Want to claim tax deductions for buying medical insurance? Section 80D is what you need

Section 80D

Medical insurance is not something optional today. And words, at lengths, have been spoken and written, about the need to get one. But still not a lot of inroads, in this regard, have been made till date. Even when everyone knows that they cannot pay for their medical expenses, the “if and when it will arise” is what stops them from getting one. Hence, to aid the cause, the government has put in place the provision – section 80D, so that people don’t hesitate in buying medical insurance.

Section 80D

Section 80D particularly deals with the tax deductions for money spent on the purchase of medical insurance policies. We’ve already talked about how section 80D works and what kinds of deductions are allowed in this.

Because there’s no limitation to what type of illnesses there can be, the government has introduced these subsections to help people claim deductions even in the worst-case scenarios. This is what one of the subsections deals with. And the other is geared towards diseases in the case of people with disabilities.

Let’s take an in-depth look at these subsections of this extremely important tax saving provision.

Section 80D Sub-sections

Here are the different sections under Section 80D:

Section 80DD

Section 80DD is to give relief to taxpayers, in the amount they pay towards their income tax, if they have a disabled dependent. If you have someone in your family who is suffering from a disability and if the person is dependent on you, then you can claim tax benefits for the same, under this section. The point is to help you take better care of the disabled family member such that you’re in a position to help them and they don’t become a liability for you.

Any individual or HUF (Hindu Undivided Family), who is an Indian resident, can claim deductions under this section. But it’s not available for Non-resident Individuals (NRIs). Also, a disabled dependent, for an individual, can be a spouse, children, parents or siblings. For HUFs, a disabled dependent can be any member of the HUF.

In case of a person having a normal disability (at least 40%), deductions can be claimed up to Rs. 75,000 and in case of people with severe disability (more than 80%), deductions can be claimed up to Rs. 1,25,000.

Section 80D

The specifics of section 80DD,

  • There’s a provision for disabled people to claim tax deductions under section 80U. Hence, if deductions have already been claimed under section 80U, you cannot claim any further deductions.
  • The disabled person should be completely or to a large extent, be dependent on the taxpayer for his/her support.
  • Medical treatments, nursing, training and rehabilitation of the disabled person – expenditure towards all of these are eligible for a deduction, provided that you produce a self-declaration certificate.

Necessary documents to Claim Tax Deductions,

  • The tax authorities will need a copy of the medical certificate to prove the disability of the dependent, and only then can you claim the deductions.
  • In case the disabled dependent is suffering from autism, cerebral palsy or if the person has multiple disabilities, then form 10-IA has to be produced.
  • You’re not required to produce any medical receipts. Only in the case of payments made towards insurance policies, taken for the disabled dependent, will the receipts be required.

The disabilities covered under Section 80DD are,

  • Autism
  • Blindness
  • Cerebral palsy
  • Hearing impairment
  • Leprosy-cured
  • Locomotor disability
  • Low vision
  • Mental illness
  • Mental retardation
  • Multiple disabilities

Section 80DDB

While section 80DD primarily concerns getting deductions for disabled dependents, section 80DDB is inclined towards getting deductions for some specific diseases. These diseases are severe – can cause permanent disabilities and are life-threatening, and getting them treated are costly affairs – the reason why they have been grouped under a separate subsection.

When it comes to eligibility criteria, documents required and other specifics, the two subsections are not a lot different. Under 80DDB as well, you can claim deductions for dependents.

The major difference comes in the type of diseases, for which, the deductions can be claimed here.

  • Neurological diseases
  • Ataxia
  • Aphasia
  • Chorea
  • Dementia
  • Dystonia musculorum deformans
  • Hemiballismus
  • Motor neuron disease
  • Parkinson’s disease
  • Malignant cancer
  • Chronic Renal Failure
  • AIDS – Acquired Immuno-Deficiency Syndrome
  • Haematological disorders
  • Thalassaemia
  • Haemophilia

A big specification with section 80DDB is that deductions are claimed on the basis of the age of the applicant. Which goes like,

  • If the age is less than 60 years – Rs. 40,000 or the actual amount of expenses, whichever is lower
  • In case the age is 60 years and above (senior citizens) – Rs. 1,00,000 or the actual amount of expenses, whichever is lower
  • While if the age is 80 years and above (very senior citizens) – Rs. 1,00,000 or the actual amount of expenses, whichever is lower

So now when you know that government has put in the best provisions in place, to help you receive tax benefits for your medical expenses, we’d recommend not to shy away from purchasing medical insurance policies for yourself as well as your families.

As said, today it’s not something optional, and you need to make sure to get one so that you don’t end up chasing huge medical bills.

Written by

Anand Vatsya