DEDUCTION IN RESPECT OF MEDICAL TREATMENT ETC

[Mr. M. GOVINDARAJAN]

Introduction

Chapter VI-A of the Income Tax Act, 1961 (‘Act’ for short) provides for deductions to be made in computing the total income of the assessee. 

• Part A – General – Sections 80A to 80B;
• Part B – Deductions in respect of certain payments – section 80C to section 80GGC;
• Part C – Deductions in respect of certain incomes – Section 80H to section 80TT;
• Part CA – Deductions in respect of other incomes – Section 80TTA to section 80TTB;
• Part D – Other deductions – Section 80U.

Deductions in respect of medical treatment

The following sections deal with the deductions in respect of medical treatment-

• Section 80D – Deduction in respect of health insurance;

• Section 80DD – Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability;
• Section 80DDB – Deduction in respect of medical treatment etc.

Section 80D

Who are eligible?

An individual or a Hindu undivided family is covered under this section.

Limit allowed

The following are the limits prescribed for deduction under section 80D(2)-

• The contribution paid to health insurance in respect of the assessee or his family members – up to ₹ 25,000/-;
• The contribution paid to the health insurance of the parent or parents of the assessee or for the preventive health check up for the parent or parents of the assessee – up to ₹ 25,000/-
• the whole of the amount paid on account of medical expenditure incurred on the health of the assessee or any member of his family – up to ₹ 50,000/-;  and
• the whole of the amount paid on account of medical expenditure incurred on the health of any parent of the assessee – ₹ 50,000/-.

Section 80DDB

Section 80DDB was inserted in the Income Tax Act, 1961 vide Finance Act (2) of 1996 with effect from 01.04.1997 and later on amended by the Finance Act, 1999, with effect from 01.04.2000.   The same was substituted by the Finance Act, 2003, with effect from 01.04.2004.   This section allowed deduction on medical treatment.

Who is eligible?

An assessee who is resident in India has, during the previous year, actually paid any amount for the medical treatment of such disease or ailment as may be specified in the rules made in this behalf by the Board-

•  for himself or a dependant, in case the assessee is an individual; or
•  for any member of a Hindu undivided family, in case the assessee is a Hindu undivided family.

Who is dependant?

The explanation to section 80DDB defines the term ‘dependent’ as-

• in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;
• in the case of a Hindu undivided family, a member of the Hindu undivided family, dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance.

Limited allowed

The assessee shall be allowed a deduction of the amount actually paid or a sum of ₹ 40,000/-, whichever is less, in respect of that previous year in which such amount was actually paid.   Where the amount actually paid is in respect of the assessee or his dependant or any member of a Hindu undivided family of the assessee and who is a senior citizen (an individual resident in India who is of the age of   60 years or more at any time during the relevant previous year), then the allowed limit is ₹ 1 lakh.

Conditions

The following are the conditions prescribed in this section for this deduction-

• The assessee must obtain the prescription for such medical treatment from a neurologist, an oncologist, an urologist, a haematologist, an immunologist or such other specialist, as may be prescribed.
• The deduction under this section shall be reduced by the amount received, if any, under insurance from an insurer, or reimbursed by an employer, for the medical treatment of the person.

Specified diseases and ailments

Rule 11DD specifies diseases and ailments for the purposes of deduction under section 80DDB of the Act.  Rule 11DD (1) provides that he following shall be the eligible diseases or ailments-

• 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 ;
• Parkinsons Disease ;

• Malignant Cancers ;
• Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
• Chronic Renal failure ;
•  Hematological disorders-

• Hemophilia ;
• Thalassaemia

Prescription

Rule 11DD (2) provides that The prescription in respect of the diseases or ailments specified above shall be issued by the following specialists-

• for diseases or ailments  for Neurological Diseases  - a Neurologist having a Doctorate of Medicine degree in Neurology or any equivalent degree, which is recognized by the Medical Council of India;
• for diseases or ailments for malignant cancer – an Oncologist having a Doctorate of Medicine degree in Oncology or any equivalent degree which is recognized by the Medical Council of India;
• for diseases or ailments AIDS – any specialist having a post-graduate degree in General or Internal Medicine, or any equivalent degree which is recognized by the Medical Council of India;
• for diseases or ailments for chronicle renal failure  – a Nephrologist having a Doctorate of Medicine degree in Nephrology or a Urologist having a Master of Chirurgiae degree in Urology or any equivalent degree, which is recognized by the Medical Council of India;
•  for diseases or ailments for hematological disorders  – a specialist having a Doctorate of Medicine degree in Hematology or any equivalent degree, which is recognized by the Medical Council of India.

