Section 80DDB of Income tax Act
The recent global healthcare crisis has increased people's dependence on healthcare insurance to save significantly on rising medical costs. However, individuals unable to afford regular healthcare insurance premiums can save on their tax liability instead via Section 80DDB of the IT Act. Under this, you can enjoy an 80DDB deduction on medical expenses incurred on your dependent or yourself.
Now that you know what 80DDB in Income Tax is, let's talk about eligibility, claim process, and other factors to help you understand better.
80DDB Deduction: Who Can Avail It?
Take a look at other 80DDB eligibility criteria to claim tax benefits -
- Only individuals and Hindu Undivided Families (HUF) qualify for tax benefits.
- Indian citizenship is a must. Any non-residents of India cannot enjoy these tax benefits. Also, any corporate businesses do not qualify for a deduction on income tax returns.
- You are an eligible taxpayer and have incurred medical expenses on diseases of your dependent.
- Here, dependents can be your spouse, children, siblings or parents. You can claim a deduction on your medical expenses as well.
80DDB Diseases List: Disease's Name Against Which You Can Claim Deduction
Take a look at the specified diseases under section 80DDB of Income Tax Act mentioned below -
This deduction covers patients suffering from 40% neurological disability. Diseases include -
- Parkinson's Disease
- Motor Neuron Disease
- Dystonia Musculorum Deformans
Other diseases include
- Severe Renal failure
How to Claim Deduction Under Section 80DDB?
Note the following pointers on how to claim tax benefits under 80DDB:
3 Factors to Consider Before Availing 80DDB Deduction
To claim your tax deduction, first consider these pointers:
- As an eligible taxpayer, you need to provide a hard copy of a medical certificate. The Central or State government medical board must issue the medical certificate stating the disease.
- The life insurance policy must be under the tax assessor’s name. Also, remember that this insurance policy is not health insurance. This pays the annuity in case of a tax assessor's sudden demise. This lump sum amount serves as a death benefit for the dependent.
- In case of the demise of a disabled dependent before taxation, the policy amount is returned to the assessor. This amount is treated as income and hence taxed accordingly.
Documents Required to Claim Your 80DDB Deduction
1. Medical Certificate
As a taxpayer, you need to submit a medical certificate issued by an authorised medical practitioner to the Income Tax Department while filing your tax return. This serves as proof for medical treatment or the treatment that has been performed.
A prescription from a Neurologist (Doctorate of Medicine in Neurology or any equivalent degrees)
Severe Renal Failure
A prescription from a Nephrologist (Doctorate of Medicine in nephrology or other equivalent degree). Or else, a prescription from a Urologist (Master of Chirurgiae or other equivalent degrees)
A prescription from an Oncologist (Doctorate of Medicine in oncology or other equivalent degrees)
Haematological Disorders (Thalassaemia and Hemophilia)
A prescription from a specialist (Doctorate of Medicine Degree in Hematology or other equivalent degrees)
A prescription from a doctor (Post Graduate Degree in general or internal medicine or other equivalent degrees)
Also, 2 things to remember:
- Person Receiving Treatment at a Private Hospital
In this case, he/she may collect the certificate from the same hospital. Therefore, he does not have to collect the same from a government hospital as instructed earlier.
- Person Receiving Treatment from Government Hospital
He/she must collect a medical certificate from a full-time working medical practitioner.
2. Self-Declaration Document
You need to showcase a self-declaration certificate. This serves as proof of the medical expenses you have incurred. Hence, this document must include all the medical expenses, including training and rehabilitation of the disabled dependent.
3. 80DDB Form
According to the new rule, you don't need to submit the prescription and Form 10-1.
But, it is essential in case a dependent suffers from disabilities such as Autism and Cerebral Palsy.
4. Paid Insurance Premium Receipts
You must submit your paid insurance premium receipts for tax exemption under section 80DDB against an insurance policy.
How to Fill in the Form for 80DDB?
Follow the step-wise guide to fill up the 80DDB Form:
- Step 1: Fill in the patient's name, address, father's name.
- Step 2: Write the name and the person's address and relationship with the patient on whom the person is dependent.
- Step 3: Mention the name of the disease. Also, specify the extent of the disability (For example, 40% or more).
- Step 4: Fill in the name, address, registration and qualification of the doctor issuing the medical certificate. Mention the name and address of the hospital.
- Step 5: Fill in the "verification" section. Also, the form should be duly signed by you and the head of the government hospital. He/she must hold a post-graduate degree in General or Internal Medicine.
80DDB Deduction Limit: What Do You Need to Keep in Mind?
The deduction under 80DDB is completely based on the age of the dependent on whom you have incurred medical expenses. So let's take a look at the age category:
Individuals categorised as seniors are Indian citizens and are 60 years or more in the given year.
Super senior citizens are Indian residents who are 80 years of age or more in the given year.
The maximum ceiling of tax deduction is the actual paid medical cost or ₹40,000 whichever comes first. Considering this, the amount of deduction follows:
80DDB Deduction Amount
Less Than 60 Years
₹40,000 or the actual medical cost, whichever is less
60 Years Or Above
₹1,00,000 or actual medical cost, whichever is less
80 Years Or Above
₹1,00,000 or the actual medical cost, whichever is less
If your employer or insurer reimburses the medical cost, that credit is adjusted in 80DDB deduction. For example, if you incur a medical cost worth ₹60,000, you can claim a tax exemption of ₹40,000. But, suppose your insurer reimburses ₹30,000 medical costs for the specified diseases. Then, you can claim a deduction of only ₹10,000 under section 80DDB Income Tax Act.
Remember, if the reimbursement exceeds beyond the permissible amount of ₹40,000, then you cannot enjoy a tax deduction. However, if the dependent is a senior citizen, you can enjoy a tax exemption of ₹1,00,000.
The government plans to extend the tax benefits to help the patients suffering from the current healthcare crisis. So keep these above pointers in mind to enjoy 80DDB deduction without any hassle.