ITR filing 2023-24: How to optimise Section 80D deductions at the time of filing tax returns

 

Income tax return: Salaried employees who have been unable to claim tax deductions they are eligible for during financial year 2023-24 can still avail of these tax breaks at the time of filing income tax returns before July 31.

Did you miss the deadline for submitting tax-saver investment proofs to your employer in the last quarter of financial year 2023-24? Or did you forget to choose the old regime with higher exemptions than the new one with minimal exemptions at the time of filing your proposed investment declarations in April 2023?

In the latter case, your employer would have computed your tax outgo as per the new regime as it is the default regime 2023-24 onwards. So, if it's the old regime that is more beneficial for you, this would have resulted in higher taxes being deducted from your salary.

Optimise tax benefits while filing ITR

However, you still have an opportunity to avail of these deductions at the time of filing your income tax returns and claim your tax refund.

Among the most popular tax deductions that can be submitted are those related to health insurance premium payments and medical expenses incurred – if you have selected the old, with exemptions, tax regime. The new tax regime does not allow these deductions.

Deductions are covered under Sections 80D, 80DD and 80DDB of the Income Tax (I-T) Act and are applicable to individuals and Hindu undivided families. Given its wider applicability, Section 80D is the most commonly used one.

Section 80D

A taxpayer can claim deduction for health insurance premiums paid and expenses incurred on preventive health check-ups for self and family (spouse and dependent children) for an aggregate amount of up to Rs 25,000 per financial year.

The limit for preventive health check-ups is Rs 5,000 and forms part of the Rs 25,000 limit. In addition, a taxpayer can claim another Rs 25,000 deduction for health insurance premium paid and expenses incurred on preventive health check-up for parents.

If the person – self, family or parents – for whom the premium is paid is a senior citizen, the deduction limit goes up to Rs 50,000. So, if you are a senior citizen yourself and also pay the premiums for your parents, you can claim a total deduction of up to Rs 1 lakh.

In order to cover situations where senior citizens do not have health insurance, Section 80D provides for deduction on medical expenses incurred up to Rs 50,000 a year. Children who pay for their parents’ medical expenses can also claim this benefit.

Note that while payment for preventive health check-ups can be made in any mode, including cash, other payments must be made in non-cash mode to claim Section 80D deductions.

Section 80DD

A taxpayer is allowed deduction for maintenance expenses, including medical treatment of a dependent who is a disabled person. This includes any amount paid as insurance premium for maintenance of a disabled person, who could be the taxpayer’s spouse, child, parent, brother or sister.

The deduction can be claimed for an amount of up to Rs 75,000 per financial year for a disabled person (40 percent or more disability) and up to Rs 1.25 lakh for a severely disabled person (80 percent or more disability) for specified disabilities. The taxpayer must provide a certificate issued by the prescribed medical authority to this effect.

Also read: ITR filing 2023-24: Why you must file Form 10-IA for claiming disability deductions

Section 80DDB

This section has provision for deduction of medical expenses incurred for the treatment of specified diseases or ailments – on self or dependent family members. Deduction of up to Rs 40,000 can be claimed per financial year. If the person with the ailment is a senior citizen, then the maximum deduction limit goes up to Rs 1 lakh.

The eligible ailments under this section include dementia, Parkinson’s disease, malignant cancer, and haemophilia. To qualify for this deduction, the taxpayer must provide a certificate from the relevant specialists such as neurologists, oncologists, and urologists.

Also, the deduction will be reduced by the amount, if any, received from an insurance company or an employer for such medical treatment.

If you are entitled to any of these tax concessions, ensure that you optimise them while filing your income tax returns before July 31, 2024. You need not attach or upload any documents as proofs at the time of filing returns, but ensure that you preserve them carefully so as to answer any I-T queries, should they arise.