Senior citizens can claim tax break up to 50,000 per year for medical expenses

  • As medical expenditure has not been expressly defined, admission of these payments for the deduction, would be a fact specific evaluation
  • The units of tax-saving funds gifted on marriage are not treated as taxable income

My wife is 72 and is a retired government servant. She has a health insurance policy too, but it does not cover OPD visits. She has diabetes since 1982 and she lost her left eye because of that. The right eye was also operated upon in 2016 and charges borne by insurance. However, she needs to do regular follow-up in OPD. She spends 30,000-40,000 in a year on consultations and investigations through credit card. Can she claim these expenses as deduction in her tax return under Section 80D of Income Tax Act?

—S. P. Gupta

In your wife’s case, as she qualifies as a senior citizen (between 60 and 80 years of age), if any payments are made towards medical expenditure, through credit card (i.e. mode other than cash), a deduction of up to 50,000 per annum can be claimed under Section 80D of the Income-tax Act, 1961, in her tax return. As medical expenditure has not been expressly defined, admission of these payments for the deduction, would be a fact specific evaluation.

Please note that the limit of 50,000 per annum, is a combined limit for deduction towards such medical expenditure, medical insurance premium and cost of preventive health check-up. Please also note that the cost of preventive health check-up has an independent sub-limit of 5,000. Your wife should maintain the original receipts/documents of the payments to support her claim, in case of any queries from the tax authorities.

It may also be noted that in case any of the above payments are made separately by you, for your wife, you would also be entitled to a deduction up to 50,000 per annum, in your tax return subject to other sub-limits as mentioned above.

I got married last year. My father invested 10 lakh as lump sum in two tax-saving funds as a marriage gift. My total income last year was 7 lakh. How should I show this gift in my income tax return?

Name withheld on request

The units of tax-saving funds gifted to you by your father on your marriage are not treated as taxable income in your hands. While receipt of the said gift is not required to be disclosed in your tax return, any income accruing in respect of such funds will be taxable in your hands and would need to be reported in your tax return.

Further, since your total taxable income does not exceed 50 lakh, the units of tax-saving funds will not be required to be reported in the “Assets and Liabilities Schedule" in the IT return. Note that the said provision is as per the tax return forms prescribed for FY 2017-18. The tax return forms for FY 2018-19 are yet to be notified.

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Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India. Queries and views at mintmoney@livemint.com

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