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Monday, January 4, 2010

Income Tax benefit for looking after your sick Elderly parents/relative

Under Income Tax section India : 80DDB , Deduction in respect of medical treatment of dependent relative, etc. is allowed.

Where an assessee who is resident in India has, during the previous year, actually incurred any expenditure for the medical treatment of such disease or ailment as may be specified in the rules made in this behalf by the Board--

(a) for himself or a dependant relative, in case the assessee is an individual; or

(b) for any member of a Hindu undivided family, in case the assessee is a Hindu undivided family,

the assessee shall be allowed a deduction of a sum of forty thousand rupees in respect of that previous year in which such expenditure was incurred:

Provided that no such deduction shall be allowed unless the assessee furnishes a certificate in such form and from such authority as may be prescribed.

Provided further that the deduction under this section shall be reduced by the amount received, if any, under an insurance from an insurer for the medical treatment of the person referred to in clause (a) or clause (b):

Provided also that where the expenditure incurred is in respect of the assessee or his dependant relative or any member of a Hindu undivided family of the assesses and who is a senior citizen, the provisions of this section shall have effect as if for the words "forty thousand rupees", the words "sixty thousand rupees" had been substituted.

Explanation ---For the purposes of this section,---

(i) "dependant" means a person who is not dependent for his support or maintenance on any person other than the assesses;

(ii) "insurer" shall have the meaning assigned to it in clause (9) of section 2 of the Insurance Act, 1938(4 of 1938);

(iii) "senior citizen" means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year.

What Are The Diseases Covered Under Section 80DDB?

As per Rule 11DD of the I T Act , following diseases or ailments are covered

(i) Neurological Diseases where the disability level has been certified to be of 40% and above,

(a) Dementia ;

(b) Dystonia Musculorum Deformans ;

(c) Motor Neuron Disease ;

(d) Ataxia ;

(e) Chorea ;

(f) Hemiballismus ;

(g) Aphasia ;

(h) Parkinsons Disease ;

(ii) Malignant Cancers ;

(iii) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

(iv) Chronic Renal failure ;

(v) Hematological disorders :

(i) Hemophilia ;

(ii) Thalassaemia.

Who are prescribed authorities to issue certificate ?

  1. Neurological Diseases , a Neurologist having a Doctorate of Medicine (D.M.) degree in Neurology or any equivalent degree, which is recognised by the Medical Council of India.
  2. Malignant Cancers- an Oncologist having a Doctorate of Medicine (D.M.) degree in Oncology or any equivalent degree which is recognised by the Medical Council of India.
  3. Chronic Renal failure- a Nephrologist having a Doctorate of Medicine (D.M.) degree in Nephrology or a Urologist having a Master of Chirurgiae (M.Ch.) degree in Urology or any equivalent degree, which is recognised by the Medical Council of India;
  4. Hematological disorders- a specialist having a Doctorate of Medicine (D.M.) degree in Hematology or any equivalent degree, which is recognised by the Medical Council of India :
  5. For diseases for which no authority prescribed or prescribed authority is not vailable/posted - In that case ,certificate, with prior approval of the Head of that Government hospital in which the patient is receiving the treatment, , may be issued by any other specialist working full-time in that hospital and having a post-graduate degree in General or Internal Medicine, which is recognised by the Medical Council of India.

Important Tips:

1) For Dementia / Alzheimer's, You can get certificate of any neurologist , however , he /she should be employed in a government hospital and the certificate should be signed by the Head of that Government Hospital.

2) Since, you have spent money on treatment of your father who is diagnosed "dementia”, you must keep all the proof of the disease and medical expenditure.

3) The Certificate in prescribed Form 10-I is must for claimingthe deducation u/s 80DDB

4) How much is deductible?

Any amount paid for the medical treatment is deductible from your income, subject to a cap of Rs. 40,000.

If the amount is spent for a senior citizen (age 65 years or more), the upper limit is higher - Rs. 60,000.

However, if you get the amount reimbursed by your employer or you get the amount from an insurer, you would not be able to claim deduction under section 80DDB.

If you get partial amount from an insurance company or get a partial amount reimbursed by your employer, the balance can be claimed as deduction from your income.



What Are The Diseases Covered Under Section 80DDB? http://www.taxworry.com/2008/02/what-are-diseases-covered-under-section.html#ixzz0bbeqrlBA



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