The prescription shall contain the name and age of the patient, name of the disease or ailment along with the name, address, registration number and the qualification of the specialist issuing the prescription.

Treatment in Government hospital

In respect of any diseases or ailments specified in sub-rule (1), the patient is receiving the treatment in a Government hospital, the prescription may be issued by any specialist working full-time in that hospital and having a postgraduate degree in General or Internal Medicine or any equivalent degree, which is recognized by the Medical Council of India.  Where the patient is receiving the treatment in a Government hospital, such prescription shall also contain the name and address of the Government hospital.

Section 80DD

Section 80DD provides for deduction in respect of maintenance including medical treatment of dependant who is a person with disability.

What is disability?

Section 2(i) of the Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 defines the term ‘disability’ as-

• blindness;
• low vision;
• leprosy-cured;
• hearing impairment;
• locomotor disability;
• mental retardation;
• mental illness.

Clause (c) of explanation to Section 80DD (4) defines the term ‘disability’ as including  ‘autism’, ‘cerebral palsy’ and ‘multiple disability’ referred to in clauses (a), (c) and (h) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 in addition to the definition of Section 2(i) of the Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.

Who is ‘a person with disability’?

Clause (f) of explanation to Section 80DD (4) defines the expression ‘a person with disability’ as a person suffering from any of the conditions relating to autism, cerebral palsy, mental retardation or a combination of any two or more of such conditions and includes a person suffering from severe multiple disability.

Who is a ‘person with severe disability’?

Clause (g) of explanation to section 80DD (4) defines the expression ‘a person with disability’ as a person with 80% or more of one or more disabilities.

Who is ‘dependant’?

Clause (b) of explanation o Section 80DD (4) defines the term ‘dependant’ as-

•  in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;
• in the case of a Hindu undivided family, a member of the Hindu undivided family, dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year.

Who is eligible?

Section 80DD (1) provides that where an assessee, being an individual or a Hindu undivided family, who is a resident in India, has, during the previous year-

•  incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or
•  paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or any other insurer or the Administrator or the specified company subject to the conditions and approved by the Board in this behalf for the maintenance of a dependant, being a person with disability,

the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of a sum of ₹ 75000/- from his gross total income in respect of the previous year.  Where such dependant is a person with severe disability, the amount eligible for deduction is ₹ 1,25,000/-

Conditions

Section 80DD (2) prescribes the conditions for availing such deduction-

•  the scheme provides for payment of annuity or lump sum amount for the benefit of a dependant, being a person with disability, in the event of the death of the individual or the member of the Hindu undivided family in whose name subscription to the scheme has been made;
• the assessee nominates either the dependant, being a person with disability, or any other person or a trust to receive the payment on his behalf, for the benefit of the dependant, being a person with disability.

Certificate

The assessee, claiming a deduction under this section, shall furnish a copy of the certificate issued by the medical authority in the prescribed form and manner, along with the return of income, in respect of the assessment year for which the deduction is claimed.    Where the condition of disability requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any assessment year relating to any previous year beginning after the expiry of the previous year during which the aforesaid certificate of disability had expired, unless a new certificate is obtained from the medical authority in the form and manner, as may be prescribed, and a copy thereof is furnished along with the return of income.

Who shall issue the certificate?

Rule 11A provides that the following are the authorities to issue certificate in respect of a person with disability and a person with severe disability-

• a Neurologist having a degree of Doctor of Medicine in Neurology (in case of children, a Paediatric Neurologist having an equivalent degree); or
• a Civil Surgeon or Chief Medical Officer in a Government hospital.

Where the condition of disability is temporary and requires reassessment after a specified period, the certificate shall be valid for the period starting from the assessment year relevant to the previous year during which the certificate was issued and ending with the assessment year relevant to the previous year during which the validity of the certificate expires.

Death of dependant

If the dependant, being a person with disability, predeceases the individual or the member of the Hindu undivided family an amount equal to the amount paid or deposited shall be deemed to be the income of the assessee of the previous year in which such amount is received by the assessee and shall accordingly be chargeable to tax as the income of that previous year.