Deduction u/s 80DDB in respect of medical treatment

Section 80DDB of the Income Tax Act is designed to offer tax relief to individuals facing the financial challenges of medical treatment fo...

Section 80DDB of the Income Tax Act is designed to offer tax relief to individuals facing the financial challenges of medical treatment for specified diseases. This deduction provides a means of easing the burden on taxpayers dealing with severe health conditions. (Updated Finance Act 2023 FY 2023-24)

1. Eligible Assessee:

Any resident individual or Hindu Undivided Family (HUF) can claim deductions under Section 80DDB for the medical treatment of specified diseases.

Expenditure should be incurred for medical treatment of

• In the case of Individual assessee  

• Himself
• wholly/mainly dependent Husband/wife(spouse)
• wholly /mainly dependent children
• wholly/mainly dependent parents
• wholly/mainly dependent brother
• wholly/mainly dependent Sisters
• In the case of Huf, a wholly/mainly dependent member of the HUF   

2. Deduction Limits: 

The amount eligible for deduction varies based on the age of the patient: 

• For individuals below 60 years: Actual expenses or Rs. 40,000, whichever is less. 
• For individuals aged 60 years and above Actual expenses or Rs. 1,00,000, whichever is less.

Eligible Diseases:

The section encompasses specified diseases such as neurological diseases, malignant cancers, chronic kidney failure, AIDS, hemophilia, and thalassemia. The government may include additional diseases for eligibility.

Specified diseases and ailments for the purpose of deduction under section 80DDB.

(i) Neurological Diseases where the disability level has been certified to be 40% and above,

(a) Dementia ;

(b) Dystonia Musculorum Deformans ;

(c) Motor Neuron Disease ;

(d) Ataxia ;

(e) Chorea ;

(f) Hemiballismus ;

(g) Aphasia ;

(h) Parkinsons Disease ;

(ii) Malignant Cancers ;

(iii) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

(iv) Chronic Renal failure ;

(v) Hematological disorders :

(i) Hemophilia ;

(ii) Thalassaemia.

Documentation:

To claim this deduction, the taxpayer needs a prescription for the specified disease from a specialist doctor. The prescription should include details such as the patient's name and age, the diagnosed disease, and the doctor's registration number. No Need To submit for 10-I Now.Refer Rule 11DD given at the end

• Specialist Prescription: The prescription for diseases covered under Section 80DDB must now be issued by specialists, including Neurologists, Oncologists, specialists in General/Internal Medicine, Nephrologists, and Hematology specialists.
• Government Hospital Exception: In cases where the patient is treated in a Government hospital, the prescription may be issued by any specialist working full-time in that hospital, easing the process of obtaining the necessary documentation.
• Prescription Details: The prescription must contain essential details such as the patient's name and age, the specific disease or ailment, and the specialist's name, address, registration number, and qualification. For patients treated in Government hospitals, the prescription should also include the hospital's name and address.
• Form No. 10-I Omission: Form No. 10-I in Appendix II, previously part of the documentation process, has been omitted, simplifying the procedural requirements for taxpayers.

Nature of Expenses:

The deduction is applicable for expenses related to treatment, including nursing, rehabilitation, diagnosis, and the cost of medicines.

Form for Claim:

Earlier, Taxpayers need to fill and submit Form 10-I to claim deductions under Section 80DDB. This form includes details of the patient and the treating doctor, along with the prescribed ailment. But As explained above now the prescription contains the requisite details of the Patient's Name etc is sufficient. The prescription must be issued by a specialist with a Doctor of Medicine (MD) degree in the concerned field or an equivalent qualification for diseases affecting children.

  

Exclusions:

Expenses reimbursed by insurance or an employer are not eligible for deduction under Section 80DDB. Additionally, if the taxpayer has received a deduction for the same expense under any other provision, it cannot be claimed under this section.

Example Illustrating Expenses Reimbursed and Dual Deduction Scenario under Section 80DDB (Indian Context):

Example-1

Consider an Indian resident, Priya, who incurs medical expenses of ₹60,000 for the treatment of a specified disease covered under Section 80DDB of the Income Tax Act.

