80DDB: Diseases Covered, Deduction Limit, and Certificate
Updated: Oct 1
Section 80DDB of the Income Tax Act provides relief to assessees through deductions on expenditure incurred for the treatment of specified diseases. This section can be a real help to tax-payers incurring high expenses on treatment. In this article, we will talk in detail about the points pertaining to Section 80DDB, diseases covered under it, the limits on deductions, and the documentation required, especially the medical certificate. This understanding would reduce much of the financial burden of the patients suffering from severe illnesses and aid them in making informed decisions at the time of filing their tax returns.
Table of Content
Introduction to Section 80DDB
Section 80DDB deals with expenditure incurred on the treatment of specified diseases mentioned in the rules framed under the Indian tax laws. The deduction is available to every individual and HUF taxpayer and thus provides much-needed tax relief by reducing taxable income. However, the deduction allowable is limited to actual medical expenses incurred, subject to certain upper limits as prescribed under the law.
Purpose of Section 80DDB
Section 80DDB is mainly concerned with bringing financial relief to those who are incurring high medical expenses because of serious health conditions. The purpose of this deduction is as follows:
Financial Relief: Directly reduces the payable income tax of an individual or his family, hence lowering their financial burden.
Healthcare Access: By providing deductions on medical expenses, it indirectly encourages the taxpayer to seek timely and adequate treatment for serious diseases, without worrying about the high costs.
Social Equity: Section 80DDB promotes social equity by using the tax system to give support to people economically disadvantaged by health or other problems.
Diseases Covered under Section 80DDB
Section 80DDB offers deductions for treatment of some specified diseases. Thus it gives a huge relief to people suffering from such diseases. This tax deduction is allowed for diseases of serious nature which usually require continuous treatment and heavy expenditure on the same. Below are the list of diseases for which deduction under Section 80DDB are allowed:
Neurological Disorders: The ailment or disease with a disability level of 40% and above certified by a medical authority are covered under this such as:
Dementia
Dystonia Musculorum Deformans
Motor Neuron Disease
Ataxia
Chorea
Hemiballismus
Aphasia
Parkinson's Disease
Malignant Cancers: All types of cancers are covered under this section, considering the grave medical and financial severity involved in cancer treatment.
Full Blown Acquired Immuno-Deficiency Syndrome (AIDS): Since it requires a heavy amount of treatment, a patient with AIDS can claim deduction under Section 80DDB.
Chronic Renal Failure: Kidney diseases that involve protracted dialysis or heavy medical intervention, come under this deduction.
Hematological Disorders: The following blood-related disorders are covered:
Hemophilia
Thalassaemia
Eligibility Criteria for Claiming Deduction under Section 80DDB
While Section 80DDB of the Income Tax Act, 1961, provides for a deduction on expenditure incurred on the treatment of specified diseases, not all taxpayers are entitled as a matter of course. The conditions and limitations prescribed for specified persons have to be understood to correctly claim the deduction.
Who Can Claim?
The deduction under Section 80DDB can be claimed by:
Individuals: Any individual taxpayer is allowed a deduction of expenditure incurred on the medical treatment of himself or any of his dependants. For the purpose of this deduction, "dependants" mean the spouse, children, parents and siblings of the individual who are wholly or mainly dependent on the individual for their support and maintenance.
Hindu Undivided Families (HUFs): Any expenditure incurred on the treatment of any member of such HUF is eligible for deduction by the HUF.
Eligibility Criteria for Claiming Deduction under Section 80DDB
To claim the deduction correctly, a number of conditions and limitations have to be complied with:
Age and Amount of Deduction:
In case of patients below 60 years of age, the maximum amount of deduction is INR 40,000.
For senior citizens (60 years or more but less than 80 years) the limit is raised to INR 1,00,000. For super senior citizens (80 years or more), the limit remains at INR 1,00,000.
Type of Diseases: The deduction shall be allowed only in case of the diseases specified in the Act. These are neurological disorders, malignant cancers, full blown AIDS, chronic renal failure, hematological disorders.
