(G) Deduction In Respect Of Medical Treatment Of Terminal Ailments, Etc. — Section 8ODDB

Income-tax deduction in respect of medical treatment is permissible to individual tax payers as well as to the Hindu Undivided Family in terms of the provisions contained in Section 8O DDB of the Income Tax Act, 1961. This section was amended by the Finance Act, 2003. Unfortunately all ailments and diseases are not entitled to the income-tax deduction. Only selected diseases and ailments as are prescribed by the Central Board of Direct Taxes are entitled to deduction while computing the net taxable income of a tax payer. Rule 11 DD of the Income Tax Rules, 1962 specifies the diseases as also the ailments for the purposes of deduction under Section 80 DDB of the Income-Tax Act, 1961. The specified diseases and ailments as per the recent Notification No. 246/2003 (F No. 142/1 7/2003-TPL) dated 17-10-2003 are as under:

(i) Neurological Diseases where the disability level has been certified to be of 4O% and above:

 

(a) Dementia,
(b) Dystonia Musculorum Deformans,
(c) Motor Neuron Disease,
(d) Ataxia, (e) Chorea,
(f) Hemiballismus,
(g) Aphasia, and
(h) Parkinsons Disease.

(ii) Malignant Cancers


(iii) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS)


(iv) Chronic Renal Failure


(v) Hematological disorders


(a) Hemophilia


(b) Thalassaemia


The provisions of Section 8ODDB now provide for a deduction for only the above mentioned diseases or ailments in respect of medical treatment by the individual tax payer for himself or for his

 

dependant. For this purpose the spouse, children, parents, brothers and sisters of the individual or any of them would be treated as “dependant” of the individual tax payer. In the case of Hindu Undivided Family, the deduction would be permissible in respect of expenses so incurred on medical treatment of disease or ailment for any member of the Hindu Undivided Family. If the expenditure is in respect of a dependant, then such person should be wholly or mainly dependant on the individual or the HUF for his support and maintenance.


The amount which is allowed as a deduction in respect of medical treatment of the above mentioned diseases or ailments would be actual amount paid or a sum of
` 40,000 whichever is less, in respect of that previous year in which such amount was actually paid. However, for Senior Citizens the limit of deduction would get enhanced to ` 60,000. Similarly, if the expenses are incurred by the Hindu Undivided Family for its member who happens to be a Senior Citizen, then also the amount of deduction would be ` 60,000. The above amount of deduction shall be further reduced by amount received from the Insurance Company or the Employer.


All those tax payers who would like to claim deduction in respect of medical treatment of above mentioned diseases or ailments should remember that the above deduction from the total income of the tax payer would be permissible to the tax payer only when the assessee furnishes with its return of income, a certificate in Form No. 10-I from a specialist working in a Government Hospital. In case the said Form No. 10-I is not submitted with the income-tax return then no deduction would be permissible to the assessee.


Thus, the provisions as are contained in Section 8ODDB provide for deduction from total income of a taxpayer on account of expenses so incurred only on selected diseases or ailments as are mentioned in rule 11 DD. However, in view of the new amendments deduction would be allowed only when the actual expenditure has been so incurred by the person claiming such deduction. Likewise, the submission of new form No. 10-I has also become mandatory. Tax payers should thus claim the above deduction only after careful screening of their facts and papers. From a practical angle it is

 

suggested that those persons who are eligible to claim the above expenditure on account of medical treatment should prepare a list of various expenses so incurred on medical treatment and should attach a zerox copy of all bills and vouchers with the Income-tax return to avoid any disallowance.

 
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