How to save Tax on medical Treatment of Serious Disease

How to save tax?

• Tax can be saved by claiming deduction through medical treatment of specified and serious disease under section 80DDB of Income Tax Act, 1961.
• This deduction is applicable to only resident individual and HUF.
• As evidence, assessee has to obtain prescription from specialist to obtain deduction.
• In this section, if an individual or HUF pays any amount for medical treatment of specified and serious disease for himself or his dependent being spouse, children, parents, brothers and sisters then deduction upto ₹40000 from total income is allowed while calculating taxable income.
• For example: If taxpayer is in slab rate of 30% then ₹12000 (40000*30%) can be saved from tax.

Meaning of Specified disease

The diseases for which deduction can be availed are as follows:

• Neurological Diseases- Disability above 40% like Dementia, Dystonia Musculorum Deformants, Motor Neuron Disease, Ataxia, Chorea, Hemiballismus, Aphasia, Parkinsons Disease.
• Malignant Cancers- Prescription of authority in case of government hospital- any specialist and in case of private hospital – Oncologist.
• AIDS- Prescription of authority in case of government hospital- any specialist and in case of private hospital – general or internal medicine.
• Chronic renal failure- Prescription of authority in case of government hospital- any specialist and in case of private hospital – Nephrologist.
• Haematological disorders like Hemophilia, Thalassaemia – Prescription of authority in case of government hospital- any specialist and in case of private hospital – Hematology.

Calculation for deduction amount

If any amount is received by the taxpayer under insurance or from his employer than such amount shall be reduced from deduction claimed.For example: If Mr.Vaibhav has paid ₹90000 for treatment of her spouse and received 10000 from insurance company, then deduction allowed to him shall be ₹30000 (40000-10000).

Increased deduction for senior citizens

For senior citizen who is above age of 60 deduction amount shall be increased to ₹100000.

Other things to know

• Deduction is allowed on payment basis i.e. deduction is allowed in the year in which it is paid.
• If the individual opts for new tax regime, then deduction shall not be available from financial year 2020-21.
• It is exclusive of deduction claimed under section 80C.

Conclusion

This deduction can be availed apart from 80C deduction of Rs. 150000. So the taxable income of a taxpayer can be reduced by ₹40000 or ₹100000 (in case of senior citizen). This deduction is available in that year in which it is paid.