Section 80D of the Income Tax Act allows you to save tax on health insurance policies for your family, children, and any immediate dependents.
To inform you, if you, a member of your family, or your elderly parents are over 60 years of age, you are also entitled to savings of up to Rs 1 lakh in tax.
In addition, in the event one is unable to pay a health insurance premium because of a pre-existing condition or another valid reason, they can easily save on taxes through medical expenses.
Save Income Tax via Medical Expenditures
Taking a quick look at some of the most important and relevant sections of the Income Tax Act, let’s see how medical expenses can save you tax.
First things first!
Can Medical Expenditure be Claimed Within Section 80D?
It is essentially possible to save on taxes under the Income Tax Act Section 80D. Expenses incurred for medical treatment can be deducted before tax is imposed. The deduction can also be claimed if the following conditions are met:
- You, your spouse, your dependent parents, or your children should be responsible for any medical expenses incurred. Additionally, the person must be 60 years of age and older in order to incur medical expenses. People can usually make a claim if they are alone, with the spouse or with their parents as most of them will be older than 60 years and will not have dependent children.
- Health insurance should not cover incurred medical expenses if a claim is made.
In this case, it is possible to claim a deduction for incurred expenses up to Rs 50,00,00 when both of the above criteria are met. Medical expenses can be paid through any of the available banking channels such as credit/debit cards, net banking, UPI, digital wallets, etc. Deductions cannot be claimed for cash payments.
Furthermore, customers must understand the difference between medical expenditures and expenditures on preventive health checks. Hopefully these points will help you if you are also confused:
- According to the existing law, the medical expenditure should be used for the treatment of any ailment or disease that affects the person or a dependent member of the family over 60 years of age.
- Regardless of the age of the patient, the amount claimed within the 80dd limit is Rs 5,000 for preventive health treatment or check-ups.
Who Can Claim Within Section 80DDB?
Income Tax Act, Section 80DDB, allows deductions for expenses incurred on medical treatment. This section specifies the expenses that can be deducted.
An individual’s age is one of the factors that determine the amount of deduction that can be claimed. In addition, either the individual or their immediate dependents are eligible to claim this deduction. If the deduction is being claimed on behalf of a dependent, the dependent must be completely dependent on the claimant.
An individual under 60 years of age can claim up to Rs 40,0000 as a deduction if the expense was incurred on the same. The maximum deduction is Rs 1 lakh for individuals over the age of 60.
It is important to note that coverage will be provided even if the individual has health insurance coverage through another policy. Whatever the case, remember that the deduction amount claimed will be lowered by the amount the provider gives or reimburses the business for the clinical treatment provided to the individual.
How to Claim Deduction Within Section 80DD and Section 80U?
Tax-saving deductions can be claimed for medical expenses incurred under Sections 80DD and 80U, respectively. Individuals or their immediate dependents may claim the deduction under both sections. A dependent can be a spouse, parent, child, brother or sister, or even a grandparent.
There is no relationship between the age of the individual and the sum that can be asserted as the reasoning for the two sections. A person’s disability level determines whether they are eligible.
At that point, all things considered, a finding of Rs 75,000 will be allowed if the dismemberment is greater than 40 percent but less than 80 percent. Additionally, if the disability level exceeds 80 percent, Rs 1.25 lakh will be approved. There is no distinction between genuine and fake expenses for this deduction.
Nevertheless, keep in mind that both deductions cannot be maintained simultaneously.
Tax Saving Deduction For Disabled Individual Under Section 80DD and Section 80U
In the case of an individual with a disability, the deduction can be claimed for the expenses incurred during the clinical treatment (including nursing), preparation, and recovery phase. Consequently, the full amount of tax owed is reduced by the deduction from the all-out pay of the inquirer before the tax of expense.
It is imperative that the plan in which the cash is kept provides annuity payments or a lump sum sum to those who are in need of assistance due to disability. Likewise, the individual may assign payment for the sake of the dependent individual with disability or another person or trust.
A disability, however, may qualify for a deduction under Section 80U.
Wrapping It Up
Individuals are able to obtain tax benefits under the Income Tax Act of 1961, particularly when medical expenses are incurred for themselves, their spouses, or their dependents.
In spite of the similarities between these sections, there are some important differences between them.