Medical Authority:
The claim of this deduction has to be substantiated by a prescription from a specialist. The specialist shall be a doctor working in a government hospital and shall be qualified in the respective field according to the rules applicable to the concerned ailment.
In so far as neurological diseases are concerned, the doctor has to be a neurologist who has obtained a degree of Doctorate of Medicine (DM) in neurology or any equivalent degree, which the Medical Council of India recognizes.
For malignant cancers, it needs an oncologist holding a DM degree in oncology or any other equivalent qualification .
Certificate Requirement: A medical certificate from the concerned specialist mentioning the disease and the treatment. This certificate must contain the name and age of patient, name of the disease and other details as may be prescribed.
Reimbursements: If the taxpayer was reimbursed by an insurer or employer for the cost of medical treatment, his deduction amount has to be reduced by the amount reimbursed. The deduction applies only to the net amount actually paid by the taxpayer.
Deadlines for Submission: Claims under Section 80DDB of the Act shall be made at the time of filing regular income tax return. Such documents pertaining to medical certificates and bills need not be attached but have to be retained and furnished if called for by any authority.
Deduction Limits under Section 80DDB
Under Section 80DDB of the Income Tax Act, financial relief is given to the taxpayer by allowing him deduction for medical treatment of specified diseases. These limits differ according to the patient's age and have been revised from time to time to adjust for an escalation in health care costs. The understanding of the limits along with the impact of health insurance reimbursement would play a very important role in maximizing the benefits under this provision for the taxpayer.
The deduction limits under Section 80DDB are designed to grant greater relief to senior citizens, as they usually incur higher expenditure on medical treatments. Currently, the following deduction limits are in place:
For individuals below 60 years of age, the maximum prescribed limit for the deduction is INR 40,000. It applies to expenses incurred on the self of the taxpayer or any dependents below the age of 60.
Now, in the case of senior citizens aged 60 years but less than 80 years, this limit has been enhanced to INR 1,00,000. Hence, it is a higher limit, considering that older adults generally have more needs and health-related expenses.
For super senior citizens aged 80 years and above, the deduction limit is also INR 1,00,000, thereby taking into consideration the huge expenditure on medical care that might incur at a very old age.
How These Limits Have Changed Over Recent Years
Over the past few years, there have been changes in deduction limits under Section 80DDB to adjust to the economic realities accruing from increasing healthcare costs. These are as follows:
Before 2015, it was generally lower and limited to INR 40,000 for all taxpayers irrespective of age.
In the financial year 2015-16, the limits were changed. Differentiation was brought about with respect to age and a higher limit was set for senior citizens in view of the generally higher medical expenses their age incurs.
The recent ones were to give more recognition to the elderly by increasing the deduction limits for seniors and super seniors to INR 1,00,000, which came into force from financial year 2018-19 onwards.
These amendments thus establish the fact that the lawmakers are realizing the escalation in expenditure towards medical care, more in cases of older citizens and those suffering from serious ailments.
Impact of Health Insurance Reimbursements on Deduction Limits
While computing the actual deduction amount under Section 80DDB, the taxpayer has to take into account the impact of health insurance reimbursement.
Reimbursement Received: The total amount of admissible medical expenditure shall be reduced by any reimbursement received from insurer or employer if it covers any part of the medical expenditure.
Example: If the total medical expense incurred is INR 1,20,000 and the health insurer reimburses INR 20,000, then only INR 1,00,000 would be eligible for deduction under Section 80DDB.
Required Documentation for Claiming Deduction under Section 80DDB
For claiming deduction under Section 80DDB of the Income Tax Act, proper documentation has to be maintained for compliance and verification of the amount incurred on the treatment for specified diseases. It should be very clear what type of documentation is necessary for the taxpayer to keep proper preparation and hence get full benefit out of this provision.
What Should Contain in a Medical Certificate?
A medical certificate is a critical document that can be used to claim deductions under Section 80DDB. And here is what it will typically contain:
Name and Age of the Patient: Clearly identifying the person who gets the treatment
Name of the Disease: It should be some of those specified ones for which Section 80DDB eligibility exists.
