Tax Exemption on Medical Expenses

Can tax benefits be availed for medical expenses incurred? What are the various sections of Income Tax act and how to avail the benefits.

Section 80D of Income Tax Act:
Medical Insurance premium for self, spouse, children and parents are eligible for exemption under section 80D up to a maximum of Rs.15000 for individuals and Rs.20000 for senior citizens.

Section 80 DD of Income Tax act:
Deduction under this section is available to an individual who:

• Incurs any expenditure for the medical treatment, training and rehabilitation of a disabled dependant; or
• Deposits any amount in schemes like Life Insurance Corporation for the maintenance of a disabled dependant. An annuity or a lump sum amount is paid to the dependant or to a nominee for the benefit of the dependant in the event of the death of the individual depositing the money, from the said scheme,

A deduction of Rs 50,000 is available. Where the dependent is with a severe disability, a deduction of Rs 75,000 is allowed.

To claim the tax benefit under Section 80DD, the dependent person means a person having any disability of not less than 40%, as per section 2(i) of the Persons with Disability Act, 1995.
Section 80DD deduction is available only towards medical treatment of dependents with specified disabilities.

Section 80DDB of Income Tax act:

An individual, resident in India spending any amount for the medical treatment of specified diseases affecting him or his spouse, children, parents, brothers and sisters and who are dependant on him, will be eligible for a deduction of the amount actually spent or Rs 40,000, whichever is less.
For any amount spent on the treatment of a dependent senior citizen an individual is eligible for a deduction of the amount spent or Rs 60,000, whichever is less is available.

Section 80DDB allows deduction of expenses on medical treatment of specified ailments prescribed under Rule 11DD of the Income Tax Rules.
The list of diseases/ ailments falling under this section:

1. Neurological diseases where the disability level has been certified to be of 40% and above. These include: Dementia, Dystonia, Musculorum Deformans, Motor Neuron Disease, Ataxia, ChoreaHemiballismus, Aphasia Parkinson's Disease
2. Malignant cancer
3. Full blown Acquired Immuno Deficiency Syndrome, (AIDS)
4. Chronic renal failure
5. Hematological disorders. These include: Hemophilia and Thalassaemia