Expenses Reimbursed by Insurance: Priya has health insurance that covers the medical expenses she incurred. After submitting the necessary documents, her insurance company reimburses her the entire ₹60,000.

In this case, since the expenses have been fully reimbursed by the insurance, Priya cannot claim any deduction under Section 80DDB. The reimbursement nullifies the eligibility for a deduction.

Example-2

Consider Mr. Sharma, a senior citizen in India, who incurs medical expenses of ₹153,000 for the treatment of a specified disease eligible under Section 80DDB of the Income Tax Act.

Claim from Insurance/Employer: Mr. Sharma has health insurance, and upon filing a claim, he receives ₹55,000 as reimbursement for the medical expenses.

In this case, the amount eligible under Section 80DDB would be the maximum allowable limit of ₹100,000 (for a senior citizen) minus the amount claimed from insurance/employer, i.e., ₹100,000 - ₹55,000 = ₹45,000.

Claiming Deduction under Section 80DDB: Mr. Sharma, while filing his income tax return, claims a deduction of ₹45,000 under Section 80DDB.

Conclusion: In scenarios where medical expenses are incurred for the treatment of a specified disease eligible under Section 80DDB of the Income Tax Act, the amount eligible under Section 80DDB is calculated by subtracting the claimed amount from insurance/employer reimbursement from the maximum allowable limit. Taxpayers should ensure accurate calculations to avoid discrepancies during tax assessments.

     

Tax Treatment:

The deduction is claimed from the total income of the taxpayer, thereby reducing the taxable income and resulting in a lower tax liability. This deduction is not available Under the New Tax regime.

  

Conclusion:

Section 80DDB serves as significant financial relief for individuals facing serious illnesses. By providing deductions for medical expenses, the government aims to alleviate the financial strain on those dealing with specified diseases, promoting both health and fiscal well-being. Taxpayers should ensure proper documentation and adherence to the specified conditions to avail of the benefits under this section.

Read About Section 80D  Section 80DD

Frequently Asked Questions (FAQs) - Section 80DDB (Updated Finance Act 2023 FY 2023-24)

1. Who is eligible to claim deductions under Section 80DDB?

- Any resident individual or Hindu Undivided Family (HUF) can claim deductions for medical treatment of specified diseases under Section 80DDB.

2. What are the eligible diseases covered under Section 80DDB?

- Section 80DDB covers specified diseases such as neurological diseases, malignant cancers, chronic kidney failure, AIDS, hemophilia, and thalassemia. The government may include additional diseases for eligibility.

3. What are the deduction limits based on the age of the patient?

- For individuals below 60 years: Actual expenses or Rs. 40,000, whichever is less.

- For individuals aged 60 years and above Actual expenses or Rs. 1,00,000, whichever is less.

4. Is documentation required to claim deductions under Section 80DDB?

- Yes, taxpayers need a prescription for the specified disease from a specialist doctor, including essential details like the patient's name, age, diagnosed disease, and the doctor's registration number.

5. Has the Form No. 10-I requirement been omitted?

- Yes, Form No. 10-I has been omitted from the documentation process, simplifying the procedural requirements for taxpayers.

6. Can the prescription be issued by specialists in non-government hospitals?

- Yes, specialists in private hospitals are now eligible to issue prescriptions for diseases covered under Section 80DDB.

7. What expenses are eligible for deduction under Section 80DDB?

- The deduction covers expenses related to treatment, including nursing, rehabilitation, diagnosis, and the cost of medicines.

8. Are expenses reimbursed by insurance or an employer eligible for deduction?

- No, expenses reimbursed by insurance or an employer are not eligible for deduction under Section 80DDB. The amount of deduction shall be reduced by the amount of reimbursement received by the assessee. (see example-2 above)

9. Can a taxpayer claim a deduction for the same expense under any other provision?

- No, if the taxpayer has received a deduction for the same expense under any other provision, it cannot be claimed under Section 80DDB.

10. How is the deduction calculated in scenarios with insurance reimbursement?

- The deduction is calculated by subtracting the claimed amount from insurance/employer reimbursement from the maximum allowable limit. Accurate calculations are crucial to avoid discrepancies during tax assessments.

Note: Taxpayers should stay informed about any amendments to Section 80DDB and ensure compliance with the specified conditions for availing benefits under this section.

