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Medical expenses can arise in very different forms. A taxpayer may pay a health insurance premium, bear treatment expenses for an elderly parent, support a dependant with a disability, or incur substantial expenditure on the treatment of a serious disease.
The Income-tax Act, 2025 does not treat all these expenses under one deduction. Instead, three separate provisions apply:
- Section 126 – health insurance premium, preventive health check-up and specified medical expenditure;
- Section 127 – maintenance and medical treatment of a dependant who is a person with disability; and
- Section 128 – expenditure on medical treatment of prescribed diseases or ailments.
Sections 126, 127 and 128 are generally not available when the taxpayer remains under the default tax regime under Section 202. An eligible taxpayer must have validly opted out of the default regime to claim these deductions.
How do the old and new section numbers compare?
| Purpose | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| Health insurance and specified medical expenditure | Section 80D | Section 126 |
| Maintenance of dependant with disability | Section 80DD | Section 127 |
| Treatment of specified diseases | Section 80DDB | Section 128 |
For FY 2025-26 / AY 2026-27, the Income-tax Act, 1961 continues to apply. Sections 126 to 128 of the Income-tax Act, 2025 apply to income and deductions relating to Tax Year 2026-27 onwards.
Section 126: Health insurance premium and medical expenditure
Section 126 is available to an individual or Hindu undivided family (HUF). It covers health insurance premium, preventive health check-ups and, in specified cases, medical expenditure incurred for a senior citizen.
Deduction for self, spouse and dependant children
An individual can claim up to ₹25,000 in aggregate for:
- health insurance premium for self, spouse and dependant children;
- contribution to the Central Government Health Scheme or another notified health scheme; and
- preventive health check-up expenditure.
If any person covered in this block is a senior citizen, the ₹25,000 limit is increased to ₹50,000.
Separate deduction for parents
A separate deduction is available for health insurance premium and preventive health check-up of the taxpayer's parent or parents.
- Normal limit: ₹25,000
- If the parent covered is a senior citizen: ₹50,000
The parent does not have to be financially dependant on the taxpayer for this particular Section 126 benefit.
Where both the taxpayer/family block and the parents' block qualify for the higher senior-citizen limit, the combined Section 126 deduction can potentially reach ₹1,00,000, subject to the actual eligible payments and statutory conditions.
Medical expenditure for senior citizens without health insurance
Section 126 also recognises medical expenditure incurred for a senior citizen where no amount has been paid to keep health insurance in force for that person.
The deduction can be considered up to ₹50,000 within the relevant self/family or parents block.
Therefore, the ₹50,000 medical-expenditure benefit is not an additional deduction over and above that block's ₹50,000 maximum. The premium and medical-expenditure amounts are aggregated within the applicable ceiling.
Example
Suppose Meera pays ₹32,000 as health insurance premium for her 67-year-old mother and spends ₹22,000 on medical treatment of her 70-year-old father, who does not have health insurance.
Although the eligible expenses total ₹54,000, the deduction for the parents' block would be restricted to ₹50,000.
Preventive health check-up: ₹5,000 limit
Preventive health check-up expenditure can be included in Section 126, but the deduction for such expenditure is restricted to ₹5,000 in aggregate.
This ₹5,000 is included within the applicable ₹25,000 or ₹50,000 limits. It is not an additional deduction over those limits.
Preventive health check-up may be paid in cash. Other payments claimed under Section 126 must generally be made through a mode other than cash.
Lump-sum health insurance premium for multiple years
A taxpayer may sometimes pay a single premium for a health insurance policy covering more than one year.
Section 126 spreads the deduction over the years for which the policy remains in force. The eligible amount for each tax year is determined by dividing the lump-sum premium by the number of relevant tax years.
Example
Rahul pays ₹60,000 in Tax Year 2026-27 for a three-year health insurance policy.
The appropriate annual amount would be:
₹60,000 ÷ 3 = ₹20,000 per tax year
The deduction remains subject to the applicable Section 126 ceiling for each year.
Section 127: Deduction for a dependant with disability
Section 127 applies to a resident individual or resident HUF who incurs expenditure for a dependant who is a person with disability.
The qualifying expenditure can include:
- medical treatment, including nursing
- training
- rehabilitation
- an eligible payment or deposit under an approved maintenance scheme for the dependant
Who is treated as a dependant?
For an individual, a dependant can include:
- spouse
- children
- parents
- brothers
- sisters
The person must be wholly or mainly dependant on the taxpayer for support and maintenance.
In the case of an HUF, an eligible dependant is a member of the HUF who is wholly or mainly dependant on the HUF.
A relative is not automatically a "dependant" for Section 127. For example, a grandfather is not included in the statutory list of dependants for an individual even if the taxpayer financially supports him.
How much deduction is available under Section 127?
| Nature of disability | Section 127 deduction |
|---|---|
| Person with disability | Up to ₹75,000 |
| Person with severe disability | Up to ₹1,25,000 |
A person with severe disability includes a person having 80% or more of one or more qualifying disabilities, subject to the statutory definitions.
Section 80DD of the Income-tax Act, 1961 provided a fixed deduction of ₹75,000 or ₹1,25,000, as applicable. Section 127 of the Income-tax Act, 2025 is worded as a deduction "up to" ₹75,000 or ₹1,25,000. Taxpayers should apply the wording of the legislation relevant to the tax year rather than automatically carrying forward the old Section 80DD treatment.
