Medical treatment of specified ailments under section 80DDB –Deductions of expenses on medical treatment of specified ailments (such as AIDS, cancer and neurological diseases) can be claimed under Section 80DDB. The maximum amount of deduction allowed from gross total income is restricted to Rs 40,000 (which goes up to Rs 60,000 if the age of the person treated is 60 years or more) on condition that no medical reimbursement is received from any insurance company or employer for this amount. In case of reimbursement the amount paid should be reduced by the amount received if any under insurance from an insurer or reimbursed by an employer.
For the purpose of this section in the case of an employee “dependant” means individual, the spouse, children, parents, brothers and sisters of the employee or any of them, dependant wholly or mainly on the employee for his support and maintenance.
In order to claim this deduction, however, you will have to submit Form 10-1 from a specialist doctor working in a government hospital in India, confirming the treatment of the disease.

Specified diseases and ailments for the purpose of deduction under section 80DDB- For the purposes of section 80DDB, the following shall be the eligible diseases or ailments :

(i) Neurological Diseases where the disability level has been certified to be of 40% and above,—
(a) Dementia ;
(b) Dystonia Musculorum Deformans ;
(c) Motor Neuron Disease ;
(d) Ataxia ;
(e) Chorea ;
(f) Hemiballismus ;
(g) Aphasia ;
(h) Parkinsons Disease ;
(ii) Malignant Cancers ;
(iii) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
(iv) Chronic Renal failure ;
(v) Hematological disorders :
(i) Hemophilia ;
(ii) Thalassaemia.

Frequently Asked Questions

Question – I am undergoing treatment for Cancer currently. Although these expenses are covered under my insurance policy, there is some parallel treatment recommended as preventive measures to control the spread of this disease. Since the parallel treatment (ovarian ablation and IVF treatment) is not covered in my insurance policy, I would have to shell out approximately 2 lakhs for this treatment. Can I avail of exemption in this case and to what extent?
Answer – Section 80DDB provides deduction for expense on cancer patients. Section 80DDB starts with following lines
Deduction in respect of medical treatment, etc.
80 DDB. Where an assessee who is resident in India has, during the previous year, actually paid any amount for the medical treatment of such disease or ailment as may be specified in the rules made in this behalf by the Board
(a) for himself or a dependent, in case the assessee is an individual; or
(b) for any member of a Hindu undivided family, in case the assessee is a Hindu undivided family,
the assessee shall be allowed a deduction of the amount actually paid or a sum of forty thousand rupees, whichever is less, in respect of that previous year in which such amount was actually paid :
So any amount of expenditure is covered u/s 80DDB. However the deduction is limited to maximum Rs 40,000 (which is Rs 60,000 in case patient is 60 years or above.)
However the proviso to section 80DDB provides that if there is any insurance claim , then deduction shall be allowed by reducing the insurance amount received from expenditure incurred .
Read the proviso below
Provided further that the deduction under this section shall be reduced by the amount received, if any, under an insurance from an insurer, or reimbursed by an employer, for the medical treatment of the person referred to in clause (a) or clause (b) :
In nutshell computation of deduction is as under
Total expenditure xxxxx
Less Insurance claim xxxxx
Net Expenditure xxxxx
Net Expenditure allowed as deduction to the maximum of Rs 40,000 (Rs 60,000 in case of Sr. Citizen) .Therefore , in your case , you can claim deduction despite getting the insurance claim upto Rs 40,000 (Rs 60,000 if you are of 60 years or more.)
——————-

Extract of the Section is as follows :-
[Deduction in respect of medical treatment, etc.
80DDB.Where an assessee who is resident in India has, during the previous year, actually paid any amount for the medical treatment of such disease or ailment as may be specified in the rules14made in this behalf by the Board—
(a) for himself or a dependant, in case the assessee is an individual; or
(b) for any member of a Hindu undivided family, in case the assessee is a Hindu undivided family,
the assessee shall be allowed a deduction of the amount actually paid or a sum of forty thousand rupees, whichever is less, in respect of that previous year in which such amount was actually paid :
Provided that no such deduction shall be allowed unless the assessee furnishes with the return of income, a certificate in such form, as may be prescribed14, from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed14, working in a Government hospital :
Provided further that the deduction under this section shall be reduced by the amount received, if any, under an insurance from an insurer, or reimbursed by an employer, for the medical treatment of the person referred to in clause (a) or clause (b) :
Provided also that where the amount actually paid is in respect of the assessee or his dependant or any member of a Hindu undivided family of the assessee and who is a senior citizen, the provisions of this section shall have effect as if for the words "forty thousand rupees", the words "sixty thousand rupees" had been substituted.
Explanation.—For the purposes of this section,—
(i) "dependant" means—
(a) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them,
(b) in the case of a Hindu undivided family, a member of the Hindu undivided family,
dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance;
(ii) "Government hospital" includes a departmental dispensary whether full-time or part-time established and run by a Department of the Government for the medical attendance and treatment of a class or classes of Government servants and members of their families, a hospital maintained by a local authority and any other hospital with which arrangements have been made by the Government for the treatment of Government servants;
(iii) "insurer"15 shall have the meaning assigned to it in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938);
(iv) "senior citizen" means an individual resident in India who is of the age of 16[sixty years] or more at any time during the relevant previous year.]
—–
14. See rule 11DD and Form No. 10-I. Rule 12 provides that the return of income shall not be accompanied by any document or copy of any account or form or report of audit required to be attached with return of income under any of the provisions of the Act.
15. For definition of “insurer” under section 2(9) of the Insurance Act, 1938, see Appendix.

