What is Section 80D?As per the section 80D of the IT Act, an individual can claim a tax deduction of up to Rs. 50,000 for paying health insurance premiums for self, spouse, parents, and dependable children. Additionally, if the taxpayer happens to be a senior citizen, he/she can avail a maximum deduction of up to Rs. 1 lakh under this section.
Amendment made in 2020 budgetRecently, in Budget 2020 the government amended the section 80D, allowing tax deductions for medical expenditure on senior citizens. This means that from financial year 2020-21, expenses incurred for the treatment of senior citizens, including doctor’s fees, medicines, diagnostic tests etc., can be claimed as deductions from the taxable income.
Who can claim this deduction?This deduction for medical expenses, available u/s 80D, can be claimed by the senior citizens themselves or by their children, given that they are incurring medical expenditure on their senior citizen parents. However, one important condition to avail the deduction is that the person(s) on whom medical expenditure has been incurred must not be covered by any health insurance policy.
Additionally, if one happens to be a senior citizen himself/herself, and his/her spouse is also a senior citizen, then he/she can claim tax deductions for medical expenses incurred for both, himself/herself and his/her spouse.
What is covered under medical expenditure?Though the Income Tax Act does not define the term ‘medical expenditure’ (for which the deductions can be claimed u/s 80D), it should cover all healthcare related expenses such as doctor’s fees, medicine bills, hospital’s room-rent, and charges for ambulance, surgeries, diagnostic tests, hearing aids, eye glasses, dental treatments etc.
Documents required to avail the deductionJust like the term ‘medical expenditure’ is undefined in the Act, there’s no word on the documents required as well. However, it’s prudent for the taxpayers to keep some documentary evidence of the expenses incurred by them such as hospital bills, invoices of medicines, doctor’s prescription etc., so that they can support their claim in case the income tax department asks for it.
The maximum deduction that can be claimed under section 80D (amended) remains the same. It means that if you’re a senior citizen, the maximum tax benefits that you can claim against the medical expenses incurred for yourself and/or your spouse is capped at Rs. 1 lakh.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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