Income Tax on Medical Expenses – For Salary Individuals

You can claim income tax relief for your medical expense under different sections of income tax act 1961. If you have been reimbursed by your employer for the medical expenses and you have met all the conditions under the income tax act then such reimbursed amount will not be taxable in your hand.

If you have spent or incurred such expenditure which your employer has not reimbursed then you can claim tax deduction under different sections of income tax.

Medical Expenses reimbursed by the employer

There are companies in India who takes care of the medical expenses of their employees either in their own maintained hospitals or in different approved hospitals. Following medical expenses reimbursed by your employer are exempted from income tax;

• Medical facility provided by the employer in its own maintained hospital or clinic.
• Reimbursement of medical expenses that an employee incurred on his treatment or treatment of any family members in a government hospital or any hospital approved by the government.
• Reimbursement of medical expenses incurred in any other hospital which is approved by the chief commissioner of income tax for this purpose. Only specified diseases are allowed to be tax free in this case.
• Reimbursement of group medical insurance taken by the employee for himself or any member of his family. Such group insurance taken by the employer in the name of employee or his family is also tax free.

Any other medical expenses reimbursed by the employer in obtaining treatment of himself or any member of the family from a doctor is allowed to be tax free up to a maximum amount of Rs. 15, 000.

If your employer reimbursed any amount in excess of Rs. 15, 000 then the whole amount will be taxed as salary. To claim this amount as tax free you need to submit the medical expense bills and doctors prescription to your employer.

Family

For the purpose of reimbursement of medical expenses by your employer family means;

• Your spouse
• Children of your employee
• Parents
• Brothers and sisters
• Any other person who is wholly and mainly dependent on you

Reimbursement facility is not available to every one for this reason in income tax act government has prescribed certain other income tax deductions for salary individuals. Followings are a list of such benefits;

Section 80D – medical insurance premium paid

You can claim income tax benefit for your medical insurance payments up to a maximum limit of Rs. 15, 000 where such payment is made to take care of the medical expenses for the benefit of self, spouse and dependent children.

If you have paid medical insurance premium for your parents then another 15, 000 can be claimed as income tax deduction. Under this section additional deduction of Rs. 5, 000 is available if any of you as mentioned above is a senior citizen (60 years of age at any time during the relevant previous year).

Payment for medical insurance premium has to be made in any mode other than cash.

From 1^st of April 2013 you can claim deduction under this section towards any payment on account of preventive health check-up. This payment can be claimed if you have incurred it in cash i.e. any mode of payment is accepted.

In Finance Budget 2015, the limit of Section 80D has been increased. Above tax deduction limits are applicable to financial year 2014-2015. From assessment year 2016-2017 i.e. financial year 2015-2016, new tax deduction limits will be applicable. PLease read this article to know the Detail provisions of Section 80D – Mediclaim.

Section 80DD – medical treatment of your handicapped dependent

You can claim a fixed deduction of Rs. 50, 000 for the medical expenses you incurred for your handicapped dependent. If your dependent has disability of 80% or more then the deduction amount for your medical expenses should be Rs. 1, 00,000.

Deduction can be claimed if you have spent any amount as medical expense for the treatment, training, and rehabilitation of your dependent having the disability and/or you have paid or deposited under a scheme with an approved insurer for the maintenance of such dependent.

Who is a dependent?

Dependent for this purpose means;

• Your Spouse,
• Your Children,
• Your Parents,
• Your Brothers and Sisters

For section 80DD also tax deduction limits are increased in finance budget 2015. To know tax deduction limit that is applicable from financial year ending 31st march 2016, please read out article Detail provisions of Section 80DD – Hospital Treatment of your handicapped dependent.

Section 80DDB – Deduction in respect of Medical Treatment

Medical expenses incurred for the specified disease is allowed as an income tax deduction up to a maximum amount of Rs. 40, 000 or the amount you spent which ever is lower.

If the person for whom medical expenses are incurred is a senior citizen (60 years of age at any time during the previous year) then the above deduction of Rs. 40, 000 will be increased to Rs. 60, 000 i.e. the amount you spent or Rs. 60, 000 which ever is less will be the available for income tax deduction.

Deduction under section 80DDB can be claimed if the expenses are incurred for following persons;

• Yourself and/or
• Your dependents

Following persons are treated as your dependent;

• Your spouse
• Your children
• Your parents
• Your brothers and sisters

What are the diseases covered under this section to claim income tax deduction

If your employer or any insurance company has reimbursed any amount for the medical expenses you incurred then that amount will be deducted from the medical expenses while claiming income tax deduction under this section.

To claim deduction you need to get a certificate from a specialist of government hospital who is dealing with such types of specified diseases.

Budget 2015 has increase the maximum tax deduction limit applicable to section 80DDB. We suggest to read out article Detail provisions of Section 80DDB – Deduction in respect of Treatment to know more.

You can claim benefits of above sections for your medical expenses as applicable to you. You need to first check, where your expenses are fits in and after that you can claim deduction under that section. Let your employer know that you have incurred or paying for your medical expenses.