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.
Deductions 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:
For Self and Family:
- Maximum deduction of Rs.25,000 per year on health insurance premium for self and family.
- Maximum deduction of Rs.30,000 per year if you are a senior citizen.
- Maximum deduction of Rs.25,000 per year on health insurance premium paid on behalf of parents.
- Maximum deduction of Rs.30,000 per year on premium payments for senior citizen parents.
- A deduction of Rs.5,000 can be claimed every year on expenses related to health check-ups. This limit includes the check-up expenses of all members in a family, including spouse, kids and parents.
Eligibility for Tax Benefits u/s 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 + 30,000) = Rs.55,000||Rs.5,000||Rs.60,000|
|Self (senior citizen) and family + senior citizen parents||Rs.(30,000 + 30,000) = Rs.60,000||Rs.5,000||Rs.65,000|
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.30,000 on Rs.32,000 paid as health insurance premium for you and your dependents.
- Tax deduction of Rs.30,000 for your parents (senior citizens) out of the overall payment of Rs.35,000.
- Total tax deduction that can be claimed is Rs.60,000 out of the overall premium payment of Rs.67,000.
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.
Are cash payments for premiums accepted for deductions?
No, you cannot claim deductions on premiums paid through cash.
Can I claim deductions on premiums paid on behalf of my working children?
No, deductions can only be claimed if the premium is paid for dependent children.
What if my spouse and parents are not dependent on me?
You can claim deductions in these cases.
What about the service tax I paid on my health insurance premium?
Service taxes are paid over and above the premium amount and collected by respective agencies. This amount cannot be claimed as deductions.
Can I claim health check-up deductions for all dependents?
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.