We are left with just a few days for first full budget for the Financial Year 2019-20. From average taxpayer to tax experts, all eyes are transfixed on the Union Budget 2019 which will be presented on July 5, 2019 by the Finance Minister, Smt. Nirmala Sitharaman.
In recent years, India has witnessed huge surge in cases of cancer, diabetes, heart & lung diseases. Millions of people in India succumb to heart and lung diseases, stroke, cancer and diabetes. As per the National Family Health Survey, only 20% women and 23% men are covered by health insurance in India. Unlike many other countries, India does not have a comprehensive health-care system for its citizens. There are Government hospitals but the facilities available are inadequate while the private hospitals are very expensive. Thus, more than 50% of people in India spend a hefty amount on medical expenses in comparison to people covered by health insurance policy.
Hence it becomes necessary for the Govt. to give benefits to the taxpayer on incurring expenses on medical. Under the Income-tax Act, 1961, section 80D provides deduction of medical expenses incurred by a taxpayer. It provides deduction for the amount paid for premium on the health insurance policy, medical expenses & preventive health checkup.
The maximum deduction allowable under section 80D is Rs. 50,000. Deduction of Rs. 25,000 is allowed for self & family and an additional deduction of Rs. 25,000 is allowed if amount has been spent in respect of parents of that assessee. Further, any sum paid in cash is not allowed as deduction (other than sum paid towards preventive health check-up). It must be noted that the deduction is available only if the premium is paid towards health insurance policy. If no health insurance policy is being taken by the taxpayer then no deduction is allowable under section 80D.
There is only one exception to this rule. In case of senior citizen taxpayers or amount paid in respect of senior citizen parents, the deduction is allowed for upto Rs. 50,000 for incurring medical expenditure also. However, this deduction isn’t available if any health insurance policy is being taken in name of such senior citizens.
To sum-up, cost incurred on medical expenditure is allowed as deduction only in case of senior citizens and that too on the condition that no health insurance policy in taken their name. A non-senior citizen taxpayer isn’t entitled to claim deduction of medical expenses irrespective of fact that whether health insurance policy is being taken or not.
Section 80D doesn’t allow deduction of medical expenditure to if health insurance policy is being taken. Thus, a large number of taxpayers get no deduction of their actual medical exp. incurred as these exp. are reimbursed by the health insurance companies. However, there are some medical expenses which insurance companies don’t reimbursed. For example, paid visit before doctor, expenses for medicines, etc.
There is no provision under the Income-tax Act to get deduction of these expenses. Upto last year, medical expenses up to 15,000 were entitle for deduction under the head salary. Even this deduction has been withdrawn by the Finance Act, 2018.
Considering the changes in global climate and unhealthy lifestyle, there is urgent need to rationale the provisions of Section 80D. Medical reimbursement deduction for salaried class taxpayer needs to re-introduced and the annual limit to be enhanced from Rs. 15,000 to Rs. 50,000. Given the rising advent of lifestyle diseases in India and the need to prevent loss of Productivity, the Govt. might think of introducing a new deduction for the medical expenses incurred by a taxpayer.