Cancer patients and caregivers not only suffer from the emotional burden but the devastating financial burden of the disease as well. The Indian tax system provides relief for preventative health checks, health insurance premiums, and patients suffering from chronic illnesses like cancer. Talk to your accountant or tax specialist to better understand these deductions.
Section 80D allows for a deduction claimed for the following:
- Preventative health checks
- Health insurance premiums
- Medical expenses
- Medical expenses of super senior citizens (above 80 years old)
A maximum deduction of Rs. 60,000 can be claimed under Section 80D. When claiming a deduction, “Service Tax” and “Cess” need to be deducted from the premium amount.
Deduction on Health Insurance or Medical Insurance / Mediclaim and Preventative Health Checks
The Section 80D deduction is available to any individual taxpayer or HUF (“Hindu Undivided Family”). The deduction is available to Indian citizens and NRIs. The deduction can be claimed for the following dependents:
- Dependent Children (non-earning male students up to age 25 only, non-earning females only till they are married)
Deductions on the coverage of health insurance and medical insurance / Mediclaim plans can be made to the extent of the following:
The following precautions should be taken while claiming deductions under Section 80D:
Can be Claimed:
- Insurance premium payments made by other modes of payment including credit card, debit card, etc.
- Premiums paid by taxpayer to enhance group coverage provided by employer for eligible members, can be claimed within applicable limits
- Cash paid for health check-ups ONLY can be claimed. As stated below cash payments on health premiums cannot be claimed
- Taxpayer makes payments to keep policy active. Taxpayer does not have to be proposer of the policy to claim the deduction
- Benefits for health insurance premiums paid through salary deduction. Tax deduction under Section 80D is over and above “Medical Benefit” deducted from salary. BOTH – health insurance/Mediclaim under Section 80D and Medical Allowance under Section 10 can be claimed
- Health insurance premiums for more than one policy can be claimed
- Top-up health insurance or medical insurance/medical plans are also eligible for the benefit
- Deductions for earning spouse or earning parents, even if they are not dependents can be claimed
- Deductions for part payment by taxpayer and parent can be claimed to the proportion of payment from each individual
- Preventative health check deductions are all-inclusive for family members (self, spouse, dependent children, parents) to the EXTENT of Rs. 5,000.
- Renewals for health insurance or medical insurance/medical plans can be claimed
Cannot be Claimed:
- Payments for insurance premiums by cash
- If the taxpayer is NOT making payments to keep the policy active then the taxpayer cannot claim the deduction
- Group health insurance provided by employer cannot be claimed
- Premiums paid for independent children, i.e. children who are earning income
- Employer-provided group health insurance plan premium payments through salary deduction
Taxpayers can claim deductions for expenses incurred on medical treatment of specified diseases. Tax deduction under Section 80DDB is available to resident individuals and their qualifying dependents and any member of HUFs. The tax benefit is not available to NRIs. For individuals, a dependent can be spouse, child, parents, and siblings.
The amount of deduction should be reduced by any amount received from insurance or reimbursement by employer, for medical treatment of patient.
List of diseases covered under Section 80DDB:
- Neurological Diseases where the disability level has been certified to be of 40% and above
- Dystonia Musculorum Deformans
- Motor Neuron Disease
- Parkinson’s Disease
- Malignant Cancers
- Full Blown Acquired Immune-Deficiency Syndrome (AIDS)
- Chronic Renal failure
- Hematological disorders
The following specialists can issue prescriptions:
- Neurological Diseases: Neurologist having a Doctorate of Medicine (D.M.) degree in Neurology or any equivalent degree, which is recognized by the Medical Council of India
- Malignant Cancers: Oncologist having a Doctorate of Medicine (D.M.) degree in Oncology or any equivalent degree which is recognized by the Medical Council of India
- AIDS: Specialist having a post-graduate degree in General or Internal Medicine, or any equivalent degree which is recognized by the Medical Council of India
- Chronic Renal Failure: Nephrologist having a Doctorate of Medicine (D.M.) degree in Nephrology or a Urologist having a Master of Chirurgiae (M.Ch.) degree in Urology or any equivalent degree, which is recognized by the Medical Council of India
- Hematological disorders: Specialist having a Doctorate of Medicine (D.M.) degree in Hematology or any equivalent degree, which is recognized by the Medical Council of India
If treatment was in a government hospital, any specialist working full-time in that hospital, having a post-graduate degree in General or Internal Medicine or any equivalent degree, which is recognized by the Medical Council of India, can issue a prescription.
The taxpayer should furnish a prescription for medical treatments of the diseases mentioned above. The prescription should contain the following information:
- Patient name
- Patient age
- Name of the disease or ailment
- Specialist/Hospital address
- Specialist registration number
- Qualification of the specialist issuing the prescription
- Name and address of the government hospital (if treatment in government hospital)
Deductions under Section 80DDB are based on the following: