Find Out the Details of Tax Benefits Under Section 80DDB

A health insurance plan is a safety net that protects you and your loved ones in case of medical emergencies. The benefits of health insurance extend way beyond providing health insurance coverage as it also provides you an opportunity to save on taxes. According to the Income Tax Act of 1961, you can save on taxes for paying health insurance premiums. Likewise, as per this act, you can also enjoy tax benefits for the expenses related to medical treatment of critical illness under Section 80DDB.

Want to know more? Read further to learn all about Section 80DDB.

What is Section 80DDB?

Section 80DDB of the Income Tax Act provides tax deductions on specified diseases. You can claim deductions for expenses related to the treatment of yourself or your dependents. The section outlines the eligible diseases and the maximum amount that can be claimed. However, the deductions are subject to certain conditions and documentation, ensuring that medical expenses are considered for tax benefits under Section 80DDB.

Also, it’s important to note that the provision under section 80DDB should not be confused with Section 80D which provides tax deductions on health insurance premiums.

Eligibility for Section 80DDB Deductions

The eligibility criteria to claim health insurance tax benefit under Section 80DDB are as follows:

Any individual who is seeking treatment for specific diseases. Moreover, the medical expenses that will be claimed must be incurred during that financial year only.
The policy must be in the name of the taxpayer or it can also be for dependants including spouses, kids, parents, etc
The maximum amount that can be claimed as tax benefit under Section 80DDB is Rs. 40,000. The maximum threshold however varies for senior citizens. Senior citizens can claim up to a maximum of Rs. 1 lakh under Section 80 DDB.

Please note that NRIs are not eligible for saving taxes under Section 80DDB. Furthermore, the section provides exemptions on only specific diseases that may be considered critical illness and not common illnesses.

List of Diseases Covered Under Section 80DDB

Listed below are some of the medical conditions that are exempted from tax deductions according to Section 80DDB of the Income Tax Act of 1961:

Neurological Diseases like Dementia, Motor neuron disease, Ataxia, Dystonia musculorum deformans, Aphasia, Parkninson’s disease
Malignant cancer
Full-blown Acquired Immunodeficiency Syndrome
Chronic Renal Failure
Hematological disorders: Haemophilia, Thalassemia

Documents Required to Claim Under Section Under 80DDB

When it comes to claiming tax deductions under Section 80DDB, you need to have certain documents that will serve as legal proof. Some of these documents include the following:

Proof of medical treatment - prescription from a certified doctor
Medical bills and receipts detailing the expenses incurred on treatment, including hospitalisation and medication costs
Nature of disease details from the medical practitioner
Identity proof of patient - Aadhaar card, PAN card

Prescription Format to Be Eligible to Claim Under Section 80DDB

As already stated, a prescription from a medical practitioner is a must-have when it comes to getting tax benefits under Section 80DDB. This is not it as the prescription should be in a valid format. Earlier, Form 10-1 was required but now a specific format needs to be followed, details of which have been provided in the section below.

The following details must be present on the prescription:

Name and age of the patient
Name of disease or ailment
The medical practitioner must specify their qualification, name, address, and registration number
In case the treatment takes place at a Government hospital, then the name of the hospital should also be mentioned
The prescription should also be signed by the head of the department if need be

How to File Claims Under Section 80DDB?

Filing claims under Section 80DDB involves a systematic approach to ensure a smooth and accurate process. Here are the steps you need to follow to claim tax exemptions for medical treatment of critical illness under Section 80DDB:

Step 1: First and foremost, collect all the documents required to claim tax benefits under Section 80DDB

Step 2: Download the ITR form and fill in the details such as the patient’s name and the name of the specific illness

Step 3: Also, enter the total amount spent on medical expenses

Step 4: You also need to enter the amount under Section 80DDB that needs to be claimed

Step 5: Verify all the details entered by you and finally click on the submit button

Take Away

In conclusion, Section 80DDB offers significant tax relief for individuals undergoing treatment for specific illnesses. So, enjoy tax benefits under Section 80DDB and get quality treatment at the same time.