Complete Section reproduced hereunder.

Deduction in respect of medical treatment, etc.

80DDB. Where an assessee who is resident in India has, during the previous year, actually paid any amount for the medical treatment of such disease or ailment as may be specified in the rules⁶³ made in this behalf by the Board—

(a)  for himself or a dependant, in case the assessee is an individual; or

(b)  for any member of a Hindu undivided family, in case the assessee is a Hindu undivided family,

the assessee shall be allowed a deduction of the amount actually paid or a sum of forty thousand rupees, whichever is less, in respect of that previous year in which such amount was actually paid :

Provided that no such deduction shall be allowed unless the assessee obtains the prescription for such medical treatment from a neurologist, an oncologist, a urologist, a hematologist, an immunologist or such other specialist, as may be prescribed :

Provided further that the deduction under this section shall be reduced by the amount received, if any, under an insurance from an insurer, or reimbursed by an employer, for the medical treatment of the person referred to in clause (a) or clause (b) :

Provided also that where the amount actually paid is in respect of the assessee or his dependant or any member of a Hindu undivided family of the assessee and who is a senior citizen, the provisions of this section shall have effect as if for the words "forty thousand rupees", the words "one hundred thousand rupees" had been substituted :

Explanation.—For the purposes of this section,—

 (i)  "dependant" means—

(a) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them,

(b) in the case of a Hindu undivided family, a member of the Hindu undivided family,

dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance;

(ii) [***]

(iii) "insurer" shall have the meaning assigned to it in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938);

(iv) "senior citizen" means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year;

(v) [***]

Rule 11DD . (1) For the purposes of section 80DDB, the following shall be the eligible diseases or ailments :

(i)

Neurological Diseases where the disability level has been certified to be of 40% and above,—

(a)		Dementia ;
(b)		Dystonia Musculorum Deformans ;
(c)		Motor Neuron Disease ;
(d)		Ataxia ;
(e)		Chorea ;
(f)		Hemiballismus ;
(g)		Aphasia ;
(h)		Parkinsons Disease ;

(ii)		Malignant Cancers ;
(iii)		Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
(iv)		Chronic Renal failure ;
(v)		Hematological disorders :

(i)		Hemophilia ;
(ii)		Thalassaemia.

[ (2) The prescription in respect of the diseases or ailments specified in sub-rule (1) shall be issued by the following specialists:—

(a)		for diseases or ailments mentioned in clause (i) of sub-rule (1) – a Neurologist having a Doctorate of Medicine (D.M.) degree in Neurology or any equivalent degree, which is recognised by the Medical Council of India;
(b)		for diseases or ailments mentioned in clause (ii) of sub-rule (1) – an Oncologist having a Doctorate of Medicine (D.M.) degree in Oncology or any equivalent degree which is recognised by the Medical Council of India;
(c)		for diseases or ailments mentioned in clause (iii) of sub-rule (1) – any specialist having a post-graduate degree in General or Internal Medicine, or any equivalent degree which is recognised by the Medical Council of India;
(d)		for diseases or ailments mentioned in clause (iv) of sub-rule (1) – a Nephrologist having a Doctorate of Medicine (D.M.) degree in Nehprology or a Urologist having a Master of Chirurgiae (M.Ch.) degree in Urology or any equivalent degree, which is recognised by the Medical Council of India;
(e)		for diseases or ailments mentioned in clause (v) of sub-rule (1) – a specialist having a Doctorate of Medicine (D.M.) degree in Hematology or any equivalent degree, which is recognised by the Medical Council of India :

Provided that where in respect of any diseases or ailments specified in sub-rule (1), the patient is receiving the treatment in a Government hospital, the prescription may be issued by any specialist working full-time in that hospital and having a post-graduate degree in General or Internal Medicine or any equivalent degree, which is recognised by the Medical Council of India.]

[ (3) The prescription referred to in sub-rule (2) shall contain the name and age of the patient, name of the disease or ailment along with the name, address, registration number and the qualification of the specialist issuing the prescription:

Provided that where the patient is receiving the treatment in a Government hospital, such prescription shall also contain the name and address of the Government hospital.]