Details on the Treatment: Including the nature and duration of treatment.
Expense Certification: It is a certificate of the amount spent or payable on the treatment.
Doctor's Details: Qualifications, Registration number, the name and address of the government hospital.
Authority Designated to Issue the Medical Certificate
The authority to issue the medical certificate lies in the hands of only practitioners working in government hospitals. However, qualifications of the medical professional issuing the certificate vary as per the disease:
Neurological Diseases: The candidate has to obtain the certificate from a neurologist who has obtained a Doctorate of Medicine in Neurology or any other equivalent degree.
Malignant Cancers: The certification has to be given by an oncologist with DM in Oncology or equivalent.
Chronic Renal Failure and Hematological Disorders: These have to be certified by the respective specialists, at the requisite level.
Other Required Documents (Expenses Proof)
Besides the medical certificate, there are other documents that would be required to support the claim:
Bills and Receipts: Original bills and receipts for the payment made toward the treatment are essential requirements. It should state in the documents what the amount was paid for.
Proof of Payment: Proof of documents that clearly show where the money was spent or to whom it was paid to, such as bank statements or credit card statements, in case the payment is not made in cash.
Details of Insurance Reimbursements: If the expense is reimbursed either by an insurance provider or through the employer, then details of the same shall have to be provided. This forms a very important criteria for determining the actual amount one can deduct after allowing for reimbursements.
How to Claim Deduction under Section 80DDB?
For claiming deductions under Section 80DDB against medical expenses incurred on the treatment of specified diseases, one needs to follow a series of steps with care and caution to be compliant and ensure maximum tax benefits. Here is a step-by-step guide on how to claim the deduction in tax returns, along with some tips for avoiding common mistakes during the process.
Step-by-Step Guide to Claim Deduction under Section 80DDB:
Collect and Prepare Documentation:
Obtain the medical certificate from a properly registered medical practitioner who holds a service in any hospital run by the government. In addition, ensure that the certificate mentions the name of the patient, disease, and treatment costs.
Collect all the medical bills, receipts, and other supporting proof of payment for proof of medical expenses incurred.
Proper Diagnosis and Certification: Be sure that the diagnosis and the issuance of the medical certificate are by a specialist, as specified for the disease under the tax rules. For example, by a neurologist in the case of neurological diseases.
Compute Deductible Amount: The total amount of medical expenses incurred shall be reduced by deducting amounts reimbursed under insurance or otherwise received from employers.
Complete Relevant Tax Forms: Claim the deduction in the return of income. The same in case of individual taxpayers, needs to be reported in prescribed ITR forms, say, ITR-2 or ITR-3.
Attach or Retain Documents: While e-filing, you are not required to attach the documentation, but you must necessarily retain all the documents for at least 6 years from the end of the financial year in which it is claimed since they may be called by the Income Tax Department for verification at the time of assessment.
File Your Tax Return: File your income tax return well before the deadline. Also, ensure that all figures quoted in the form agree with the documents in your possession, especially the amounts claimed.
Reply to Any Notices: In case the claim is questioned by the Income Tax Department by issuing an income tax notice, respond immediately with all relevant documents in support of deduction.
What Should be Mentioned in the 80DDB Certificate?
The certificate used while claiming a deduction against Section 80DDB is an important document to be completed by the specified doctor. Here's what must be mentioned within this certificate so that it becomes a valid claim document:
Details of the Patient:
Name and age of the patient
Permanent Account Number (PAN) of the patient, if available
Medical Details:
Diagnosis of the ailment or disease from the list mentioned in Section 80DDB
ICD-10 code of the disease in case it is applicable
Doctor Details:
Name
Address
Qualification
Registration number of the doctor with Medical Council of India/state medical council
Treatment Details
Details of treatment rendered with the duration of treatment
Details of the hospital where the treatment has been given
Certification
Clause mentioning that the above mentioned details are true and duly verified
Doctor's signature with date
FAQ
Q1. What diseases are covered under Section 80DDB?
The neurological diseases, chronic renal failure, malignant cancers, full-blown AIDS, and certain hematological disorders are the diseases covered.
