I am an ordinary resident for FY20. I have a wholly-dependant mother. My father is retired and does not have taxable income. My mother is recovering from cancer surgery and had suffered a stroke in January. I have arranged a nurse at home. Can I claim tax deduction for medical expenses and nursing when filing returns? Also, can I carry forward the deduction for medical expenses and claim benefit for FY21?
A deduction is available under Section 80DD of the Income-tax Act, 1961, to a resident taxpayer, if he has incurred expenditure for medical treatment (including nursing), training and rehabilitation of a dependant parent, with disability or severe disability. Deduction of ₹75,000 and ₹1,25,000 is available towards disability and severe disability, respectively. Disability has been defined to cover specific ailments. In case cancer or stroke qualifies as a disability or severe disability—for which you should consult a medical practitioner—you may explore this deduction. In order to claim it, a certificate in Form 10-IA is required to be obtained from a medical authority, mentioning that the person suffers from the specified disability or severe disability. Also, to claim this deduction, it is assumed that your mother is not claiming any deduction towards such disability (if eligible) under Section 80U in her own income tax return.
A deduction is also available under Section 80DDB towards expenses on medical treatment of specified ailments (including malignant cancers), for a parent wholly or mainly dependant. It is assumed that your mother is aged 60 years or more. Therefore, she would qualify as a senior citizen, and you can claim a tax deduction of the expenditure incurred on medical treatment, subject to a cap of ₹1,00,000 and other conditions. Note that the said deduction specifies only expenditure towards medical treatment and does not include nursing or similar expenses. In your case, while deduction towards medical treatment expenses should be available, deduction towards expenses paid to a person who helps in nursing may not qualify for deduction.
Further, in case insurance premium is not being paid for your mother, a deduction for expenditure on the health of your mother can be claimed under Section 80D up to ₹50,000. Note that this deduction is towards medical expenditure and nursing or similar expenses may not be covered. Also, you cannot carry forward deduction for medical expenses, not claimed between April 2019 and March 2020, and set it off against income earned in the period 1 April 2020 to 31 March 2021.
Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India. Queries and views at firstname.lastname@example.org