Here is Complete information on income tax deductions under sections 80DD which relate to medical expenses and health insurance / mediclaim. Good understanding will help you in substantial tax savings.
Every family has regular medical expenses. This may be towards a health insurance premium, or expenditure related to a family member's disability/critical illness. The Income Tax Act of 1961 has made provisions to reduce this burden through tax deductions under Income Tax section 80D, section 80DD, section 80DDB. Read on to understand how to use these sections to your benefit.
Section 80DD for Medical Treatment of Handicapped Dependents
If you are incurring expenditure for the treatment of your handicapped dependent, you could claim a deduction under section 80DD.
Available Deduction - Rs 50000, or actual expenditure incurred, whichever is lesser. For severe handicap conditions Rs. 1,00,000 is the deduction limit.
Scope of Deduction - Deduction can be claimed for dependent parents, spouse, children and siblings. Dependents must not have claimed any deduction for their disability.
Deductions are permissible in either of the following cases.
a) Costs incurred for medical treatment, training or rehabilitation of a disabled dependent, including amount spent for nursing.
b) Amount paid towards an insurance scheme for the maintenance of your disabled dependent in case of your untimely death.
Meaning of Disability- Disability means a person suffering from 40% or more of any of the below disabilities. A severe disability condition is 80% or more of the disabilities.
a) Blindness and Vision problems
b) Leprosy-cured
c) Hearing impairment
d) Locomotor disability
e) Mental retardation or illness
Key factors
a) Individuals would need to produce a copy of the disability certificate as issued by the central or state government medical board to claim deduction.
b) Insurance policy obtained must be in your name and should be a policy for life. It could pay either an annuity or a lump sum amount for the benefit of the dependent on your death.
c) If the disabled dependent predeceases you, the policy amount is returned to you, and treated as income for the year in which you receive it, thus fully taxable in your hands.
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