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5 Ways Medical Expenses Help You Save Taxes

Shilpi Saini Shilpi Saini 27 January 2017
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That time of the year is soon to arrive when we all will smell the coffee and feel the morning sun of TAX PAYMENT in our face.

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The urgency has not yet set in and we are still floating with the tide. But we all know, the moment that realization to file tax returns and save on taxes will hit us, everyone will rush towards the easiest way out – saving on medical expenses. Here’s how medical expenses could help you save on taxes:

1. Regular Medical Expenses : Rs. 15,000

Section: 17(2)(viii)

If you are an employee, reimbursements on medical expenses up to Rs. 15,000 a year are exempted from taxation. The expenses could be in the form of pharmacy bills, medical checkup bills, or doctor consultation. The expenses could be for anyone in your family – yourself, your spouse, your children, your parents.

However, post the Budget of 2018, Medical Allowance of Rs. 15,000 and Travel Allowance of Rs. 19,200 has been replaced by the Standard Deduction of Rs. 40,000.

Proof required

All you need to do is submit original bills/receipts as per the process defined by your employer/HR department.

2. Preventive Medical Checkup: Rs. 5,000

Section: 80D

You can claim charges paid to conduct preventive medical tests for any member of your family. Many pathological laboratories now provide check-ups of Rs. 5,000 flat for you to maximize this deduction. Remember that this deduction is part of the overall deduction available under Section 80D mentioned in Point 5 below.

Proof required

Submit original invoice or receipt from the pathological laboratory to your employer/HR.

3. Maintenance or Medical Treatments for Disabled Dependents: Rs. 75,000 to Rs. 1,25,000

Section: 80DD

Having a dependent with disabilities could be an emotionally draining situation for the entire family. One can claim a fixed deduction of Rs. 75,000 in case you have any family member with disabilities dependent on you. That person could be your spouse, child, parent, brother or sister. In case, the disability is more than 80 percent, one can claim Rs. 1,25,000 per annum as deduction on the taxable salary.

Proof required

  • Medical certificate of disability from a government hospital certifying the disability of the dependent. The certificate needs to be renewed periodically.

  • Self-declaration on account of medical treatment, training and rehabilitation of the dependent. You do not have to preserve the actual bills/receipts.

Also Read:Tax Deduction on Health Insurance

4. Medical Treatment for Dependents with specified diseases: Rs. 40,000 to Rs. 80,000

Section: 80DDB

Deductions could be claimed if you or your dependent family member suffers from certain specified diseases with disability levels of more than 40 percent. These diseases include cancer, AIDS, chronic renal failure, hemophilia, thalassemia and neurological disorders. The extent of deduction depends on the age of the dependent:

Below the age of 60 years : Rs. 40,000

Between the age of 60-80 years : Rs. 60,000

Above the age of 80 years : Rs. 80,000

The limits for Senior Citizens above the age of 60 has been increased to Rs.1,00,000 for the Assessment Year 2019-20.

Proof required

  • Form 10-1 from a relevant specialist doctor

  • Prescription for medical treatment

  • Bills/receipts for the treatment

5. Health Insurance for Family: up to Rs. 1,00,000

Section: 80D

Our modern lives have come at the cost of lifestyle diseases. With such maladies, hospitalization or healthcare expenses have become one of the biggest financial burdens an urban Indian family has to bear.

While many of us are covered by the insurance cover provided through our employer, it makes no sense to completely rely on it. Moreover, premiums paid on such insurances can be claimed as deductions.

Here are the extents to which you can claim deductions depending on the family members covered by your insurance policy:

Self + Spouse + Kids - Rs. 25,000 (Rs. 50,000 in case of senior citizens)

Additional: Parents - Rs. 25,000 (Rs. 50,000 in case of senior citizens)

Proof required

  • Policy copy with premium receipt.

The premium should have been paid from your bank account.

Recommended Read:How Tax Deduction Differs for Life and Health Insurance

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Shilpi Saini
Written by Shilpi Saini
A romantic at heart and pragmatist out of necessity, Shilpi loves ideas, opinions, life in motion, dance, cinema and staring out of the window. She is also a content writer at Coverfox.