How health check-up, insurance premium can help you in saving tax

Preventive check-up is one available to save tax based on medical-related issues

The tax-filing season has arrived. While most taxpayers are aware of the deduction available under Section 80C, several other provisions of the Income-Tax (I-T) Act also let you save tax if you have spent on medical issues.

Section 80D

This section allows you to get a tax deduction on the money spent on paying health insurance premiums. This deduction can also be claimed for money spent on preventive health check-ups and contributions to the central government health scheme.

“Individuals can avail of Section 80D benefit for themselves and their family (consisting of spouse and dependent children). In the case of a Hindu Undivided Family (HUF), this deduction can be availed on the premium paid for its members,” says Suresh Surana, founder, RSM India.

The maximum deduction that an individual can avail is Rs 25,000. This limit gets enhanced to Rs 50,000 for senior citizens (aged 60 years or more).

However, the aggregate deduction for a preventive health check-up for self, spouse, and dependent children is restricted to Rs 5,000. This Rs 5,000 is included within the overall limit of Rs 25,000 or Rs 50,000, as applicable.

Surana informs that senior citizens who don’t pay any health insurance premium can claim the maximum deduction allowed under this section on the medical expenses they incur.

Premiums paid for top-up health plans and critical illness plans are also eligible for Section 80D benefit.

You can avail of this deduction if you pay in any mode other than cash. Cash payment is permitted only in case of preventive healthcare expenses.

Many people fail to avail of the preventive check-up benefit under Section 80D. If you have already got the check-up done, or have scheduled one before March 31, you can get this deduction.

Section 80DD

Section 80DD offers deductions for the medical costs incurred by a dependant with disabilities. “It includes insurance premiums paid towards specific insurance policies covering a dependant’s disability,” says Naval Goel, founder and chief executive officer (CEO), PolicyX.com.

Only resident individuals and members of an HUF can claim this deduction.

The taxpayer may claim a flat deduction of Rs 75,000 for a normal disability and Rs 125,000 for a severe disability. To get the deduction, the taxpayer needs to furnish, along with his tax return, a certificate issued by a medical authority for substantiating the disability. Hearing impairment, mental retardation, mental illness, autism, cerebral palsy, blindness, low vision, leprosy-cured, and locomotor disability are eligible for this deduction.

Besides treatment and nursing expenses, this deduction can also be availed for training and rehabilitating the dependant.

Section 80DDB

A deduction under Section 80DDB is allowed for medical treatment of a dependant suffering from a specified set of diseases. Maneet Pal Singh, partner, I P Pasricha & Co. says, “In the case of normal citizens, the deduction can be claimed for Rs 40,000 or the amount paid, whichever is less. In the case of a senior citizen or a super senior citizen, the deduction can be claimed for Rs 1,00,000 or the amount paid, whichever is less.” The list of diseases is prescribed under the I-T rules.  

To claim the deduction under this section, an individual needs a prescription from a neurologist, oncologist, urologist, or immunologist, as the case may be. Payment can be made in any mode. Pallav Pradyumn Narang, partner, CNK says, “For this section, dependant means spouse, children, parents, brothers, and sisters of the individual.” This deduction can be claimed by an individual or HUF and is only allowed to resident Indians. Surana adds, “Any insurance claim received by the assessee would be reduced for the purpose of computing the deduction under this section.”

Section 80U

Section 80U provides a deduction of Rs 75,000 to a taxpayer who has been certified by a medical authority to be a person with a disability. Shilpi Jain, partner, Ved Jain and Associates says, “Deduction is provided based on the certificate. In the case of a severe disability, the deduction allowed shall be Rs 125,000.” A person with a severe disability is a person with 80 per cent or more of one or more disabilities.

Narang, says, “For claiming this deduction, the individual needs to furnish a copy of the certificate of disability issued by the medical authority along with the return of income under Section 139.”

Many people confuse Section 80U with 80DD. Section 80U offers tax benefits to an individual who suffers from a disability while Section 80DD offers deductions for bearing the medical costs of a dependant. Surana adds, “Deduction under this section can be claimed only when the taxpayer has not claimed any deduction under Section 80DD of I-T Act.”  

Only resident individuals can avail of this tax benefit. Goel says, “The disabilities covered are blindness, low vision, leprosy cured, hearing impairment, locomotor disability, mental retardation, and mental illness.”

Get the required certification

Since most of the sections require a certificate from a medical authority, taxpayers should arrange for the certificate on time. Surana says, “The certificate should cover the financial year for which the deduction is claimed.”

Remember you will not be able to claim the deduction if the certificate has expired.

Taxpayers can avail of enhanced tax benefits by making payments on the behalf of senior citizens.