as a Serious Ailment Deduction and is primarily for those who need to get treatment for any serious diseases as listed by the guidelines of this section.
- As per Section 80DDB of the Income Tax Act, up to Rs. 40,000 can be claimed as a deduction when filing income tax returns.
- The deduction of up to Rs. 40,000 can be claimed against expenses incurred for the treatment of severe disease to self or a dependent
- There is a specified list of serious diseases covered by the section
- The expenses incurred should be real with proper proof. Any reimbursement made towards the expenses should be subtracted
- One must show a certificate of illness from a practising government doctor or a private doctor
- Senior citizens are allowed an exemption of up to Rs 1 Lakh or the amount paid for medical treatment, whichever is lower. This exemption was allowed from 1st April 2019. Earlier, the exemption limit for senior citizens was only Rs 60,000, and Rs 80,000 for super senior citizens
- Diseases covered are dementia, ataxia, aphasia, Parkinson's, dystonia Musculorum Deformans, motor neuron disease, cancers, renal failure, haematological disorders & AIDS
Table depicting the amount of rebate that can be availed as per Budget 2019:
|Covered Individuals||Exemption Limit||Conditions|
|Self||Rs. 40,000||The actual amount paid or exemption limit, whichever is lower|
|Dependent||Rs. 40,000||The actual amount paid or exemption limit, whichever is lower|
|Senior Citizens (Above 60 years of age)||Rs. 1,00,000||The actual amount paid or exemption limit, whichever is lower|
|Super Senior Citizens (Above 80 years of age)||Rs. 1,00,000||The actual amount paid or exemption limit, whichever is lower|
Eligibility Criteria for Claiming Tax Rebate Under Section 80DDB
Tax rebates and deductions under Section 80DDB apply to individual taxpayers and also Hindu Undivided Family or HUF. The tax deductions claimed must be for the financial year that the income tax returns are being filed for, and the medical expenses incurred must be towards individual self or a member of the Hindu Undivided Family or a parent, sibling, spouse, or children that are dependent on the individual.
For an individual to be eligible for tax deduction under Section 80DDB, one of the most important criteria is a certificate of illness for the specific disease.
The income tax department has made some changes to make it easier for individuals to acquire this certificate:
- If the patient receiving medical treatment is being treated at a privately owned hospital
- The certificate of illness needs to be acquired from a government doctor
- The certificate of illness can be acquired from the hospital where the patient is being treated
- The certificate must be acquired from a doctor that is specializing in the disease which the patient is suffering from. The specialist must also possess a degree in his area of specializing, which is validated by the Medical Council of India
- For those patients that are being treated at a government hospital
- The certificate of illness must be taken from a government doctor who is working full-time at that hospital
- The specialist doctor must possess a general Post-Graduate degree or an internal medicine degree or similar, validated by the Medical Council of India
- The certificate of the disease in Form 10I will not be required
- Details to be included in the Certificate of Illness as per the Income Tax Department
- Name of the patient
- Age of the patient
- Name of the ailment or disease which the patient is suffering from
- Details of the specialist or treating doctor:
- Registration Number
- If the treatment of the patient is taking place in a government hospital, then the name of the hospital and its address also have to be mentioned in the certificate
We can take a look at three cases as examples of how deductions under Section 80DDB can be claimed
|Case 1||Case 2||Case 3|
|Particulars||Amount (Rs)||Amount (Rs)||Amount (Rs)|
|Actual expenses incurred on treatment (Age <60 years)||60,000||60,000||60,000|
|Eligible Amount of deduction||40,000||40,000||40,000|
|Reimbursement received from employer or insurance company||0||20,000||40,000|
|Amount deductible under Section 80DDB||40,000||20,000||0|
In the first case, the individual has not received any reimbursement but has spent Rs—60,000 on medical treatment. Since the individual is less than 60 years of age, he or she can claim a deduction of only up to Rs 40,000.
In the second case, the individual has received reimbursement from either the employer or the insurance company of Rs 20,000. Therefore only 20,000 can be claimed as a deduction.
In the third case, since a total of Rs 40,000 has been received as reimbursement; no amount can be claimed under the section as a deduction.
How is the Rebate Calculated under Section 80DDB?
If an individual is less than 60 years of age, a total of Rs 40,000 can be claimed as a deduction. Therefore, if an individual spends Rs. 20,000 on medical treatment, he or she can claim only Rs. 20,000 as a deduction provided; he or she has not received any reimbursement. If the person has spent Rs. 80,000 on treatment, he or she can only claim Rs 40,000 total as a deduction as that is the exemption limit. For citizens above the age of 60 years, Rs 1,00,000 is the exemption limit.
How to Claim Rebate under Section 80DDB?
To claim deduction under Section 80DDB, the assessee has to provide proof of medical treatment for that financial year. It is therefore mandatory to obtain a certificate from a doctor that specializes in the disease for which the treatment is occurring, either from a private hospital or a government one. The qualification of the doctor or specialist has to be recognized by the Medical Council of India. A list is provided under Section 80DDB of which specialists are allowed to provide a certificate.
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Ans: The Income Tax Act provides a list of acceptable diseases and treatments for those specific diseases for an individual to be able to claim deductions under Section 80DDB. These include Neurological diseases such as dementia, Ataxia, Chorea, etc., certain malignant cancers, AIDS, Chronic Renal Failure, and Hematological disorders.
Ans: If an individual is paying for the medical treatment of dependents, which include parents, children, spouse, or siblings, then the applicable exemptions under Section 80DDB can be availed. However, if dependents are receiving reimbursement from an employer or insurance company, then these have to be subtracted before claiming the benefit.
Ans: In addition to other exemptions and deductions that be claimed under Section 80D of the Income Tax Act, an individual is allowed to claim a deduction of up to Rs. 40,000 or Rs. 1,00,000 depending on the age, or expenses incurred towards medical treatment of certain specific serious diseases. This helps to lessen the burden shouldered by a taxpayer, especially those that do not receive reimbursements or coverage from employers or insurance companies.
Ans: A certificate of illness can be obtained from a private or government doctor. The certificate must mention certain vital points, and the doctor must meet the standards set by the rules of Section 80DDB to provide an acceptable certificate. For example, if a person has cancer, then only an Oncologist with a Doctorate of Medicine (D.M.) degree in Oncology or other equivalent degrees, as recognized by the Medical Council of India, can provide such a certificate.
Q: I have spent over Rs 2,50,000 for medical treatment of a neurological disorder for the last 3 years. Can I claim a total deduction for expenses incurred this year while filing income tax returns?Ans: No. Deductions as per the exemption limit must be claimed within the same year that the expense was incurred. So, if you are filing your income tax return this year, you can only claim up to Rs. 40,000 if you are below 60 years of age or up to Rs 1,00,000 if you are above 60 years of age.