Tax exemption on medicals: how you can avail it

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Tax exemption on medicals: how you can avail it

Relax With Tax


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June 08, 2005

ou 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.

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

My wife suffers from Deep Vein Thrombosis.

I spent more than Rs 100,000 during the financial year 2004-05 on medical expenses.

Can I claim this expense under section 80DDB?

- Srinivasan Devarajan

Under Section 80DDB, the deduction is allowed only for the diseases/ ailments prescribed in Rule 11DD.

The list is as follows:

1. Neurological diseases where the disability level has been certified to be of 40% and above.
- 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
- Hemophilia
- Thalassaemia

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

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

What is the difference between medical reimbursement and medical allowance?

My son is a Cystic Fibrosis patient. This is a genetic problem for which there is no cure.

I spend Rs 2,000 to Rs 3,000 per month on his medical expenses. Can I get the tax exemption under Section 80DDB?

- Raju V Nadimpalli

Please refer to the answer of the earlier question.

Insurance terms you must know

If I take an insurance cover from LIC [Get Quote] and a medical insurance cover, do I get tax benefits? If I have a corporate medical insurance, do I need a separate medical cover?

- Nageshwara Prasad Siripurapu

Effectively, there is a distinction between life insurance policies and medical insurance policies. The former is to cover the risk of loss of life and the second is to cover for any medical ailment-related expenses and loss of earning potential.

Both are absolutely essential to an individual to safeguard against unforeseen events relating to one's life and health.

As regards the tax benefit, both get tax breaks.

The life insurance premium is covered under the new Section 80C, where the entire premium is deducted from the income. This limit is subject to an overall ceiling of Section 80C of Rs 100,000.

To find out what investments fall under this section, read All about Section 80C.

Medical insurance premium is covered under Section 80D subject to a limit of Rs 10,000. If the coverage includes a senior citizen then it goes up to Rs 15,000.

A company sponsored mediclaim cover is good to cover the health risk. However, an employee may need to take extra cover independently as the company risk cover ends when the employee resigns from the company.

Do note, if you are paying the premium on your medical policy, you will get the tax break. If your company is doing so, you get no tax break.

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, rediff.com 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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