Last week, we touched upon tax deductions that pertain to medical expenses. The most common one under this group is Section 80D. It’s the section under which we claim our health insurance premium and medical expenses for parents who do not have a health insurance policy.
In addition to this, the Income Tax Act provides a few more deductions under Sections 80DD, 80DDB and 80U. While these sections are lesser known, they aid those suffering from certain specific diseases or disabilities. Let’s take a look at the conditions of each of these three sections and whom they apply to.
An Overview of Sections 80DD, 80DDB, 80U
The first thing to note is that Section 80DD and Section 80U are the same, barring one important detail. 80U may be claimed by the person with the disability. However, 80DD may be claimed by the individual on whom such person is wholly dependent. These two sections can be claimed together only in a situation wherein both individuals have a disability.
Now, let’s understand the other aspects of these sections.
Who is a Dependent?
Say you are the assessee, aka the taxpayer claiming the deduction under these sections. For you, a dependent means your spouse, children, parents or siblings.
For an HUF (Hindu Undivided Family), a dependent means a member of the HUF.
What are the disabilities covered?
List 1: Disability
For Section 80DD and Section 80U
- Blindness
- Low vision
- Leprosy-cured
- Hearing impairment
- Locomotor disability
- Mental retardation
- Mental illness
- Autism, cerebral palsy, and multiple disability
List 2: Specified Diseases
For Section 80DDB
1. Neurological Diseases where the disability level has been certified to be of 40% and above:
- Dementia
- Dystonia Musculorum Deformans
- Motor Neuron Disease
- Ataxia
- Chorea
- Hemiballismus
- Aphasia
- Parkinson’s Disease
2. Malignant Cancers
3. Full Blown Acquired Immuno-Deficiency Syndrome (AIDS)
4. Chronic Renal failure
5. Hematological disorders
- Hemophilia
- Thalassaemia
In case you want to figure out the specifics of any of these disabilities or diseases, you may refer to the following links from the Income Tax Department’s official website:
Section 80DD, Section 80DDB, Section 80U
Conditions for Section 80DDB in particular
To claim this deduction, the individual must fulfil certain conditions:
- The expenditure is actually incurred for medical treatment of specified diseases for self or dependent.
- A doctor’s prescription is mandatory to claim this deduction. It may be obtained by a neurologist, oncologist, immunologist, nephrologist, or haematologist, who has a Doctor of Medicine degree or equivalent recognised degree.
- 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 concerned.
Certificate for Section 80DD and Section 80U
To claim a deduction under these sections, a certificate issued by a medical authority is a must. Later, if the disability requires reassessment, a fresh certificate will be needed after the period mentioned on the original certificate expires. This will allow you to continue to claim the deduction in subsequent years.
The format of this certificate, Form 10-IA, is available via this link.
In Conclusion
During the tax-filing season last year, I was deep-diving into these sections for a family member. What I learned was that your doctor might know more than your chartered accountant! After all, they are the ones issuing the certificate.
Moreover, I also learned that the entire process of obtaining the certificate can take a week or more. A medical board is constituted to assess the level of disability of the individual. So, it’s best not to leave this for the last minute.
Medical expenses can cause a serious drain on our finances. In some cases, the amounts of deductions under these four sections – Section 80D, 80DD, 80DDB, and 80U – might appear small in comparison to the actual expenses incurred, especially on severe diseases and disabilities. But no matter the quantum, it is important to know that they exist in our tax provisions, and to claim them whenever applicable.
PS: None of these deductions are available if you opt for the new tax regime.
