NEW DELHI: When it comes to availing income tax deductions, most common taxpayers think about investments in Employee Provident Funds, Public Provident Fund, tax saver mutual funds, life insurance, etc. They, however, forget that many routine expenses such as expenses on education, healthcare, etc also qualify for deductions under different provisions of the Income Tax Act.
You can save a lot of taxes by claiming several of your healthcare expenses as deductions. Contribution towards health insurance premium: The most common medical expense that people claim is money paid towards buying a health insurance premium.
One can claim up to Rs 25,000 a year for buying health insurance covering self, kids and spouse. Another Rs 25,000 can be claimed for buying health insurance for parents who are not senior citizens yet. If your parents are senior citizens, the maximum deduction allowed is Rs 50,000.
“Section 80D (of Income Tax Act) allows deduction of up to Rs 50,000 for medical expenses incurred for senior citizens, self, spouses or dependent children. If you are making payment of medical bills of your senior citizen parents, you can take a separate deduction of up to Rs 50,000. This limit is inclusive of the overall limit of Section 80D,” says Archit Gupta, CEO & Co-Founder of Clear (previously Cleartax).
However, there is a condition for claiming that additional Rs 50,000 spent on medical expenses of senior citizen parents. You can claim such deduction only if the person on whom such expenses are incurred is not covered under any health insurance policy. Also, the payment must be made by any mode other than cash.
One can also claim Rs 5,000 on preventive check-ups within the overall limit prescribed under Section 80D. So, for example, if your family floater plan costs you Rs 18,000 a year (against the overall limit of Rs 25,000), you can claim an additional Rs 5,000 on preventive health check-ups.
Expenditure on treatment and rehabilitation of a disabled dependent: If you have a disabled dependent — who happens to be your spouse, children, parents and siblings — then expenditure on treatment, training and rehabilitation of such a dependent is also eligible for income tax deduction up to a certain limit.
The disability of the dependent should not be less than 40%. The total deduction allowed in case of not severe disability (more than 40% but less than 80%) is Rs 75,000 and in case of severe disability, the total deduction allowed is Rs 1.25 lakh.
The disabilities for availing this benefit include low vision, blindness, hearing impairment, leprosy-cured, mental illness, mental retardation, etc. Disabilities for this purpose is defined under Section 2 in The Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.
Expenditure on self or dependent for treatment of certain diseases: A deduction of up to Rs 40,000 is available for an individual, and Rs 1 lakh if the expenditure is incurred on a senior citizen. The specified diseases on the treatment of which expenses incurred are allowed the deduction benefit include dementia, malignant cancer, AIDS, Parkinson’s disease, etc.
However, if the dependent is insured by a health policy and receives payment from the insurer or a part of the expense is reimbursed by the employer, then that amount would be reduced from the deductible allowed.
Deduction for a person with physical disability: If you suffer from certain physical disabilities like blindness, low impairment, mental retardation, locomotor disability etc, you can avail deduction benefit up to Rs 75,000 in case of non-severe disabilities, and Rs 1.25 lakh in case of serious disabilities (80% or more disability).
Save E50K on senior citizens’ medical expenses
“Section 80D (of Income Tax Act) allows deduction of up to Rs 50,000 for medical expenses incurred for senior citizens, self, spouses or dependent children. If you are making payment of medical bills of your senior citizen parents, you can take a separate deduction of up to Rs 50,000. This limit is inclusive of the overall limit of Section 80D,” says Archit Gupta, CEO & Co-Founder of Clear (previously Cleartax).
