You cannot directly get tax benefits on medical expenses incurred on in-laws, but you may be able to avail the benefit indirectly. Income Tax section 17 tax benefits and exemptions under section 80D, 80DD, 80U and 80DDB can help in such a case.
However, there’s a catch. To avail tax benefits on medical expenses incurred on in-laws, your spouse should also be an earning member of the family.
Assuming that your spouse is also an earning member of the family, there are four income tax sections apart from section 17 to help you reduce tax liability. Earlier, your spouse could have saved up to 15,000 in taxes by showing medical bills to his/ her employee under section 17(2) of the Income Tax Act but all that changed last year. Section 17(2) has now been replaced with a standard deduction of up to Rs. 40,000.
Don’t worry; there are still many ways to save taxes in such a case, provided your spouse claims the tax benefits on his/her income tax return.
- Tax benefits under section17 of the Income Tax Act: Tax benefits on medical expenses under section 17 can be availed if an employee incurs costs on medical treatment of self or family members in hospitals approved by the Chief Commissioner. Section 17 tax benefits are only applicable to a specific list of diseases.
- Tax exemption under section80D: You can also avail tax benefits on medical expenses of your in-laws through your spouse if your parents-in-law are senior citizens (above 60 years of age). To avail tax benefits under section 80D, you parents-in-law must not be covered under any health insurance plan. You can get tax benefit up to Rs. 50,000 under section80D.
- Tax exemption under section80DD: If anyone of your in-laws is dependent upon your spouse and is a person with a disability, you can avail tax benefit up to Rs. 75,000 in a financial year. Expenses incurred on nursing, training and rehabilitation is eligible for deduction under section 80DD. If the disability is severe, your spouse and you can avail deductions up to Rs. 1,25,000.