Tax season can be a confusing and stressful time for many people, especially when it comes to figuring out which deductions and credits apply to their specific situation. One common question often arises — can we claim 80D and 80DDB together? While both relate to medical expenses, they have distinct differences that can impact their eligibility for use. In this discussion, we will explore the nuances of each deduction and provide clarity on whether it’s possible to claim both simultaneously.
What is Section 80D?
Section 80D is a provision in the Income Tax Act that offers tax benefits to individuals who purchase health insurance policies. It provides a deduction on the premium paid towards the health insurance policy, thereby reducing the taxable income. The Section also offers an additional deduction for those who pay premiums for their parent’s health insurance policies, providing financial relief for families with dependents. Section 80D encourages people to invest in health insurance policies and ensures access to quality medical care without financial constraints.
For taxpayers under 60 years of age, the deduction ceiling for Section 80D stands at Rs 25,000. However, for individuals aged 60 years and above, this limit is extended to Rs 50,000. Additionally, if a taxpayer pays the premium for his/her parents’ medical insurance policy, the person can avail of an extra benefit of up to Rs 50,000; remember that this depends on the age of the taxpayer’s parents.
What is Section 80DDB?
Section 80DDB allows taxpayers to claim a tax benefit for treatment costs incurred towards specified diseases, thereby reducing their tax liability. This Section aims to alleviate the monetary hurdle for taxpayers who incur high medical expenses for themselves or their dependents.
The diseases covered in this Section include neurological disorders, malignant cancers, chronic kidney diseases, and others that require specialised treatment. A taxpayer can claim a deduction of up to Rs 40,000 (age below 60) or Rs 1,00,000 (applicable for senior citizens) for the expenses incurred towards treating these diseases.
To receive this benefit, the taxpayer must get a doctor’s prescription for the treatment from a registered medical practitioner. The prescription must also specify the nature of the disease and the treatment’s estimated expenses. The deduction is available to a taxpayer or his/her dependents, including the person’s spouse, children, parents, and siblings.
Can both deductions be claimed at the same time?
It is possible to benefit from both 80D and 80DDB deductions. However, to claim the 80DDB medical expenditure deduction, one must provide evidence of the prescription given by a doctor. Additionally, only the amount the insurer does not cover qualifies for a Section 80DDB deduction. That means when calculating the total amount spent on medical expenses for a parent, one must subtract any amount received from the insurance company. The remaining balance will be eligible for deduction under 80DDB.
Conclusion
Sections 80D and 80DDB of the Income Tax Act provide significant tax benefits to individuals for medical insurance premiums and treatment expenses. Claiming these deductions together requires individuals to ensure that they meet all eligibility criteria and do not exceed the maximum limit allowed for total deduction claimed. It is also advisable for individuals to consult a tax expert to understand the deductions and ensure that they follow all tax laws correctly.
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