Deductions under Section 80DDB of the Income Tax Act

Deductions under Section 80DDB of the Income Tax Act are available to an individual or a HUF since 1.4.2004. This kind of deduction is covered by Chapter VIA of the Income Tax Act, 1961.

Who can claim such deduction?

To claim deduction under Section 80DDB of the Income Tax Act, 1961, the following conditions should be satisfied:
1. The Taxpayer should be resident in India;
2. Deduction can be claimed by an individual or Hindu Undivided Family only;
3. Deduction is available for the actual expenses on medical treatment of some particular diseases or ailments;
4. Expenses should be incurred for medical treatment of the assessee himself or someone who is totally or mainly dependent upon him.
5. In case of Hindu Undivided Family, for persons who are totally or mainly dependent members of the Hindu Undivided Family.

Who is a dependent?

For the purpose of section under Section 80DDB of the Income Tax Act, a “dependant” means the assessee himself or his spouse or dependent children or dependent parents or dependent brothers or dependent sisters.

For availing the tax benefits under section 80DDB of Income Tax Act, 1961, an assessee should be a resident in India but it is not mandatory that the dependent also should be a resident in India.

Requirements:

The Assesee requires submitting a certificate in form no 10-I from a prescribed doctor of a Government hospital.

Government hospital includes a dispensary established and run by a Department of the Government for the medical treatment of Government servants and their family members or a hospital which is maintained by a local authority where arrangements have been made by the Government for the treatment of its employees.

This deduction cannot be allowed while calculating the TDS. The assessee shall have to apply for claiming this deduction at the time of filing his income tax return.
However section 80DDB provides that in case of any insurance claim, the deduction shall be allowed by decreasing the insurance amount received from actual expenses incurred by the assessee.

Who is an “insurer”?

“Insurer” shall be defined as per under section 2(9) of the Insurance Act, 1938.
According to the section, “Insurer” means-
(1) Any individual or body of individuals incorporated under the law and
(i) Carries on business in India, or
(ii) Has its principal place of business in India, or
(iii) For getting insurance business, employs a representative in India;
(2) Any corporate body within the meaning of the Indian Companies Act.

Amount of Deduction allowed:

Deduction under Section 80DDB is available for Rs. 40,000/- or the amount actually paid, whichever is less.

If expenses have been incurred for the medical treatment of a dependent who is at least of 65 years of age, then deduction shall be Rs. 60,000/- or the actual amount paid whichever is less.

Diseases specified for the purpose of deduction under section 80DDB:

(i) Neurological Diseases with disability of 40% and more, such as Dementia, Motor Neuron Disease , Chorea , Parkinson’s Disease , etc.
(ii) Malignant Cancer;
(iii) Acquired Immuno-Deficiency Syndrome (AIDS);
(iv) Renal failure;
(v) Hemophilia;
(vi) Thalassaemia,etc.