In Pakistan, medical expenses can be a significant burden on individuals and families. However, there are certain tax deductions available for medical expenses that can help reduce the financial burden. In this article, we will discuss the tax deductions available for medical expenses in Pakistan.
What are Medical Expenses?
Medical expenses are any expenses incurred for the prevention or treatment of a physical or mental illness. This includes expenses incurred for doctor’s fees, hospitalization, diagnostic tests, medicines, and other medical treatments.
Tax Deductions for Medical Expenses
Tax deductions are available for medical expenses under Section 61 of the Income Tax Ordinance, 2001. The following deductions are available for medical expenses:
- Deduction for Medical Insurance Premiums
If an individual pays premiums for medical insurance, they are eligible for a tax deduction. The deduction is subject to limitations and conditions applicable. It is important to note that the premium must be paid in the tax year for which the deduction is being claimed.
- Deduction for Medical Expenses Incurred for Self or Dependents
A rebate at the average rate of tax is allowed on donations made to any approved non-profit organization on the lower of donation value and 30% of the individual’s taxable income. In case of donations made by an individual to an associate, the amount of donations qualifying for tax credit would be restricted to 15% of the individual’s taxable income
3. Deduction for Medical Expenses Incurred for an Employee
If an employer incurs medical expenses for their employee, they are eligible for a tax deduction. The deduction is equal to the actual amount of medical expenses incurred up to a maximum of 10% of the employer’s taxable income. It is important to note that the medical expenses must be incurred in the tax year for which the deduction is being claimed.
Documentation Required for Claiming Tax Deductions for Medical Expenses
To claim tax deductions for medical expenses, individuals must provide the following documentation:
- Receipts of medical expenses incurred
- Invoices or receipts of medical insurance premiums paid
- Certificates from doctors or hospitals indicating the nature and extent of the medical treatment received
Conclusion
Medical expenses can be a significant burden on individuals and families in Pakistan. However, tax deductions are available for medical expenses, which can help reduce the financial burden. Tax deductions are available for medical insurance premiums, medical expenses incurred for self or dependents, medical expenses incurred for a person with a disability, medical expenses incurred for an employee, and medical expenses incurred for a dependent with a disability. It is important to keep proper documentation to claim these tax deductions.
