Healthcare expenses constitute a significant portion of your overall spending, including health treatments, preventive checkups, and health insurance premiums, and such expenses are rising yearly.
So, under the Income Tax Act, an individual can claim some of these expenditures as deductions while filing an ITR under the Old Tax Regime.
1. Deduction for Health Insurance Policy
Are you paying health insurance premiums? If yes, then section 80D of the Income Tax Act provides relief to an Individual and HUF for the premium paid towards health insurance in any other mode than cash for self, spouse, and, dependent children to the extent of ₹25,000. If you’re a senior citizen, the deduction increased to ₹50,000.
It further allows an additional deduction of up to ₹25,000 for premiums paid on a health insurance plan for your parents. If your parents are senior citizens, the deduction increased to ₹50,000.
In the case of senior citizens (self/ parents) medical expenditure incurred for doctor visits, medicines, etc. which are not covered by health insurance can be claimed up to the overall limit of ₹50,000 mentioned above.
Deduction for Preventative Health check-ups
Any expenditure incurred for regular health checkups (may be in cash as well) allows a deduction of up to ₹5000, which is included in the overall limit of ₹25,000 or ₹50,000 whichever is the case.
2. Deduction for dependents with disability
If you’re paying for the treatment of the disability of a dependent family member: parents, spouse, children, and siblings, you can claim a deduction under section 80DD of the Income Tax Act in order to reduce the liability of the resident individual.
Deduction of a maximum of up to ₹75,000 can be claimed. In case of any severe disability (i.e. 80%) the deduction can be claimed up to ₹1,25,000.
3. Deduction for treatment of the specified disease
You are eligible to claim a deduction of up to ₹40,000 under section 80DDB for the expenses incurred by an individual for a dependent family member towards the treatment of specified diseases stated in the IT Act such as AIDS, cancer, etc.
In case of a senior citizen, the deduction allowed is ₹1,00,000. However, the amount of the deduction shall be first adjusted with the reimbursement received by the insurance company or employer.
4. Deduction for Individuals with disability
Section 80U provides an incentive to help disabled individuals manage their financial well-being. Physically or mentally disabled individual residents are eligible for the 80U benefit.
The maximum deduction allowed is ₹75,000 and it increases to ₹1,25,000 in case of severe disability.
Example: Dhruv, an individual aged 41 years, purchased health insurance for his senior citizen parents and himself. He pays ₹36,000 for his medical insurance, ₹45,000 for his parent’s insurance, and a total of ₹10,000 for their medical check-ups. He incurred some expenses for the medical treatment of his dependent younger sister suffering from cancer.
Solution: Dhruv is eligible for a total deduction of ₹1,15,000.
- ₹25,00 u/s 80D for his own insurance premium
- ₹50,000 u/s 80D for his senior citizen parents (Inclusive of heath check-ups expense)
- ₹40,000 u/s 80DDB for his dependent sister suffering from a severe disease as specified under the IT Act.
It is advisable to have supporting documents like insurance premium receipts, medical bills, medical certificates, etc. while claiming deductions in filing ITR.
Read more about Tax Savings & Deductions under Chapter VI-A,