Section 80DDB: Deduction in respect of Medical Expenditure on Self or Dependent Relative

S. 80DDB provides for income tax deduction under chapter VI-A for payment of medical treatment of a person suffering from a specified disease. The deduction u/s 80DDB is allowed only to individual & HUF. Moreover, this deduction is only allowed to those individuals HUF which are resident in India for that year. A deduction to the extent of Rs. 40,000/- or the amount actually paid, whichever is less is available for expenditure actually incurred by resident assessee on himself or dependent relative for medical treatment of specified disease or ailment. The diseases have been specified in Rule 11DD. A certificate in form 10 I is to be furnished by the assessee from any Registered Doctor.

Medical treatment of specified ailments—

Deductions of expenses on medical treatment of specified ailments (such as AIDS, cancer and neurological diseases) can be claimed u/s 80DDB. The maximum amount of deduction allowed from gross total income on condition that no medical reimbursement is received from any insurance company or employer for this amount. In case of reimbursement the amount paid should  be reduced by the amount received if any under insurance from an insurerer or reimbursed by an employer.

Raising the limit of deduction u/s 80DDB—

Under the existing provisions of S. 80DDB of the Act, an assessee, resident in India is allowed a deduction of a sum not exceeding Rs. 40,000/- being the amount actually paid, for the medical treatment of certain chronic and protracted diseases such as Cancer, full blown AIDS, Thalassaemia, Haemophilia etc. This deduction is allowed up to Rs. 60,000/- where the expenditure is in respect of a senior citizen i.e. a person who is of the age of 60 years or more at any time during the relevant P.Y.

Further, it is also proposed to amend S. 80DDB to provide for a higher limit of deduction of upto Rs. 80,000/- for the expenditure incurred in respect of the medical treatment of a “very senior citizen”. A “very senior citizen” is proposed to be defined as an individual resident in India who is of the age of 80 years or more at any time during the relevant previous year.

Amount of deduction will be lower of the following:

a. mount actually paid on medical treatment specified above; or

b. or Amount as per Table below

Specified diseases and ailments for the purpose of deduction u/s 80DDB—

 (i)  Neurological Diseases where the disability level has been certified to be of 40% and above,—

(a)  Dementia ;

(b)  Dystonia Musculorum Deformans ;

(c)  Motor Neuron Disease ;

(d)  Ataxia ;

(e)  Chorea ;

(f)  Hemiballismus ;

(g)  Aphasia ;

(h)  Parkinsons Disease ;

(ii)  Malignant Cancers ;

(iii)  Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

(iv)  Chronic Renal failure ;

(v)  Hematological disorders :

(i) Hemophilia ;

(ii) Thalassaemia.

The above deduction is available to an individual for medical expenditure incurred on himself or a dependant relative. It is also available to a Hindu undivided family (HUF) for such expenditure incurred on its members. Dependant in case of an individual means the spouse, children, parents, brother or sister of an individual and in case of an HUF means a member of the HUF ,wholly or mainly dependant on such individual or HUF for his support and maintenance.

Under the existing provisions of this section, a certificate in the prescribed form, from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist working in a Government hospital is required. It has been represented that the requirement of a certificate from a doctor working in a Government hospital causes undue hardship to the persons intending to claim the aforesaid deduction. Government hospitals at many places do not have doctors specialising in the above branches of medicine. For this and other reasons, it may be difficult for the taxpayer to obtain a certificate from a Government hospital.

In view of the above, it is proposed to amend S. 80DDB so as to provide that the assessee will be required to obtain a prescription from a specialist doctor for the purpose of availing this deduction.

These amendments will take effect from 1^st April, 2016 and will, accordingly, apply in relation to the A.Y. 2016-17 and subsequent A.Y.

Reference:

As Per Section 80DDB, of the Finance bill, 2015-

Amendment of section 80DDB.

In section 80DDB of the Income-tax Act, with effect from the 1st day of April, 2016, — 5 (i) for the first proviso, the following proviso shall be substituted, namely:—

“Provided that no such deduction shall be allowed unless the assessee obtains the prescription for such medical treatment from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed.”.

(ii) after the third proviso, the following proviso shall be inserted, namely:—

‘Provided also that where the amount actually paid is in respect of the assessee or his dependant or any member of a Hindu undivided family of the assessee and who is a very senior citizen, the provisions of this section shall have effect as if for the words “forty thousand rupees”, the words “eighty thousand rupees” had been substituted.’;

(iii) in the Explanation,—

(a) clause (ii) shall be omitted;

(b) after clause (iv), the following clause shall be inserted, namely:—

‘(v) “very senior citizen” means an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year.’

As Per Section 80DDB, of the Income Tax Act, 1961-

Deduction in respect of medical treatment, etc.

Where an assessee who is resident in India has, during the previous year, actually paid any amount for the medical treatment of such disease or ailment as may be specified in the rules made in this behalf by the Board—

(a)  for himself or a dependant, in case the assessee is an individual; or

(b)  for any member of a Hindu undivided family, in case the assessee is a Hindu undivided family,

the assessee shall be allowed a deduction of the amount actually paid or a sum of forty thousand rupees, whichever is less, in respect of that previous year in which such amount was actually paid :

Provided that no such deduction shall be allowed unless the assessee furnishes with the return of income, a certificate in such form, as may be prescribed, from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed, working in a Government hospital :

Provided further that the deduction under this section shall be reduced by the amount received, if any, under an insurance from an insurer, or reimbursed by an employer, for the medical treatment of the person referred to in clause (a) or clause (b) :

Provided also that where the amount actually paid is in respect of the assessee or his dependant or any member of a Hindu undivided family of the assessee and who is a senior citizen, the provisions of this section shall have effect as if for the words “forty thousand rupees”, the words “sixty thousand rupees” had been substituted.

For the purposes of this section,—

(i)  “dependant” means—

(a)  in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them,

(b)  in the case of a Hindu undivided family, a member of the Hindu undivided family,

dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance;

(ii) “Government hospital” includes a departmental dispensary whether full-time or part-time established and run by a Department of the Government for the medical attendance and treatment of a class or classes of Government servants and members of their families, a hospital maintained by a local authority and any other hospital with which arrangements have been made by the Government for the treatment of Government servants;

(iii) “insurer” shall have the meaning assigned to it in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938);

(iv) “senior citizen” means an individual resident in India who is of the age of [sixty years] or more at any time during the relevant previous year.