Q2. What is the maximum deduction limit under Section 80DDB?
The deduction would be INR 40,000 for people below 60 years and INR 1,00,000 for senior citizens above 60 years.
Q3. Who can claim deductions under Section 80DDB?
This deduction is available to all individuals and HUFs who are experiencing certain specified diseases for themselves or their dependents.
Q4. What is required to claim a deduction under Section 80DDB?
The assessee obtains a medical certificate from the competent government recognized specialist. Proof of expenditure incurred on medical expenses is also required.
Q5. Can I claim the deduction for the amount reimbursed by insurance?
No, such reimbursement by an insurance company or employer will not be eligible for deduction against Section 80DDB.
Q6. What should be the format of a medical certificate?
The medical certificate should indicate the name, disease, and treatment details of a patient, duly attested by a government doctor.
Q7. Which neurological disease is not covered under Section 80DDB?
Only the neurological diseases specified in the tax law, such as Dementia, Ataxia, and Parkinson's Disease, will be covered. All other conditions, though neurological, are not eligible.
Q8. How frequently can I avail of deductions under Section 80DDB?
Deductions can be availed year after year so long as medical expenses are incurred and the conditions satisfy the criteria in the financial year.
Q9. What if I claim more than the actual expense incurred under Section 80DDB?
Any claim in excess of the expenditure actually incurred will be regarded as a false claim and may attract a penalty or any other action by the tax authorities.
Q10. Can deductions under Section 80DDB be carried forward?
No, deductions under Section 80DDB cannot be carried forward. Hence, they have to be claimed in the financial year in which the expenditure is incurred.
Q11. Can an NRI claim deductions under Section 80DDB?
No, Non-Resident Indians (NRIs) are not eligible to claim deductions under Section 80DDB. This deduction is only available to resident individuals and Hindu Undivided Families (HUFs).
Q12. Can both the taxpayer and the dependent claim a deduction under Section 80DDB for the same medical expenses?
No, the deduction under Section 80DDB can only be claimed by the taxpayer who incurs the medical expenses for themselves or their dependent. The same expense cannot be claimed twice by two individuals.
Q13. Who qualifies as a dependent under Section 80DDB?
Dependents include the taxpayer’s spouse, children, parents, and siblings. The taxpayer can claim deductions for the medical treatment of any of these dependents, provided they are financially dependent on the taxpayer.
Q14. Are preventive health check-ups covered under Section 80DDB?
No, preventive health check-ups are not covered under Section 80DDB. This section specifically applies to expenses incurred for the treatment of specified serious illnesses.
Q15. Can the deduction under Section 80DDB be claimed for treatment in a private hospital?
Yes, the deduction can be claimed for treatment taken in both government and private hospitals, provided that the medical certificate is obtained from a government-recognized specialist or institution.
Q16. Is there an age limit for the dependent to qualify for Section 80DDB deduction?
No, there is no age limit for the dependent to qualify for the deduction under Section 80DDB. However, the deduction limit increases to INR 1,00,000 if the dependent is a senior citizen (above 60 years).
Q17. What is the difference between deductions under Section 80D and 80DDB?
Section 80D allows deductions for medical insurance premiums and preventive health check-ups, while Section 80DDB specifically provides deductions for medical expenses incurred for treating specified diseases.
Q18. Can I claim a deduction under Section 80DDB if I am already receiving benefits from a government health scheme?
No, you cannot claim a deduction under Section 80DDB for any expenses that are already reimbursed or covered under a government health scheme or an insurance plan. The deduction is applicable only on the amount that is not reimbursed.
Q19. Can I claim both Section 80DDB and Section 80U deductions?
Yes, you can claim both Section 80DDB and Section 80U deductions if you meet the eligibility criteria for both sections. Section 80DDB covers medical expenses, while Section 80U provides deductions for individuals with disabilities.
Q20. Is dialysis treatment eligible for deductions under Section 80DDB?
Yes, dialysis treatment is covered under Section 80DDB, as chronic renal failure is one of the specified illnesses eligible for the deduction.
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