Section 80DDB

According to Chapter VIA of the Income Tax Act, 1961 states the permissible deductions from the gross total income under Section 80C to 80U of the Income Tax Act. Section 80A of the Income Tax Act specifies the amount of Gross Taxable income of the assessee. Deductions mentioned in this chapter cannot be claimed for short term and long-term capital gains covered under section 111A, winnings from horse races or lotteries or such other income covered under section 115BB or income covered under section 115A, 115AB, 115AC, 115AD, 115BBA, and 115D.

Chapter VI A is comprehensive. It covers all deductions concerning various investments or payments made for expenses incurred by the assessee. Details of the same are mentioned below:

Section 80C: It includes deduction concerning contribution made by the assessee towards various investments like Life Insurance policies, PPF, payment towards repayment of principal portion of a housing loan, payment of tuition fees to school, etc. The maximum amount of deduction that can be claimed under section 80C is capped at Rs. 1, 50,000/-.

Section 80D: It includes deduction in respect to payments of premiums made under health insurance policies. Premium paid towards health insurance policy of the assessee or his family capped at a maximum of Rs. 25,000/- while that of the assessee or his parents, being senior citizens, capped at Rs. 50,000/-.

Section 80DD: Any expenditure incurred by an individual or HUF towards medical treatment or maintenance of a person with a disability is allowed as a deduction to the extent of actual expenses but limited to Rs. 75,000/-

Thus, each section covers different types of expenses or investments allowed as a deduction, the conditions that need to be met to claim such deductions and the amount which can be claimed as deduction.

Thus, for computing the net taxable income of any assessee, it is important to understand the application of deductions under Chapter VI A of the Income Tax Act 1961.

Deduction under Section 80DDB

Section 80DDB includes deductions concerning expenses incurred at the time of doing medical treatment of specified ailments or diseases.

Section 80DDB provides that if an individual or a HUF has incurred medical expenses for treatment of specified disease or ailment, such expense is allowed as a deduction, subject to such conditions and capped at such amount as specified, under Section 80DDB of Income Tax Act.

This section basically covers the medical expenses incurred in the treatment of specified diseases or ailments. One should not mix this with health insurance bought for covering such kind of diseases or ailments. The payment for health insurance is covered under Section 80D of the Income Tax Act.

Who can claim deduction under Section 80DDB?

It can be claimed only by individuals and HUFs who is a resident of India during the relevant previous financial year. No deduction under this section can be claimed by corporates or any other entity. That is the section does not apply to non-resident Indians.

Further, it is imperative that deduction can be claimed only by the person who has incurred the expenses. Thus, in the case of Section 80DDB, the deduction can be claimed by the individual and HUF who has incurred such medical expense.

Who can avail of medical treatment as a deduction under Section 80DDB?

A person who is incurring the expenses can claim deduction under Section 80DDB. For the following people, medical expenses can be incurred:

Individuals

Expenses can be incurred on the medical treatment of the assessee or any of his dependents. The ‘dependents’ concerning this section covers spouse, his parents, his children, brothers and sisters of the individual or any of them. The dependent as the world suggests should be ‘dependent on the individual’ for his or her maintenance and support.

Hindu Undivided Family (HUF)

In the case of a HUF, one can claim medical expenses as a deduction when the expense incurred for doing the medical treatment of any member of the HUF.

What medical treatments are allowed under Section 80DDB?

The nature of diseases and ailments which include for deduction under Section 80DDB are mentioned in Rule 11DD of the Income Tax and the same are as follows:

• Neurological diseases

It is identified by a specialist where the level of disability has been certified up to 40 percent and above and covers Dementia, Dystonia Musculorum Deformans, Chorea, Motor Neuron Disease, Ataxia, Aphasia, Parkinson’s Disease, and Hemiballismus.

• Malignant Cancer
• AIDS- Acquired Immuno-Deficiency Syndrome
• Chronic Renal failure
• Hematological disorders like Hemophilia or Thalassemia.

Thus, the section intents to cover medical treatment for major illnesses and diseases and would not cover medical expenses which are more common in nature like a cataract or a C-section.

Documents required to claim for the expenses incurred for various diseases as deduction under Section DDB

To claim for deduction under Section 80DDB, the assessee must provide proof of the need for treatment and proof that the treatment is already taken place. It is compulsory to get a prescription for such treatments from a qualified doctor.

Previously, this prescription is needed from the doctors of only government hospital. But from the Assessment year 2016-2017, prescription now can also consider valid if obtained from the private hospitals. Rule 11DD now stands amended and prescription now be obtained as follows:

• In the case of neurological diseases, a prescription from a Neurologist should be Doctor of Medicine in Neurology or any equivalent degree is required.
• In the case of Malignant Cancer, a prescription by an Oncologist having a Doctor of Medicine in oncology or any equivalent degree is required.
• In the case of AIDS, a prescription by any specialist having Post Graduate degree in general or internal medicine or any equivalent degree is required.
• In case of Chronic Renal failure, a prescription by a Nephrologist having a Doctor of Medicine (D.M.) degree in Nephrology or a Urologist having a Master of Chirurgical (M.Ch.) degree in Urology or any equivalent degree is required.
• In the case of the last ailment Hematological disorders, a specialist having a Doctor of Medicine degree in Hematology or any equivalent degree is required.
  

