Medical Expenses are Eligible for Tax Benefits

Medical expenses by default provides tax benefits

Medical expenses are reality of your life. That is medical expenses is basic need of your family life, like food, shelter, education, etc. You cannot plan your medical expenses, both in terms of timing and amount. You cannot avoid and control your medical expenses, but you can take heart from the fact that your medical expenses do provide tax exemptions thereby reducing your taxes.

Process to claim tax benefit on your medical expenses is -

  1. Awareness – Know the various income tax sections available to claim tax benefits on your medical expenses
  2. Documentation – Keep records of your medical expense, like medical bills, doctor prescription, etc
  3. Benefit Period – Medical expenses tax exemption are on financial year basis. That is your tax exemptions need to be claimed within the financial year in which your medical expenses occurred. Medical expenses cannot be carried forward to subsequent financial year for claiming tax exemptions in subsequent financial year
  4. Expense Reporting – Submit all your medical expenses data and documents to your company payroll or CA before end of financial year. So that your exemptions for tax savings is accommodated in your taxation before the end of financial year. Do not wait till end of financial year, and then try to claim tax refund from Income Tax Department. As getting tax refund is tedious and takes its own time running into months to years

Income Tax Section 10 – Your Medical Treatment Expenses Reimbursement

  • Section 10 provides exemption for your medical treatment expenses, provided you have medical reimbursement as perquisite from your employer. That is your medical reimbursement exemption is applicable only when medical reimbursement is part of your salary package
  • Exemption is provided on medical treatment expenses on you and your family members for any disease. Expenses on cosmetic treatment and eye-glasses are not included
  • Exemption limit is Rs 15,000 per year
  • Your medical reimbursement amount should be supported by your medical bills and prescriptions corresponding to the medical bills

Income Tax Section 80D – Your Health or Medical Insurance Premium

  • Section 80D provides exemption for your health insurance premium. Health insurance is a must in today’s uncertain and stressful life with increase in cost and availability of quality medical treatment
  • Exemption limit -
    • For you & your family – Rs 15,000 per year
    • For parents – Another Rs 15,000 per year. If your dependent parents are senior citizen, then this exemption limit is Rs 20,000
  • Your medical insurance premium should be paid through cheque to claim the exemption. This exemption is not available for premium paid through cash or demand draft

Income Tax Section 80DDB – Your Medical Treatment Expenses

  • Section 80DDB provides exemption for medical treatment expenses on you and your dependent patient for certain diseases
  • Exemption limit is Rs 40,000 per year. If you or your patient is a senior citizen then this exemption limit is Rs 60,000
  • You need to submit Form 10I, issued by a specialist doctor working in Government hospital certifying the disease and criticality of the disease, to claim this exemption
  • The list of diseases covered are – Dementia, Dystonia Mascular Deformans, Motor neuron disease, Ataxia, Chorea, Hemiballisums, Aphasia, Parkinson disease, Malignant cancers, AIDS, Chronic reneal failure, hematological disorders, hemophilia and Thalassaemia

Income Tax Section 80DD – Your Expenses on Physically Disabled

  • Section 80DD provides for exemption for expenses on your physically disabled dependent
  • Exemption is allowed for your expenses on -
    • Medical treatment – Medical treatment expenses including nursing, training and rehabilitation of your handicapped dependent
    • Annuity paymentPayment or deposit under an approved scheme of LIC or UTI providing annuity or lump sum amount to your handicapped dependent in event of your death
  • You need to submit Form 10IA, issued by Government Doctor certifying the physical disability, to claim this exemption
  • Exemption limit is Rs 50,000 each year. If the disability is severe as certified by the Government doctor, then the exemption is R 75,000

Make sure you use all the tax benefits available for medical related expenses