Introduction to Section 80DDB

Section 80DDB of the Income Tax Act, 1961, allows taxpayers to claim a deduction for medical treatment expenses. Specifically, it covers the cost of treatment for certain specified ailments incurred by the individual himself or dependent relatives. This section aims to provide financial relief to individuals who have had to bear substantial medical costs due to severe ailments.

Specification of Diseases Covered Under Section 80DDB

The diseases for which deduction is allowed under section 80DDB are specified under Rule 11DD of the Income Tax Rules, 1962. These include neurodegenerative diseases such as Parkinson's and Alzheimer's, malignant cancers, AIDS, chronic renal failure, and hematological disorders like hemophilia and thalassemia.

Who Can Claim Deduction Under Section 80DDB?

Individuals and Hindu Undivided Families (HUFs) can claim this deduction. If the individual taxpayer is below 60 years of age, they can claim a maximum deduction of INR 40,000. If the individual is a senior citizen (aged 60 and above but less than 80 years) or a super senior citizen (aged 80 years and above), they can claim a maximum deduction of INR 100,000.

Dependents for whom a deduction can be claimed under this section include spouses, children, parents, and siblings of the individual, who are wholly or mainly dependent on such individual for their support and maintenance.

Procedures for Claiming Deduction Under Section 80DDB

1. Medical Certificate: To claim the deduction, the taxpayer must obtain a medical certificate from a specialist working in a government hospital. For diseases and ailments specified under Rule 11DD, the certificate can be obtained from various specialists listed in the Rule.

2. Claiming the Deduction: The deduction is claimed by reporting it in the Income Tax Return form, under the section for deductions under Chapter VI-A.

3. Amount of Deduction: The deduction is limited to the amount actually spent on treatment or the specified limit (40,000 or 100,000), whichever is lower. However, any amount received under an insurance from an insurer, or reimbursed by an employer, for the medical treatment of the person, will be subtracted from the deduction amount.

Case Laws Related to Section 80DDB

1. Commissioner of Income Tax vs. Smt. Vimla Verma (2021): The Income Tax Appellate Tribunal, Delhi, ruled in this case that the requirement of obtaining a certificate from a government hospital is only a formality and, if the treatment is availed from a private hospital due to compelling circumstances, the claim under Section 80DDB cannot be denied.

2. Bai Mamubai Trust vs. Income Tax Officer (2016): The Mumbai Bench of the Income Tax Appellate Tribunal held that expenses incurred for the medical treatment of a trust’s beneficiary can be claimed as a deduction under Section 80DDB.

Conclusion

Section 80DDB of the Income Tax Act, 1961, provides substantial relief to taxpayers facing significant medical expenses due to certain serious ailments. The clear specification of diseases, limit on deductions, and need for a medical certificate ensure that the provision is not misused. This allowance, however, is only a small step in addressing the broader issue of high medical costs in India.