Section 80D, 80 DD, 80 DDB & 80 U are the options to reduce your tax liability, beyond Section 80 C, by saving in various tax savings instruments. Normally, all of us will limit our tax savings with Section 80C, which is known to most of us.
This article is an attempt to help you by reducing your tax liability in addition to Section 80C deductions.
We all spend some amount every year towards various medical expenses. This can be for doctor consultation, treatment for certain serious diseases, regular medication for diseases etc. Some of you may be spending for treatment for dependants suffering from disability or critical illnesses. You may have a health insurance policy to take care of the hospitalisation expenses. The Income Tax Act provides certain exemptions to reduce your tax liability, if you are spending amount as described above.
Let us see the exemptions in details.
Section 80D, 80 DD, 80 DDB and 80 U
In Section 80D.You can claim exemption up to Rs. 15,000 in a year towards premium paid to buy a health insurance policy from any of the insurance company approved by the insurance regulator, IRDA. If you are a senior citizen, this limit is Rs. 20,000.
You can claim deduction for the health insurance premium paid for insuring yourself, spouse and children. You can also claim additional deduction up to Rs. 15,000 for the health insurance premium paid for your parents. If either of the parents are senior citizens, this limit is Rs. 20,000.
The Budget for FY 2012-13 announced an additional benefit in this area. You can spend Rs. 5000/- in a year for a preventive health check-up. But this is within the overall limit of Rs. 15,000.
If you have a handicapped dependant, then you are eligible for certain exemptions under section 80DD.
Section 80DD exemption is for the amount spent on dependants like spouse, children, parents, brothers or sisters. The disabled person should be wholly dependent on you for their support and maintenance. The dependant should have a disability of 40% or more. You have to produce a certificate to this effect issued by the Medical Board.
You can claim for Section 80DD exemption in the following 2 cases:
1. If you deposit any amount in schemes of Life Insurance Corporation of India or any other insurer for the maintenance of the disabled dependant. From this scheme, an annuity or a lump sum amount is paid to the dependant or to a nominee for the benefit of the dependant in case of your death.
2. If you incur any expenditure for the medical treatment, training, nursing and rehabilitation of the dependant.
You can claim a fixed exemption of Rs. 50,000 in a year in this section. Please note that the exemption is fixed at Rs. 50,000 irrespective of the actual amount spent under the above 2 categories. If the disability is above 80%, the exemption allowed is Rs. 1 Lakh.
You can claim exemption under section 80DDB, if you are spending on treatment for certain specified ailments notified by the government. The amount can be spent on treatment for self, spouse, children, parents, brothers and sisters provided they are dependent on you. You have to produce the certificate in the prescribed format to that effect from a specialist doctor in a government hospital.
The following are the ailments which will qualify for this exemption:
- Renal Failure
- Haematological Disorder
- Neurological Issues
You can claim exemption for the actual expenses, but limited to Rs. 40,000 in a year. For senior citizens, this limit is Rs. 60,000. But, if you are already having any reimbursement scheme for such expenses from your insurance policy or from your employer, you cannot claim it again. In such cases, you can claim for the shortage only. Another problem in this is that, your employer will not permit you this deduction in the tax calculations. So, you have to claim this as refund from the IT department by filing the Returns.
Section 80U permits certain exemption, if you are suffering from a permanent disability or mental retardation. You will get exemption of Rs. 50,000 in a year under this section. But, if the disability is severe, then the limit is Rs. 1 Lakh.
Please share it with your friends, because Section 80D, 80 DD, 80 DDB & 80 U may be of use to somebody.