Section 80DDB of the Income Tax Act provides for tax benefits to taxpayers who incur expenses towards the treatment of specified illnesses for themselves or their dependents. In this blog, we will discuss the provisions of Section 80DDB and how taxpayers can claim the benefits under this section.
What is Section 80DDB?
Section 80DDB of the Income Tax Act allows taxpayers to claim a deduction for expenses incurred towards the treatment of specified diseases for themselves or their dependents. The section provides relief to taxpayers who incur high medical expenses due to the treatment of certain illnesses. The deduction under this section is available to both individuals and Hindu Undivided Families (HUFs).
Who is eligible to claim a deduction under Section 80DDB?
The deduction under Section 80DDB is available to an individual or a Hindu Undivided Family (HUF) who has incurred expenses for the treatment of the following diseases:
- Neurological Diseases, which includes Dementia, Parkinson’s Disease, and Ataxia.
- Malignant Cancers
- Chronic Renal Failure
- Hematological disorders, which includes Hemophilia and Thalassemia.
- AIDS
- Chronic Obstructive Pulmonary Disease (COPD)
- End-stage Liver Disease
The taxpayer can claim the deduction for the treatment of these diseases for himself or his dependent. A dependent can be a spouse, parents, children, or siblings.
What is the deduction amount under Section 80DDB?
The deduction under Section 80DDB is allowed up to a maximum of Rs. 1,00,000 for the financial year 2021–22. However, for senior citizens (i.e. individuals aged 60 years or above), the maximum deduction limit is Rs. 1,20,000. The deduction is allowed for the actual expenses incurred towards the treatment of the specified illness or the maximum deduction limit, whichever is lower.
How to claim a deduction under Section 80DDB?
To claim the deduction under Section 80DDB, the taxpayer needs to submit a medical certificate in Form 10-I from a specialist doctor. The certificate should contain the name and age of the patient, the name of the disease or ailment, and the details of the treatment undergone. The certificate should also mention the amount of expenditure incurred towards the treatment of the disease.
The deduction under Section 80DDB can be claimed at the time of filing the income tax return. The taxpayer needs to enter the amount of deduction under the relevant section in the tax return form.
- Expenses eligible for deduction: The deduction under Section 80DDB is allowed for expenses incurred towards the treatment of specified diseases. The expenses that are eligible for deduction include the cost of medicines, medical tests, consultation fees, hospitalization charges, and other expenses related to the treatment of the disease.
- Medical certificate requirements: The medical certificate required to claim the deduction under Section 80DDB should be issued by a specialist doctor working in a government hospital or a hospital approved by the government. The certificate should be in the name of the patient and should mention the amount of expenditure incurred towards the treatment of the disease.
- Dependent definition: Under Section 80DDB, a dependent can be defined as a spouse, children, parents, or siblings. If the taxpayer incurs expenses towards the treatment of any of these dependents for the specified disease, he can claim the deduction under this section.
- Carry forward of deduction: If the total amount of deduction claimed under Section 80DDB in a financial year is less than the maximum allowable limit, the balance amount can be carried forward and claimed as a deduction in the subsequent financial year.
- Non-resident Indians (NRIs): NRIs are also eligible to claim the deduction under Section 80DDB for the treatment of specified diseases for themselves or their dependents.
- Tax benefits for senior citizens: Senior citizens (i.e., individuals aged 60 years or above) are eligible for a higher deduction limit of Rs. 1,20,000 under Section 80DDB. This higher limit provides additional tax benefits to senior citizens who may incur higher medical expenses.
In conclusion
Section 80DDB of the Income Tax Act provides much-needed tax relief to taxpayers who incur expenses towards the treatment of specified diseases. Taxpayers should ensure that they keep proper documentation and medical certificates to claim the deduction under this section. They should also take advantage of the carryforward provision and the higher deduction limit available for senior citizens to maximize their tax benefits.
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Frequently Asked Questions (FAQs)
Q. What is Section 80DDB of the Income Tax Act?
Section 80DDB is a provision in the Income Tax Act that allows taxpayers to claim a deduction for expenses incurred towards the treatment of specified diseases for themselves or their dependents.
Q. What are the diseases covered under Section 80DDB?
The diseases covered under Section 80DDB are neurological diseases, malignant cancers, chronic renal failure, hematological disorders, AIDS, chronic obstructive pulmonary disease (COPD), and end-stage liver disease.
Q. Who is eligible to claim a deduction under Section 80DDB?
An individual or a Hindu Undivided Family (HUF) can claim a deduction under Section 80DDB if they incur expenses for the treatment of the specified diseases for themselves or their dependents.
Q. What is the maximum deduction limit under Section 80DDB?
For the financial year 2021–2022, the maximum deduction limit under Section 80DDB is Rs. 1,00,000. For senior citizens, the limit is Rs. 1,20,000.
Q. How to claim the deduction under Section 80DDB?
To claim the deduction under Section 80DDB, the taxpayer needs to submit a medical certificate in Form 10-I from a specialist doctor. The certificate should contain the name and age of the patient, the name of the disease or ailment, and the details of the treatment undergone.
Q. Can the deduction under Section 80DDB be claimed for expenses incurred on a dependent who is not a family member?
No, the deduction under Section 80DDB can only be claimed for expenses incurred on dependents who are family members, including spouse, parents, children, and siblings.
Q. Can the balance amount of deduction under Section 80DDB be carried forward to the next financial year?
Yes, if the total deduction claimed under Section 80DDB in a financial year is less than the maximum allowable limit, the balance amount can be carried forward and claimed as a deduction in the subsequent financial year.
Q. Are non-resident Indians (NRIs) eligible to claim the deduction under Section 80DDB?
Yes, NRIs are also eligible to claim the deduction under Section 80DDB for the treatment of specified diseases for themselves or their dependents.
Q. Can a taxpayer claim a deduction under Section 80DDB and Section 80DD for the same dependent?
No, a taxpayer cannot claim a deduction under both Section 80DDB and Section 80DD for the same dependent. The taxpayer needs to choose the section under which they want to claim the deduction.
Q. What is the penalty for falsely claiming a deduction under Section 80DDB?
If a taxpayer is found to have falsely claimed a deduction under Section 80DDB, they may be liable to pay a penalty of up to 200% of the tax amount evaded, in addition to the tax liability and interest.