Medical certificate requirement under Section 127
A taxpayer claiming Section 127 must obtain the required certificate from the prescribed medical authority and furnish a copy with the return of income.
Rule 61 of the Income-tax Rules, 2026 prescribes the certification framework. Form No. 30 applies in specified cases including autism, cerebral palsy and multiple disability.
Where the certificate requires the disability to be reassessed after a specified period, a fresh certificate must be obtained after the earlier certificate expires if the deduction is to continue.
Can both the taxpayer and dependant claim disability deduction?
No double benefit is intended.
A dependant for whom the taxpayer claims Section 127 cannot include a person who has claimed the separate deduction under Section 154 in computing his or her own total income for that tax year.
Section 128: Deduction for treatment of specified diseases
Section 128 provides relief where a resident individual or HUF actually pays for medical treatment of certain prescribed serious diseases or ailments.
An individual may claim qualifying expenditure incurred for:
- himself
- a dependant
An HUF may claim qualifying expenditure incurred for an eligible dependant member of the HUF.
Deduction limit under Section 128
| Person receiving treatment | Maximum deduction |
|---|---|
| Other than senior citizen | Actual amount paid or ₹40,000, whichever is lower |
| Senior citizen | Actual amount paid or ₹1,00,000, whichever is lower |
Which diseases are covered?
Rule 62 of the Income-tax Rules, 2026 specifies the diseases and ailments for which Section 128 can be claimed. These include:
- specified neurological diseases where the certified disability level is 40% or more, including Parkinson's disease, dementia and motor neuron disease
- malignant cancers
- full-blown Acquired Immuno-Deficiency Syndrome (AIDS)
- chronic renal failure
- haemophilia
- thalassaemia
Section 128 applies only to diseases or ailments prescribed under the Income-tax Rules. A high medical bill by itself does not make the expenditure eligible.
Prescription from a specialist is required
Section 128 requires a prescription for the medical treatment from the prescribed specialist.
Rule 62 links different diseases with appropriate specialists, including:
- neurologist for prescribed neurological diseases
- oncologist for malignant cancers
- nephrologist or urologist for chronic renal failure
- haematologist for haemophilia and thalassaemia
- an eligible specialist in General or Internal Medicine for full-blown AIDS
The Rules also contain a specific provision for patients receiving treatment at a Government hospital.
Insurance and employer reimbursement reduce the deduction
Section 128 does not permit a taxpayer to claim a deduction for expenditure that has effectively been recovered through insurance or an employer reimbursement.
The amount received from an insurer or reimbursed by an employer must therefore be reduced while calculating the deduction.
Example
An individual spends ₹1,20,000 on eligible cancer treatment for his 68-year-old dependant father. The insurer reimburses ₹30,000.
Net expenditure borne by the taxpayer:
₹1,20,000 − ₹30,000 = ₹90,000
Since the patient is a senior citizen and the maximum Section 128 ceiling is ₹1,00,000, the deduction in this example would be ₹90,000.
Section 126, 127 or 128: Which one applies?
| Situation | Relevant provision |
|---|---|
| Health insurance premium | Section 126 |
| Preventive health check-up | Section 126 |
| Medical expenses of uninsured senior citizen | Section 126, subject to conditions |
| Maintenance, treatment, training or rehabilitation of dependant with disability | Section 127 |
| Treatment of prescribed serious disease | Section 128 |
Common mistakes taxpayers should avoid
- Claiming these deductions under the default regime: Sections 126, 127 and 128 are generally unavailable under Section 202's default regime.
- Treating the ₹5,000 preventive check-up limit as additional: It forms part of the overall Section 126 limit.
- Paying health insurance premium in cash: Except for preventive health check-ups, Section 126 payments must generally be made through a non-cash mode.
- Claiming normal medical expenditure for a non-senior citizen under Section 126: The specific medical-expenditure provision applies to eligible senior citizens and is subject to the absence of health insurance for that person.
- Assuming every dependant relative qualifies under Section 127: The statutory relationship and dependency requirements must both be satisfied.
- Ignoring the disability certificate: The prescribed medical certificate is an important requirement for Section 127.
- Claiming Section 128 for an unprescribed disease: Only diseases and ailments prescribed under Rule 62 qualify.
- Ignoring insurance reimbursement: Insurance or employer reimbursements must be reduced while computing Section 128 deduction.
- Using old section numbers for Tax Year 2026-27: Sections 80D, 80DD and 80DDB belong to the Income-tax Act, 1961. The corresponding provisions under the Income-tax Act, 2025 are Sections 126, 127 and 128.
Documents to retain
Depending on the deduction claimed, taxpayers should retain appropriate supporting records such as:
- health insurance premium receipts
- bank or digital payment evidence
- preventive health check-up invoices
- medical bills and hospital records
- proof of age for senior citizens
- prescribed disability certificate for Section 127
- specialist's prescription for Section 128
- insurance reimbursement statement
- employer reimbursement details
- documents supporting the relationship and dependency of the person concerned
Key takeaway
Sections 126, 127 and 128 address different medical situations and should not be treated as interchangeable deductions.
Section 126 primarily deals with health insurance, preventive health check-ups and eligible senior-citizen medical expenditure. Section 127 provides relief for the maintenance and treatment of an eligible dependant with disability, while Section 128 applies to actual expenditure on prescribed serious diseases.
Before claiming any of these deductions, taxpayers should check the applicable tax regime, relationship with the person concerned, age, nature of expenditure, statutory limit and documentation requirements.
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