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

Most of us are aware that in case you have a health insurance policy whether for the family, children or any of the immediate dependents then you can save tax within Section 80D of the Income Tax Act.

In case you are unaware, it is to be duly noted that you, members of your family or your old parents who are above 60 years of age can likewise save tax up to Rs 1 lakh each financial year.

Besides, due to any of the pre-existing medical condition or any other valid reason, if you are unable to pay the health insurance premium even then one can easily save on the tax via medical expenses.

Save Income Tax via Medical Expenditures

Now, let us quickly get into the nitty-gritty of saving tax via medical expenses and understand some important and relevant sections within the Income Tax Act.

First things first!

Can Medical Expenditure be Claimed Within Section 80D?

The Income Tax Act Section 80D essentially permits you to save on tax. You can claim the incurred medical expenses as a deduction from the payment before the tax is levied. Moreover, under the following two conditions the deduction can be claimed:

  • The incurred medical expenses should either be on you, your spouse or dependent parents or the children. Besides, it is to be noted that the incurred medical expenses for the person have to be for someone who is 60 and above years of age. Thus, most of the times people can make a claim limited to yourself, the spouse or the parents as mostly they will be in the age bracket of 60 years and above and most likely not the dependent children.
  • The person should not be covered under any health insurance policy if one wishes to claim within the incurred medical expenses.

Therefore, when these two above-mentioned conditions are met, one may claim up to deduction of Rs 50, 00, 00 for the incurred expenses in the financial year. The payment of the incurred medical expenses should be paid via any of the banking channels like credit/debit cards, net banking or through any digital mediums such as UPI, digital wallets and much more. The cash mode of payment will not be accepted to claim the deduction.

Moreover, individuals need to understand that the terms medical expenditure and expenditure on preventive health consultation or check-up are not the same. In case you too are confused, the following are the key points to be remembered:

  • As defined within the existing law, the medical expenditure should be done upon self or the dependent members of the family who are 60 and above years of age for the medical treatment of any of the ailments or disease.
  • Regardless of the age of the person, the expenditure upon the preventive health treatment or check-up need to be done in cash and the amount claimed within the highest deduction is Rs 5,000.

The table below shows the deduction for medical expenditure:

  Members of Family/ Parents(Below 60 Years of Age) Members of Family/ Parents(Above 60 Years of Age)
Section 80D Not Permitted Rs 50, 000
Section 80DDB Rs 40, 000 Rs 1 lakh
Section 80D/80U* Rs 75, 000/ Rs 1.25 Lakh(On the premise of the disability percentage) Rs 75, 000/ Rs 1.25 Lakh(On the premise of the disability percentage)

Note: * denotes that within Section 80U and 80DD the deduction does not take into account the age factor.

Who Can Claim Within Section 80DDB?

Within Section 80DDB of the Income Tax Act, the deductions can be claimed for the expenses incurred on the medical treatment, which is mentioned within the specified section.

There are various factors, which determine the sum of deduction to be claimed such as the age of the individual on whom the expense has been incurred. Moreover, this deduction can be claimed by the individual itself or the immediate dependent. In case the claim is made for the dependent then the dependent must be completely reliant upon the individual who is to claim the deduction.

In case a person is less than 60 years of age and the expense has been incurred on the same then a claim can be made up to the maximum deduction of Rs 40, 0000. On the other side, if the person ages 60 and above then a maximum deduction of Rs 1 lakh will be claimed.

The highlight is even if the individual is covered within any other health insurance policy, the individual will be covered. In any case, recall that the deduction amount claimed will be diminished by the sum got from the provider or repaid by the business for the clinical treatment of the said individual.

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 for tax-saving deductions. Within both of these sections, the deduction shall be claimed by the individual himself or even the immediate dependent. The dependent implies to the spouse, the parents or the children and even the 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 per cent however under 80 per cent, 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 per cent or more. This deduction is fixed regardless of the genuine expenses.

Be that as it may, recollect both these deductions can't be asserted all the while.

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

The deduction can be asserted for the consumption caused on the clinical treatment (counting nursing), preparing and recovery of an individual with a handicap. The deduction is asserted from the all-out pay of the inquirer before the toll of expense accordingly lessening the complete tax payable.

The plan wherein the cash has been kept ought to give annuity instalment or single amount sum to support the needy experiencing a disability, in case of the passing of the person. The individual can likewise assign the reliant individual experiencing disability or some other individual or trust to get payment for his sake.

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

Wrapping It Up

The Income Tax Act, 1961 does offer tax benefits, which helps an individual of not facing a burden specifically when the incurred expenses are towards medical treatment whether for the self, spouse or the dependents.

These sections might appear similar however, there are some key differences in the benefits offered, which has been highlighted above.

Read more: Income Tax Login

Written By: PolicyBazaar - Updated: 18 November 2020
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