Section 80D of the Income Tax Act provides tax deductions for medical expenditure made for the self and the family which can go up to Rs.50,000. Self, spouse, children, parents, and Hindu Undivided Families (HUF) can claim this.
The Section 80D of the Income Tax Act, 1961 deals with tax deductions on medical insurance. This section allows you to receive tax deductions on premiums made for medical insurance for yourself and on behalf of your family. The Section 80D offers deductions over and above the exemptions derived from the more popular Section 80C.
Deduction available under Section 80D
As mentioned before, Section 80D will help you in getting tax deductions on medical insurance premiums only. The deductions allowed are as follows:
|Category||Premium Paid||Deduction under Section 80D|
|Self, family, and children||Parents|
|Individual, and parents below the age of 60 years||Rs.25,000||Rs.25,000||Rs.50,000|
|Individual and family below the age of 60 years, but parents above the age of 60 years||Rs.25,000||Rs.50,000||Rs.75,000|
|Both individual, family, and parents above the age of 60 years||Rs.50,000||Rs.50,000||Rs.1 lakh|
|Hindu Undivided Family (HUF)||Rs.25,000||Rs.25,000||Rs.25,000|
Union Budget - Rise in tax deduction under Section 80D
On 1st February, the Union Budget 2018 was announced by Former Finance Minister Arun Jaitley. He proposed a rise in the limit of tax deduction on health insurance premium from Rs.30,000 to Rs.50,000 under Section 80D of the Income Tax Act, 1961, for all senior citizens. Budget 2018 is especially focused on taking care of senior citizens, women, and farmers of the country. In an effort to help senior citizens lead a dignified life in their old age, the government has made provisions for tax deductions on health insurance premiums and medical expenditure incurred by people aged 60 years and above (below 80 years). The current increase in tax deductions on premiums paid toward any health insurance policy for a senior citizen will prove beneficial to senior citizens as well as anyone who pays health insurance premiums on behalf of a senior citizen, say a parent or spouse.
Eligibility for Tax Benefits under 80D
A taxpayer can claim the deductions u/s 80D. The health insurance premium paid for the following members in a family are eligible for deductions:
Hindu Undivided Families (HUF) can also claim deductions under this section. Premium payments of any member in a HUF can be used for tax deduction subject to upper limit as per the act.
Section 80D Limit
As per Section 80D, a taxpayer can claim deductions on health insurance premiums paid for self/family and parents, apart from deductions on expenses related to health check-ups. The overall deduction limits are as follows:
|Persons Covered||Exemption Limit||Health Check-Up Exemption||Total|
|Self and family||Rs.25,000||Rs.5,000||Rs.25,000|
|Self and family + parents||Rs.(25,000 + 25,000) = Rs.50,000||Rs.5,000||Rs.55,000|
|Self and family + senior citizen parents||Rs.(25,000 + 50,000) = Rs.75,000||Rs.5,000||Rs.80,000|
|Self (senior citizen) and family + senior citizen parents||Rs.(50,000 + 50,000) = Rs.1,00,000||Rs.5,000||Rs.1.05 lakh|
Suppose you are 60 years old paying an yearly premium of Rs.32,000 for yourself and your dependents. Apart from this, you are also paying a health premium of Rs.35,000 for your parents’ policy, who are 80 years old. As per Section 80D terms, you are eligible for:
- Tax deduction of Rs.32,000 on Rs.32,000 paid as health insurance premium for you and your dependents.
- Tax deduction of Rs.35,000 for your parents (senior citizens) out of the overall payment of Rs.35,000.
- Total tax deduction that can be claimed is Rs.67,000 out of the overall premium payment of Rs.67,000.
Note: Please note that the maximum tax deduction which can be claimed is subject to the provisions under Section 80D of the Income Tax Act. Always consult an expert to get the most out of the tax saving provisions.
Section 80D and 80C
Section 80D is sometimes confused with its more visible cousin, Section 80C. Section 80C provides deductions up to Rs.1.5 lakhs per year while Section 80D offers deductions up to Rs.65,000, subject to conditions.
Another differentiating point is that Section 80C includes investments made in a wide range of financial instruments such as small savings schemes, life insurance premium, mutual funds etc., while Section 80D is meant exclusively for deductions on health insurance premiums paid.
Deduction for Mediclaim under Section 80D
The deduction of Mediclaim under Section 80D happens so that your insurance policy stays active. This insurance can be for the policy holder or for the spouse of the policy holder. Mediclaim is of utmost importance as it takes care of your medical expenditure bills, if you fall ill and require medical assistance.
Points to be remembered at the time of purchase of medical insurance
There are certain points you must keep in mind before purchasing medical insurance:
- If you pay premium on behalf of working children, you cannot claim tax exemption under Section 80D.
- You cannot claim tax deduction under Section 80D if you pay premiums on behalf of your siblings, grandparents, uncles, aunts, or any other relatives.
- In case you and your parents have part paid your premiums, then both of you can claim tax benefits under Section 80D.
- You cannot claim tax deduction for the premium paid for group medical health insurance provided to you by your employer.
- You will have to take the deduction without taking the service tax and cess portion from premium amount payable.
FAQs On Section 80D
- Are cash payments for premiums accepted for deductions?
- Can I claim deductions on premiums paid on behalf of my working children?
- What if my spouse and parents are not dependent on me?
- What about the service tax I paid on my health insurance premium?
- Can I claim health check-up deductions for all dependents?
No, you cannot claim deductions on premiums paid through cash.
No, deductions can only be claimed if the premium is paid for dependent children.
You can claim deductions in these cases.
Service taxes are paid over and above the premium amount and collected by respective agencies. This amount cannot be claimed as deductions.
Health check-up deductions can be claimed up to Rs.5,000 inclusive of all dependents in the family. This deduction isn’t available separately for each individual.