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Medical Expenses and Income Tax

Arjuna: Madhava, just now Diwali festival has been celebrated. On the occasion of Diwali, we have discussed how books of accounts to be maintained and if one has to start new business then which tax laws are required to be followed. In that discussion you explained how one should earn money by keeping our own health and health of the family. Accordingly, Krishna, please explain what are the provision under Income Tax Act for expenditure incurred on Medication.  

Lord Krishna: Wow Arjuna, during this festival season after having lots of delicious sweets, Snacks foods, etc. and due to pollution of Fire Crackers, care have to be taken of health. As per Income Tax Act there are many provisions for medical expenditure?  

Arjuna: What about Medical Allowance or reimbursement of medical expenditure of salaried person?

Lord Krishna: Medical Allowance received by a salaried person is fully taxable as a part of Salary. If, Medical expenditure up to Rs. 15,000/- is incurred than deduction of such allowance is allowed from Salary. Further details of expenditure with bills are to be submitted to employer and he needs to verify it and maintained it. Medical expenditure of own, spouse, children, father, mother, brother and sister who are dependent are included.

Arjuna: What about medical insurance premium paid by general taxpayer?

Lord Krishna: Arjuna, all individual and HUF taxpayers can get the deduction of medical insurance premium paid under section 80 D up to Rs. 15,000/- and senior citizen can get the deduction up to Rs. 20,000/-. Further in the medical insurance policy, members of the family can be included. Further additional deduction of Rs. 15,000/- can be taken on the medical insurance premium paid for father and mother. Please also note that upto Rs.5000/- spend on “Preventive health Checkup” in any Hospital is also allowable as deduction, in the above limit of Rs.15,000/-. Benefit of Health Insurance should be taken by everyone.  

Arjuna: What about the medical expenditure or premium incurred on any member of the family suffering from disability?

Lord Krishna: Listen Arjuna, as per section 80 DD if any member in the family is suffering from disability as mentioned for e.g. Blindness, Handicapped, etc., i.e., above 40 % and up to 80% then deduction of Rs. 50,000/- or if suffering from severe disability of more than 80% then Rs. 1,00,000/- can be taken on the expenditure incurred or premium paid irrespective of amount expended by any Individual and HUF taxpayer. However medical certificate (Form 10 - IA) approved by medical officer is required to be produced.

Please note that if that disabled person is a taxpayer and has claimed deduction under section 80 U i.e, medical expenses on disability as mentioned, i.e., above 40 % and up to 80% then deduction of Rs. 50,000/- or if suffering from severe disability of more than 80% then Rs. 1,00,000/-, then same cannot be claimed by his parents u/s 80DD.

Arjuna: Some medical treatments are too expensive, what about expenditure incurred for such treatments?

Lord Krishna: As per section 80 DDB if expenditure incurred for own or family member on specified treatments (Like Cancer, Brain, Aids, etc.) then deduction of lower of actual expenditure incurred or Rs. 40,000/- and for senior citizens Rs. 60,000/- can be availed. Bills of expenses incurred and Form 10I is required to be produced.

Arjuna: What about donations given to the medical trusts?

Lord Krishna: Giving donation is good habit. Deduction can be availed if donation given to the trusts is registered under section 80 G. Through this one can help the needy and orphans.

Arjuna: What about medical expenses incurred by a manufacturer on workers?

Lord Krishna: Dear Arjuna, if any accident happens on shop floor, etc than expenses incurred by such taxpayer is allowable as business expenditure. Further contribution on health scheme like E.S.I.C is also allowable as deduction.

Arjuna: Now days, Expenditure on health has been increased. For common man medical expenditure is unbearable many times.

Lord Krishna: Arjuna, in today’s competitive world, while earning money importance is not given to eating habits; exercise, self-peace, etc. Further now children’s are busy in mobile, T.V., etc. and are not playing outdoor games, thereby reducing resistance power of body. Further in medical services technology and professional developments are continuously carried out, hence cost is increasing. Further Government is also providing schemes for up keeping health of women, child, etc., benefits of such scheme should be taken by needy. Please note that “Health is Wealth.” Everyone should invest appropriately in health, due to which in life he can cope with health issues. Its sheer luck of taxpayer that Service tax is not yet levied by Govt on some hi fi medical services provided by Corporate Hospitals.


Published by

CA Umesh Sharma
Category Income Tax   Report

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