How to Save Income Tax under Sections 80D, 80DDB, 80DD and 80U?

When it comes to taxes, paying for healthcare can be tough. Sections 80D, 80DDB, 80DD, and 80U of the Income Tax Act offer deductions for medical expenses and disabilities. These deductions can help you save a significant amount of tax on your taxable income.

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Can Medical Expenditure be Claimed Within Section 80D?

Section 80D of the Income Tax Act provides an opportunity to reduce taxable income by claiming deductions on medical expenses. These deductions can be availed under specific conditions:

  • The medical expenses should pertain to yourself, your spouse, dependent parents, or dependent children. Notably, for individuals aged 60 and above, the medical expenses can be claimed for any family member.

  • The individual for whom medical expenses are incurred should not be covered by any health insurance policy.

Meeting these conditions allows individuals to claim deductions of up to Rs 50,00,000 for the incurred medical expenses during the financial year. It is crucial to note that payments for medical expenses must be made through banking channels such as credit/debit cards, net banking, UPI, digital wallets, etc. Cash payments are not eligible for deduction.

Additionally, it's essential to distinguish between medical expenditure and preventive health consultation or check-up. Here are key points to clarify any confusion:

  • Medical expenditure, as per the existing law, should cover self or dependent family members aged 60 and above for the treatment of ailments or diseases.

  • Preventive health treatment or check-up expenses, irrespective of the individual's age, must be paid in cash, with the maximum deduction capped at Rs 5,000.

The deduction for medical expenditure:

  • Section 80D: Section 80D of the Income Tax Act allows individuals to claim a deduction for medical expenses incurred for themselves, their spouse, their children, their parents, and their dependent relatives. The maximum deduction that can be claimed is Rs 25,000 in a financial year. However, if the individual is a senior citizen (aged 60 years or above), the maximum deduction is Rs 50,000.

  • Section 80DDB: Section 80DDB of the Income Tax Act allows individuals to claim a deduction of Rs 1 lakh for medical expenses incurred for the treatment of a dependent with a severe disability.

  • Section 80DD: Section 80DD of the Income Tax Act allows individuals to claim a deduction of Rs 100,000 for medical expenses incurred for the maintenance, training, and rehabilitation of a dependent with a disability.

  • Section 80U: Section 80U of the Income Tax Act allows individuals to claim a deduction of Rs 1 lakh for medical expenses incurred for the treatment of their own disability.

Who Can Claim Within Section 80DDB?

  • Deductions under Section 80DDB of the Income Tax Act are applicable for medical treatment expenses outlined in the specified section.

  • The sum of deduction depends on factors such as the age of the individual on whom the expense is incurred.

  • The deduction can be claimed by the individual or the immediate dependent. If claimed for a dependent, they must be entirely reliant on the individual making the deduction.

  • For individuals under 60 years of age, a claim can be made up to a maximum deduction of Rs 40,000. For individuals aged 60 and above, the maximum deduction is Rs 1 lakh.

  • The deduction is applicable even if the individual is covered by another health insurance policy.

  • It's important to note that the deduction amount claimed will be reduced by the sum received from the insurer or reimbursed by the employer for the medical treatment of the individual.

Invest & Save upto ₹46,800 per annum in taxInvest & Save upto ₹46,800 per annum in tax

How to Claim Deduction Within Section 80DD and Section 80U?

The Sections 80DD and 80U essentially deal with the incurred medical expenses for which the claims can be made under tax-saving deductions. Within both of these sections, the deduction shall be claimed by the individual himself or even the immediate dependent. The dependent can be spouse, parents or children and even brother and sister.

For the two sections, the sum that can be asserted as the reasoning doesn't rely upon the age of the individual. It relies upon the level of the disability of the individual.

If the dismemberment is more than 40% but under 80%, at that point, all things considered, a finding of Rs 75,000 will be permitted. Then again, the conclusion of Rs 1.25 lakh will be permitted if the level of disability is 80% or more. This deduction is fixed regardless of the genuine expenses.

Tax Saving Deduction For Disabled Individuals Under Section 80DD and Section 80U

  • Deductions can be claimed for expenses incurred on medical treatment, including nursing, training, and rehabilitation of an individual with a disability.

  • The deduction is claimed from the total income of the taxpayer before the calculation of taxes, thereby reducing the overall tax liability.

  • The fund in which the money is deposited should provide either annuity payments or a lump sum amount to support individuals with disabilities, especially in the event of the person's demise.

  • The individual has the option to designate a dependent with a disability, another individual, or a trust to receive payments on their behalf.

  • On the other side, Section 80U offers deduction when the individual is going through a disability.

Wrapping It Up

The Income Tax Act of 1961 provides tax benefits that lift off the financial burden for individuals, particularly when expenses are incurred for medical treatments for oneself, one's spouse, or dependents. While these sections may seem similar, it's essential to note the highlighted distinctions in the benefits they offer.

Read more: Income Tax Login

FAQ's

  • Can we claim both 80U and 80DDB together?

    No, you cannot claim both Section 80U and Section 80DDB together. Section 80U is for individuals with disabilities, while Section 80DDB is for medical expenses incurred for the treatment of a dependent with a severe disability. You can only claim one of these deductions.
  • Can we claim 80D and 80DD?

    Yes, you can claim both Section 80D and Section 80DDB. Section 80D is a general deduction for medical expenses, while Section 80DDB is an additional deduction for medical expenses incurred for the treatment of a dependent with a severe disability. You can claim both deductions separately.
  • What is the maximum deduction under 80D and 80DDB?

    The maximum deduction under Section 80D is Rs 25,000 for individuals and Rs 50,000 for senior citizens (aged 60 or above). The maximum deduction under Section 80DDB is Rs 1 lakh per dependent.
  • How can I save tax under 80DD?

    To save tax under Section 80DD, you must maintain original bills and receipts for medical expenses incurred for the treatment of a dependent with a severe disability. You must also submit a certificate from a registered medical practitioner certifying the disability of the dependent. You can claim the deduction by submitting these documents along with your income tax return.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
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