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Is there a tax benefit on medical expenses?

Relax With Tax | September 09, 2005

You have a question about House Rent Allowance, medical allowance or even a general tax query.

Here's where we step in with our experts, Relax With Tax.

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Can I get a tax rebate or exemption on the expenditure I incurred for my parents' treatment?

Is it included in the maximum limit of Rs 1,00,000 under Section 80C?

- Dr Faruqui

The deduction under Section 80C is for specified investments and expenditure.

The investments

  • Provident Fund
  • Public Provident Fund
  • Life insurance premium
  • Pension plans
  • Equity Linked Saving Schemes of mutual funds
  • Infrastructure bonds
  • National Savings Certificate

The expenditure

Payments towards the principal amount of your home loan are also eligible for an income deduction.

The amount spent on medical treatment is not included.

Section 80DDB

This section allows deduction of expenses on medical treatment of specified ailments prescribed under Rule 11DD of the Income Tax Rules.

List of diseases/ ailments that qualify for a tax break

The list is as follows:

1. Neurological diseases where the disability level has been certified to be of 40% and above. These include:

  • Dementia
  • Dystonia Musculorum Deformans
  • Motor Neuron Disease
  • Ataxia
  • Chorea
  • Hemiballismus
  • Aphasia
  • Parkinson's Disease

2. Malignant cancer

3. Full blown Acquired Immuno Deficiency Syndrome, commonly referred to as AIDS

4. Chronic renal failure

5. Hematological disorders. These include:

  • Hemophilia
  • Thalassaemia

You need to consult your doctor to ascertain if your parent's problem falls into any of the above categories.

If yes, deduction upto Rs 40,000 or the actual expenditure incurred, whichever is lower, would be eligible.

I have spent around Rs 1,00,000 on a Pacemaker device for my mother.

Can I claim an income tax deduction? Can such a declaration be given to my employer for calculating the tax?

- Badri Narayanan K

From the bare facts mentioned by you, we don't think you are eligible for any deduction for the medical expense incurred by you.

The eligible ailments prescribed under the Rule 11DD of Income Tax Rules do not apparently cover your mother's case.

Please read the answer above.

My taxable income is around Rs 2,40,000. I do not have any separate medical allowance in my salary account.

Can I present  medical bills worth Rs 15,000 to my company in January and claim tax benefits up to that amount?

In other words, is a salary component like medical allowance mandatory in salary structure?

- Prashant K

There needs to be a reimbursement component to your salary structure wherein the amount is reimbursed based on medical bills submitted.

Any payment not supported by bills, or a component like a fixed medical allowance, is fully taxable in the hands of the employee.

You need to enquire with your company if some portion could be transferred from special/ flexible allowance to this reimbursable component.

If they agree, you could go ahead and avail of this benefit.

We also suggest you read The difference between medical reimbursement and allowance.

Got a question for Relax With Tax? Please write to us!

Note: Questions may be edited for brevity. Due to the tremendous response, all queries will not be answered.

Disclaimer: While efforts have been made to ensure the accuracy of the information provided in the content, or the author shall not be held responsible for any loss caused to any person whatsoever who accesses or uses or is supplied with the content (consisting of articles and information).

Illustration: Dominic Xavier

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