Currently, I pay my entire medical expenses out of pocket. This is a significant part of my income. The part that I don't like is that I pay tax even on the part of my income that I spend on my medical expenses. This is not fair at all.

This struck me as weird when I realized that if someone donates a sum of money to a charity, he or she gets exemption on the sum donated under section 80G. Now, there is an exemption for medical expenses for an individual under section 80DDB. However, this exemption is capped at Rs. 40,000 per year. I am, not for a second, arguing that the exemption under section 80G for donating to charities is wrong. But, taxing money used for medical bills is absolutely wrong. There should be no cap. Period. What is the argument for a cap? Someone, please enlighten me.

We have no healthcare policy worth mentioning in India. Ok, we have Aarogyasri but that is only in Andhra Pradesh and that too only for the very poor (on paper at least). Its not like people who can afford their healthcare expenses can do so for ever. The money that I spent on taxes year after year could have been saved and I could have bought the NxStage System One, for example.

There is so much wasteful expenditure that the government incurs every year. The Haj subsidy, for example. Even true Muslims resent this and point out that the Holy Quran forbids this. Then there is the money that is spent on implementing various government schemes named after one politician or the other. Remember Mayawati's monument mania?

Any amount spent by an individual on his health (backed by a proper prescription and bills) must be totally exempt from Income Tax. I have a lot to say about the duty on importing medical equipment or consumables but that topic deserves another post.

It is high time the government woke up to this stark reality. It should really get its priorities right. If you cannot make life easier for us, at least don't make it more difficult!

... http://www.kamaldshah.com/2011/01/tax-exemption-on-medical-expenses-when.html