Healthy discounts

Healthcare costs are eligible for some tax deduction. Here's the list of rebates.
Dipak Mondal/Money Today        Print Edition: February 2014
Healthy discounts

Healthcare costs constitute a significant part of household budgets, including treatments, preventive checkups and health insurance premiums, and it's increasing every year.

However, not everyone is aware that income tax deduction is available on some healthcare costs , including your health insurance premium. So, here is a list of such tax deductions.

HEALTH INSURANCE PREMIUM
(Under Section 80D)

Health insurance premium paid in a year up to Rs 15,000 can be deducted from your annual income when determining taxable income. The limit is Rs 20,000 for senior citizens; for example, cover for your parents. This deduction is available on mediclaim policies purchased to cover yourself, spouses and dependant children, and parents (dependant or not).

In the context of Hindu Undivided Families (HUFs), the cost of a policy purchased by you for any HUF member is deductible. In effect, you can claim a maximum deduction of Rs 40,000 a year (see table Deduction Limit).

If your yearly health insurance premium is less than these limits, expenses up to Rs 5,000 on preventive health checkups can also be used to claim a tax deduction (total deduction remains the same).

MEDICAL EXPENDITURE FOR SELF OR DEPENDANTS
(Section 80DDB)

Medical expenses for treating certain illnesses are eligible for a tax deduction up to Rs 40,000, or Rs 60,000 for senior citizens. A dependant can be spouse, children, parents or siblings. (For the full list of eligible ailments and diseases, see table Eligibility Test).

However, this deduction is allowed only after you discount the amount paid by your insurer or reimbursed by your employer.

For example, if you have been billed Rs 60,000 for a particular treatment and your health insurer has paid Rs 30,000, you can only claim deduction on the remaining Rs 30,000 (See table Deduction).

To claim a tax deduction, you need to give a certificate (in a prescribed format) of treatment from doctors of government hospitals.

A government hospital can mean a departmental dispensary (full-time or part-time) established and run by the government, a hospital maintained by a local authority or any hospital with which arrangements have been made for treatment of government employees.

EXPENSES FOR TREATING A DISABLED DEPENDANT
(Under Section 80DD)

Expenses for treatment and rehabilitation of a disabled dependant or payment for an approved insurance scheme for a disabled dependant's maintenance is tax-deductible as per Section 80DD.

The limit of tax deduction is Rs 1 lakh per year if the dependant suffers from severe disability ('80% or more') or Rs 50,000 otherwise. A person with a disability is defined as someone who has suffered 'not less than 40% of a disability' as certified by a medical authority.

The disabilities eligible are blindness (or low vision), leprosy, hearing impairment and mental retardation, among others. (See table Eligibility List for full list of disabilities eligible for deduction) For any individual, a dependant can be spouse, children, parents or siblings. In the context of an HUF, any member of the Undivided Family can be a dependant.

The amount you deposit in an insurance scheme is eligible for deduction only if the handicapped dependant gets an annuity or a lump sum after your death. You can nominate either the dependant, another person or a trust to receive the payment on your dependant's behalf.

DEDUCTION FOR PERSONS WITH DISABILITY
(Section 80U)

If you suffer 'a disability that is not less than 40%', you can claim a tax deduction up to Rs 50,000 per year, or Rs 1 lakh for severe disability ('80% or more').

You will have to furnish a certificate from a government-approved medical authority. The condition of disability will be reassessed when the certificate expires. The disabilities eligible for this is the same as mentioned earlier.

 

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