Section 80D Benefits for Medical Expenses
As the current financial year draws to a close on March 31st, taxpayers nationwide seek avenues to optimize their tax savings. While many have already exhausted the limits for claiming deductions on eligible investments under Chapter VI-A, a lesser-known opportunity exists to claim deductions for certain expenses incurred during the financial year. One such expense category is medical bills. Thanks to an amendment in the income tax law during the Budget of 2018, individuals can now claim deductions for medical bills paid by senior citizens aged 60 years and above.
Who Can Claim Such a Deduction?
Under Section 80D of the Income Tax Act, any individual who incurs medical expenses for themselves or their family members who are senior citizens is eligible for a deduction. Furthermore, if an individual pays medical bills for their senior citizen parents, those expenses are also eligible for deduction.
As defined by the act, a senior citizen is a person aged 60 years and above. Family members, in this context, include the spouse or dependent children. It’s important to note that this deduction only applies if any medical health insurance policy does not cover these individuals.
This provision primarily benefits senior citizens who bear medical expenses but lack the financial backing of a medical insurance policy due to unaffordable premiums. Consequently, this new rule offers them relief from their income tax liability.
Types of Medical Expenses Covered
While the Income Tax Act doesn’t explicitly define the types of medical expenses covered, it is generally accepted that hospitalization costs and regular medical expenditures such as medicines and consultation fees, as recommended by medical experts, are eligible for this deduction.
Limit for Claiming Medical Expenditure
Under Section 80D, the act imposes a maximum limit of Rs. 50,000 on medical expenses for senior citizen individuals or their family members. However, there is an additional cap of Rs. 50,000 if medical bills are paid for senior citizen parents. Therefore, once an individual crosses the age of 60, they can claim a maximum deduction of up to Rs. 50,000 on their medical expenses. Additionally, if they’ve incurred medical expenses for parents aged 60 years or above, they can claim an additional deduction of up to Rs. 50,000.
The Rs. 50,000 limit is the overall cap for Section 80D. This means that you can claim a maximum deduction of Rs. 50,000 for health insurance premiums, Central Government Health Scheme (CGHS) contributions, preventive health check-ups, and medical expenditures for yourself or your family members who are senior citizens. If these expenses are for senior citizen parents, the maximum deduction can reach Rs. 1,00,000.
Here’s a breakdown of the Section 80D limits in various scenarios:
- For Self, Spouse, and Dependent Children are Non-senior Citizens (NSC) & Parents are NSC: Rs. 50,000
- For Self, Spouse, and Dependent Children are NSC & Parents are Senior Citizens (SC): Rs. 75,000
- For Self, Spouse, and Dependent Children are SC & Parents are SC: Rs. 1,00,000
Eligible Mode of Payment
To claim medical expenditures under Section 80D, payments must be made through modes other than cash. Payments made via debit cards, credit cards, online banking, UPI, or digital wallets are all eligible for claiming deductions.
Additionally, Section 80DDB covers specified diseases or medical conditions for specific age groups. If your medical condition falls within this category, you can claim deductions under Section 80DDB. In cases where the limit has already been exhausted, or the medical condition doesn’t qualify under Section 80DDB, the remaining medical expenses can still be claimed under Section 80D.
Section 80D of the Income Tax Act offers a valuable opportunity to save on taxes by claiming deductions for medical expenses incurred by senior citizens and their family members. Understanding the provisions and limits of this section can help taxpayers optimize their tax savings while ensuring they receive the necessary healthcare support. So, as the financial year comes to a close, make sure to explore this avenue for potential tax benefits.