Section 2(9) of the Insurance Act, 1938,

9) “Insurer” means-
(a) any individual or unincorporated body of individuals or body corporate incorporated under the law of any country other than India, carrying on insurance business not being a person specified in sub-clause (c) of this clause which-
(i) carries on that business in India, or
(ii) has his or its principal place of business or is domiciled in India, or
(iii) with the object of obtaining insurance business, employs a representative, or maintains a place of business, in India;
(b) any body corporate not being a person specified in sub-clause (c) of this clause carrying on the business of insurance, which is a body corporate incorporated under any law for the time being in force in India; or stands to any such body corporate in the relation of a subsidiary company within the meaning of the Indian Companies Act, 1913 (7 of 1913), as defined by sub section (2) of section 2 of that Act, and
(c) any person who in India has a standing contract with underwriters who are members of the Society of Lloyd’s whereby such person is authorised within the terms of such contract to issue protection notes, cover notes, or other documents granting insurance cover to others on behalf of the underwriters. but does not include a principal agent’ chief agent, special agent’ or an insurance agent or a provident society as defined in Part III;
16. Substituted for “sixty-five years” by the Finance Act, 2012, w.e.f. 1-4-2013.
——————-

Extract of Rule 11D
[Specified diseases and ailments for the purpose of deduction under section 80DDB.
11DD. (1) For the purposes of section 80DDB, the following shall be the eligible diseases or ailments :
(i) Neurological Diseases where the disability level has been certified to be of 40% and above,—
(a) Dementia ;
(b) Dystonia Musculorum Deformans ;
(c) Motor Neuron Disease ;
(d) Ataxia ;
(e) Chorea ;
(f) Hemiballismus ;
(g) Aphasia ;
(h) Parkinsons Disease ;
(ii) Malignant Cancers ;
(iii) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
(iv) Chronic Renal failure ;
(v) Hematological disorders :
(i) Hemophilia ;
(ii) Thalassaemia.
(2) The certificate in respect of the diseases or ailments specified in sub-rule (1) shall be issued by the following specialists working in a Government hospital—
(a) for diseases or ailments mentioned in clause (i) of sub-rule (1) - a Neurologist having a Doctorate of Medicine (D.M.) degree in Neurology or any equivalent degree, which is recognised by the Medical Council of India;
(b) for diseases or ailments mentioned in clause (ii) of sub-rule (1) - an Oncologist having a Doctorate of Medicine (D.M.) degree in Oncology or any equivalent degree which is recognised by the Medical Council of India;
(c) for diseases or ailments mentioned in clause (iv) of sub-rule (1) - a Nephrologist having a Doctorate of Medicine (D.M.) degree in Nephrology or a Urologist having a Master of Chirurgiae (M.Ch.) degree in Urology or any equivalent degree, which is recognised by the Medical Council of India;
(d) for diseases or ailments mentioned in clause (v) of sub-rule (1) - a specialist having a Doctorate of Medicine (D.M.) degree in Hematology or any equivalent degree, which is recognised by the Medical Council of India :
Provided that where in respect of any diseases or ailments specified in sub-rule (1), no specialist has been specified or where the specialist specified is not posted in the Government hospital in which the patient is receiving the treatment, such certificate, with prior approval of the Head of that hospital, may be issued by any other specialist working full-time in that hospital and having a post-graduate degree in General or Internal Medicine, which is recognised by the Medical Council of India.
(3) The certificate from the prescribed authority to be furnished along with the return of income shall be in Form No. 10-I.]