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Monday, 5 December 2011

Are you claiming this income tax deduction?

A deduction is allowed under Section 80 DDB of the Income Tax Act for Treatment of Specified diseases
The following diseases are covered -
·         Neurological Diseases (where the disability level has been certified as 40% or more)
- 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
Deduction is allowed for costs incurred on the treatment of above specified illnesses to a resident taxpayer – individual or HUF in India (i.e. NRI cannot claim this deduction).  
This deduction is allowed for treatment of self, spouse, children, siblings, and parents, wholly dependent on you.  However, if you have availed any reimbursement for the treatment from your insurance company or employer, the deduction under this section shall be reduced by the amount received under insurance or reimbursed by the employer.
 The deduction will only be allowed on submission of a certificate as proof for the specified ailment from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist as may be prescribed, working in a government hospital.    This certificate is to be provided in the prescribed Form 10-I. See link.  http://law.incometaxindia.gov.in/DITTaxmann/IncomeTaxRules/pdf/itr62Form10I.pdf
The amount of deduction allowed is
-          Actual sum paid for the medical treatment subject to a maximum of Rs. 40,000.
-          Where the actual sum paid for the medical treatment is in respect of a senior citizen (age 65 years or more), the upper limit is higher – Rs. 60,000.
To claim this higher deduction of Rs 60,000 proof of age of the patient is required.  
Salaried tax payers can include this deduction along with investment declaration provided to their employer around this time of the year.  This will ensure the deduction is taken care of in the TDS calculation and reflected in your Form 16.

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