What are the tax deductions available on Critical Ailments expenses?

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A tax deduction is an overall benefit that comes complimentary with health insurance plans and medical expenses. There is a separate category that deals with specific critical ailments that involve high expenses and more medical assistance. Critical ailment related expenses and the percentage of tax deduction are set under the section 80DDB of the Income Tax Act.

This section particularly mentions critical ailments that require special attention, both monetary and physical. This section sets the rules and conditions under which an individual can claim tax deductions on the health insurance premium.

The medical ailments specified under section 80DDB are:

  1. Neurological diseases:
  • Ataxia
  • Dementia
  • Aphasia
  • Dystonia Musculorum Deformans
  • Hemiballismus
  • Parkinson’s Disease
  • Chorea
  • Motor Neuron Disease
  1. Chronic renal failure
  2. Malignant cancer
  3. Haematological disorders:
  • Thalassemia
  • Haemophilia
  1. Full blown Acquired immune deficiency syndrome (AIDS)

The Chapter VI-A of the section 80DDB provides tax deductions to individuals suffering from some specified diseases. This section is applicable to individuals or the members of Hindu Undivided Family (HUFs) who must be residents of India. The medical expenses should be incurred by an individual or HUF either for self or any dependent family member.

The Section 80DDB defines a dependent member as the following:

  • Dependent spouse
  • Dependent parents
  • Dependent children
  • Dependent sisters
  • Dependent brothers

Under section 80DDB, the maximum tax deduction allowed shall be the least of the following:

  • Actual amount paid
  • Rs 40,000

While, for senior citizens between the age of 60 years and 80 years, the maximum tax deduction is Rs 60,000, for senior citizens above the age of 80, the maximum amount that can be availed is Rs 80,000.

To get the tax deduction, an individual must submit the medical certificate that should have details like the name and age of the person, the name of the ailment or disease, the details of the specialist (name of the doctor, qualification, address, and registration number of the doctor), and the name of the hospital that is being visited for the treatment of the person.

In the year 2015, a new amendment was made in the section 80DDB of the Income Tax Law. According to this amendment, any individual can get the tax benefit after showing a certificate obtained from a reputed doctor of the specific field having legitimate experience in the field. The doctor could be from any government hospital or dispensary, or any reputed private hospital. Prior to the amendment of 2015, only the medical certificate obtained from the government doctor was considered valid.

The income tax law has further clarified the process of acquisition of the certificate that can help an individual to access the tax benefit. The processes are as follows:

  1. If the person is getting a treatment done from a privately-run hospital;
  • The individual can take a certificate from that hospital itself
  • The individual doesn’t need to find a government run hospital in order to get a certificate
  • The certificate mandatorily should be signed by a specialist doctor. The specialist must possess a degree in the field of specialisation and the same should be validated by the Medical Council of India
  1. If the person is getting treatment from a government run hospital;
  • The certificate can be acquired by a specialist working as a full-time doctor at the hospital
  • It is mandatory for the specialist to have a general post-graduation degree in medicine which should be validated by the Medical Council of India

Conclusion

The medical inflation is rising at an unprecedented rate in India. A simple hospitalisation is enough to put a burden on your finance. When it comes to critical ailments, the treatment costs may increase manifolds. Therefore, the government’s move to offer extra tax benefits on critical ailments is a good move to ease the financial burden to some extent.

Karan is CA by Qualification with the rare distinction of being awarded All India Rank 22. He is also the founder of this website and loves to help people with their Tax Queries.