Thus, the prescription is required by a relevant specialist in the field of Medicine. It must be noted that all the degrees should be recognized by the Medical Council of India.

Where the treatment is undertaken in a government hospital, the prescription can be obtained from any specialist working full time with the hospital and having a post-graduate degree in general medicine.

What all is required to mention in the prescription?

he prescription should be given by the qualified doctors having a relevant specialization. Earlier prescription needs to be submitted in form 10-I, now the same is done away with the Assessment year 2016-17. The prescription should now specify the following:

• Name of the Patient
• Age of the Patient
• Disease or Ailment
• Name, Address, registration number of the specialist doctor issuing the prescription.
• In case the treatment is undertaken in a government hospital, the prescription should mention the name and address of the government hospital.
• The Form needs to be signed by the doctor/head of government hospital.
• The prescription so obtained must be submitted by the assessee to the income tax department along with the Income Tax Return.

What amount can be claimed under as deduction under Section 80DDB?

The amount can be claimed as a deduction under Section 80DDB based on the age of the person for whom the medical expense or treatment is incurred.

In the case where the medical treatment expense incurred for an individual or his dependent or a member of HUF, the amount of deduction is capped at the actual amount paid or Rs 40,000 whichever is less.

In the case where the medical treatment expense incurred for an individual or his dependent or HUF is a senior citizen, the amount of deduction is capped at the actual amount paid or one lakh, whichever is less.

According to this Section:

Senior citizen would mean any person, being a resident Indian, who has completed sixty years or more at any time during the relevant previous year.

Very Senior Citizen means any person who is a resident of India and whose age is 80 years or above during the relevant previous year.

Thus, the amount of deduction that can be claimed under Section 80DDB can be tabled as follows:

Things to remember

• The deduction can be claimed with respect to actual expenses incurred during the relevant previous year.
• The amount of deduction is based on the age of the person who is taking a medical treatment and not on the age of assessee of the person claiming the deduction.
• The amount of deduction under Section 80DDB is exclusive of deduction claimed under any other section covered by Chapter VI A.
• Adjust the amount of deduction with any Reimbursement.
• The amount claimed under Section 80DDB should be adjusted with the amount received by the insurer against the health insurance policy or as may be reimbursed by the employer.
• If the assessee incurs expense on the medical treatment of specified disease or ailment of Rs 60,000/- then can claim deduction of Rs 40,000/- according to Section 80DDB. If the assessee has received an amount of Rs 30,000/-from an insurance company against such expenses. In that case, amount of deduction claims under Section DDB gets reduced. Thus, the assessee can then claim only an amount of Rs. 10,000 /- (Rs. 40,000 less amount received from insurance company Rs. 30,000) under Section 80DDB.

In what situation assessee can not make a claim under Section 80DDB?

In case the amount received from the insurance company against the expense of Rs 60,000-is Rs 50,000 which is more than the permissible limit being set that is Rs 40,000. In that case, assess cannot make any claim as per Section 80DDB.

It may further be noted that in this case if the senior citizen is undertaking the treatment is a senior citizen, then he can avail deduction of Rs. 1,00,000/- (permissible deduction under section 80DDB for Senior citizen is Rs. 1,00,000 less amount received from insurance company which is Rs. 50,000/-)

In a nut shell

Section 80DDB provides for deduction to Individuals and HUFs for medical expenses incurred for treatment of specified diseases or ailments and should be deducted from the Gross Total Income while computing taxable income of the assessee.

Form Format of Section 80DDB

U/S 80DDB, the deduction can be claimed by any individual for the expenses incurred towards the treatment of certain specified medical diseases or ailments for himself or for any of his/her dependents. Below mentioned is the format for Section 80DDB:

How to fill Section 80DDB Form

Form 80DDB consists of various details to be filled in order to claim the deduction. It is also called Form 10-I. Mentioned below is the process of filling the form 80DDB:

Step1: Mention the name of the applicant

Step 2: Enter the address and the applicant’s father’s name

Step 3: Mention the name of the person and the address on whom the applicant is dependent and the relationship with the applicant.

Step 4: After this, before filling the column of the name of the disease or ailments please see Rule 11DD.

Step 5: Mention whether the disability is 40% or more for diseases and ailments.

Step 6: Enter the name, address, registration number and the qualification of the specialist issuing the certificate along with the name and address of the government hospital.

Step 7: After that fill the verification section with duly signed and stating the fact that information is provided correctly.

Section 80DDB for Senior citizen

In the 2018 budget, the proposal has been put up to increase the deduction under Section 80DDB for Senior citizens for medical treatment of specified diseases. Section 80DDB for senior citizens for taking a medical treatment of specified diseases. It is proposed to amend the provisions of Section 80DDB to INR 1 lakh for both senior citizens as well as super senior citizens from INR 60,000 and INR 80,000 respectively.