What is the Tax Deduction Limit for Seniors Claiming Medical Bills?
The Income Tax Act permits you to claim a maximum deduction of Rs 50,000 (as of FY 2021-22) for medical costs spent in a fiscal year for the healthcare of senior persons (qualified parents). As a result, if you are 60 or older, you can claim a maximum tax deduction of Rs 50,000 on your medical costs or health insurance premiums.
Eligibility for a tax deduction
According to Sujit Bangar, EX-IRS officer and founder of Taxbuddy.com, an ITR filing service, “one of the prerequisites for claiming a deduction is that medical expense be made on family members and/or parents aged 60 years and above.” According to the legislation, family members include the individual, his or her spouse, and any dependent children. Another criteria is that the person for whom medical expenses have been spent should not be covered by any health insurance.
Who is eligible to take advantage of this tax deduction?
This medical expense deduction can be claimed by the individual who incurred the medical expense. As a result, if you are a senior citizen and are not protected by a health insurance policy, you can claim the deduction on your own.
On the other hand, if an individual has spent medical expenses for his or her parents (aged 60 and up) during the fiscal year, the individual can claim the deduction.
In addition to not defining the phrase “medical expense,” the Income-tax Act does not define what records you must preserve in order to claim this deduction. Even so, it is essential to retain documented evidence such as medical bills, medicine invoices, and so on in case the income tax authority requests proof of your deduction claim.
Wadhwa claims that according to the legislation, payment of medical coverage premiums or medical expenses shall be permitted only if made in a manner other than cash. To make payments, one can use financial channels such as net-banking, cheques, debit cards, and so on, or digital channels such as UPI and mobile wallets.
However, if you pay for medical expenses in cash, you will not be able to claim the deduction.
The maximum allowable deduction
The maximum sum that may be claimed as a deduction for medical expenditure incurred under section 80D is exactly the same as the maximum deduction for health insurance premiums paid. In a fiscal year, you can claim a maximum deduction of Rs 50,000 for costs incurred.
What exactly is the section 80D deduction?
Under section 80D of the Income-tax Act, a person can claim a maximum deduction of Rs 25,000 (if under 60 years of age)/ Rs 50,000 (senior citizens) on health insurance premiums paid.