Income Tax Deduction for Medical Expenses
Income Tax Deduction for Medical Expenses
This article provides a list of all income tax deductions and other benefits available for medical expenses. The taxability of reimbursements made by employers for medical expenses met by employees is given. Also, a list of medical facilities made available by the employer to an employee which can be treated as tax-free perquisites is provided.
Section 80D Deduction
Section 80D deduction can be claimed by taxpayers from gross total income for health insurance premium, contribution to Central Government Health Scheme and preventive health checkup.
Section 80DD Deduction
Section 80DD deduction can be claimed by individuals who are resident in India and HUFs for maintenance and medical treatment of a disabled dependant. The maximum deduction under section 80DD is Rs.75,000 for disabled dependants. In case the disabled dependent is a person with severe disability, the maximum deduction allowed is Rs.1.25 lakhs. Deduction under Section 80DD is not dependant on the amount of expenses incurred. Hence, even if the actual expenses on the above mentioned disabled dependent relative is less than amount mentioned, full deduction can be claimed under Section 80DD.
Section 80DDB Deduction
Section 80DDB deduction can be availed by taxpayers for medical treatment of certain specified diseases for self or dependent. Individuals and HUFs, resident in India can claim deduction under Section 80DDB. This deduction can be claimed only by persons or dependents suffering from certain diseases.
Section 80U Deduction
Section 80U deduction can be claimed by taxpayers who have been certified by a Medical Authority to be a person with a disability or severe disability. Section 80U and 80DDB provide tax benefits to individuals and their family members with disabilities. Individuals suffering from disability can get deduction under Section 80U.
Medical Facility Maintained by Employer
The value of medical treatment provided by an employer to an employee or any member of the family in a hospital, dispensary or a clinic or a nursing home maintained by the employer will be a tax-free perquisite.
Medical Treatment in India
Any money paid by an employee for obtaining medical treatment for him or her or family upto a maximum of Rs.15,000 will be tax-free. Also, the expenses incurred by the employer, on the medical treatment of an employee and family members will be fully tax-free:
- In case of treatment at a hospital maintained by the Government or any local authority or in a hospital approved by the Government for medical treatment of its employees, the actual expenditure incurred would be tax-free in the hands of the employee.
- The medical expenditure incurred by an employer for an employee or on family members with respect to certain diseases and ailments as specified in Rule 3A of the Income Tax Rules, in any hospital approved by the Chief Commissioner of Income-tax, will be tax-free. To claim this tax exemption, the employee has to attach along with the taxpayer’s income tax return, a certificate from the hospital specifying the disease or ailment for which medical treatment was required and the receipt for the amount paid to the hospital.
Insurance Premium Paid by Employer
The portion of the insurance premium paid by the employer for insurance of the health of the employees under a scheme approved by the Central Government or the IRDA would be tax-free. Also, reimbursement by the employer of any insurance premium paid by the employee, for own health or family members’ health in a scheme approved by the Central Government or IRDA is a tax-free perquisite.
Medical Treatment Outside India
The following expenditure incurred by an employer on the treatment of the employee or family members outside India is a tax-free perquisite:
- Expenses on medical treatment of the employee or any member of the employee’s family outside India. However, the expenses will be a tax-free perquisite to the extent permitted by the Reserve Bank of India.
- Expenses on stay abroad of the employee or any member of the employee’s family for medical treatment with one attendant who accompanies the patient in connection with such treatment. The expenses will also be a tax-free perquisite to the extent permitted by the Reserve Bank of India.
- Travel expenses of the patient (employee or any family member) and one attendant who accompanies the patient in connection with such treatment will be tax-free subject to gross total income. The value of travel expenses provided will be tax-free in the case of an employee whose gross total income does not exceed Rs.2,00,000. Hence, if the gross total income of the employee before including the taxable medical perquisite on account of travel expenditure exceeds Rs.2,00,000, then the expenses on the travel of the patient as well as of the attendant will become taxable.