Section 80D: Deductions for Medical and Health Insurance

Section 80D allows a tax deduction of up to Rs. 25,000 per financial year on medical insurance premiums for non-senior citizens and Rs. 50,000 for senior citizens. Read in detail about section 80D of the IT Act.
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3 min
15-September-2023

With rising healthcare costs, having a health insurance is essential to ensure access to quality medical care. Section 80D of the Income Tax Act allows taxpayers to claim deductions on premiums paid for health insurance policies, thereby encouraging individuals to prioritise their health and well-being.

In this article, we will delve into the intricacies of deductions under Section 80D, exploring eligibility criteria, the deductions allowed, preventive health check-ups, provisions for senior citizens, and other related aspects.

What is Section 80D of the Income Tax Act?

Section 80D is a provision in the Income Tax Act, 1961, that offers tax deductions to individuals and Hindu Undivided Families (HUFs) who have purchased health insurance policies. The primary objective of this section is to promote health insurance coverage among taxpayers, ensuring that they have access to adequate healthcare facilities without straining their finances.

Eligibility for tax deduction under Section 80D

To avail tax deductions under Section 80D, individuals and HUFs must meet the following eligibility criteria:

Individuals:

Any individual taxpayer can claim deductions under Section 80D for health insurance premiums paid for themselves, their spouses, children, and parents. It is important to note that these family members can be dependant or non-dependant.

HUFs:

Hindu Undivided Families can claim deductions for the health insurance premiums paid to cover the health of any family member, including dependant parents.

The income tax slabs for FY 24-25 are essential for determining the applicable tax rates for different income levels.

What deductions are allowed under Section 80D?

Here are the deductions allowed under Section 80D:

  • Taxpayers can avail a deduction of up to Rs. 25,000 for premiums paid towards medical insurance for themselves, spouses, and dependant children.
  • A deduction of up to Rs. 25,000 is allowed for medical insurance premiums paid for parents below the age of 60 years.
  • In case an individual or a parent is a senior citizen, the deduction on medical insurance premiums is increased to Rs. 50,000.
  • If an individual pays for medical insurance premiums for their HUF member(s), they can claim a deduction up to Rs. 25,000.
  • HUFs can claim a further deduction of up to Rs. 25,000 if any member is below 60 years of age.
  • In the case of senior citizen HUF members, the deduction limit is increased to Rs. 50,000.

Covered category

Premium paid (in Rs.)

Maximum tax exemption (as per Sec. 80D) (in Rs.)

For self, spouse, children

For parents

Individuals and parents below the age of 60

25,000

25,000

50,000

 

Individuals below the age of 60; parents above the age of 60

25,000

50,000

75,000

Individuals and parents above the age of 60

50,000

50,000

1,00,000

 

HUFs below the age of 60

25,000

25,000

25,000

HUFs above the age of 60

50,000

50,000

50,000

 

How much tax deduction is allowed under Section 80D?

Section 80D of the Income Tax Act provides tax deductions on health insurance premiums, aiming to encourage individuals to secure their health. The deductions are as follows:

  • Rs. 25,000: For premiums paid on health insurance for self, spouse, and dependent children (non-senior citizens).
  • Rs. 50,000: For premiums paid on health insurance for senior citizen parents (above 60 years).
  • Rs. 5,000: Additional deduction for expenses on preventive health check-ups (included in the total limit).

For instance, let us take the case of Dinesh, a 40-year-old individual who paid Rs. 35,000 for his health insurance. Under Section 80D, he can claim a tax deduction of Rs. 25,000 as he is under 60. On the other hand, Dinesh’s father, who is 65 years old, paid Rs. 55,000 for his medical insurance. As a senior citizen, his father can claim a tax deduction of Rs. 50,000.

Similarly, NRIs below 60 years can claim a tax exemption of up to Rs. 25,000 on premiums paid. If the NRI is 60 years or older, the limit increases to Rs. 50,000 for the financial year.

This provision allows individuals to reduce their taxable income and makes health insurance an even more beneficial financial decision.

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What are the tax deductions under section 80D on health insurance premium paid for parents?

Under the Income Tax Act, you can claim tax deductions under 80D
on health insurance premiums paid for your parents. If your parents are below 60 years, you can claim up to Rs. 25,000 annually. If they are senior citizens (above 60), the deduction limit increases to Rs. 50,000. This deduction is in addition to the limit for premiums paid for self, spouse, and children. Paying for preventive health check-ups for parents also qualifies within the overall limit.

Understanding the section 80D tax deductions for HUF

Under Section 80D of the Income Tax Act, Hindu Undivided Families (HUFs) can also claim tax deductions on health insurance premiums. The HUF can claim a maximum deduction of Rs. 25,000 for premiums paid for family members under 60 years of age. For senior citizens (above 60), the limit increases to Rs. 50,000. These deductions apply to premiums paid for the health insurance of the HUF members, including parents, spouse, and children.

What are preventive health check-ups under Section 80D?

Preventive health check-ups are an integral part of maintaining good health. To encourage individuals to prioritise preventive care, Section 80D of the Income Tax Act provides deductions for expenses incurred on preventive health check-ups. Here's what you need to know:

  • Taxpayers can claim a deduction of up to Rs. 5,000 for preventive health check-ups for themselves, their family members, or their parents. This deduction is within the overall limit specified under Section 80D.
  • Preventive health check-ups include medical tests and screenings to detect potential health issues before they become serious. These may include blood tests, X-rays, ultrasounds, and other diagnostic procedures.
  • The deduction is available for expenses incurred on preventive health check-ups for family members, including spouses, children, and parents.
  • Ensure that you retain the receipts and documentation for preventive health check-ups as proof when claiming deductions.

Expenses

Actual expense

Maximum deduction under section 80D

Total Deduction Applicable

Health insurance premium for self, spouse, and children

Rs. 30,000

Rs. 25,000

₹25,000

Preventive health check-up for self, spouse, and children

Rs. 15,000

Rs. 5,000

₹5,000

Total expense for self, spouse, and children

Rs. 45,000

Rs. 25,000

₹25,000

Health insurance premium for senior citizen parents

Rs. 47,000

Rs. 50,000

₹47,000

Preventive health checkup for parents (senior citizens)

Rs. 10,000

Rs. 5,000

₹3,000

Total for parents (senior citizens)

Rs. 57,000

Rs. 50,000

₹50,000

Total deductions available for the financial year

₹75,000


Which payment modes are eligible for section 80D deductions?

Under Section 80D, specific payment modes are eligible for claiming deductions on health insurance premiums and preventive health check-ups. Cash payments are restricted for premiums.

Expenses

Modes of payment allowed

Health insurance premiums

All modes of payment, except for cash (e.g., debit card, credit card, UPI, cheque, net banking).

Preventive health check-ups

All modes of payment, including cash, debit card, credit card, UPI, and cheque.


Proper documentation of payments is essential to claim these deductions.

How are Section 80D deductions applied for multi-year health insurance premiums?

If you pay a lump sum premium for a policy covering multiple years, the total premium is divided equally across the policy term. You can claim a health insurance premium deduction Section 80D each year, proportionate to the premium allocated for that specific year.

Deduction for medical expenses of senior citizens under Section 80D

Senior citizens often have higher healthcare needs, and the Indian government acknowledges this by providing additional tax benefits. Under Section 80D, the following provisions are made for senior citizens:

If an individual or their spouse is a senior citizen (60 years or older), the maximum 80D deduction limit for parents health insurance premiums increases to Rs. 50,000 for themselves and their parents.

This higher deduction limit helps senior citizens manage their healthcare expenses more effectively.

Factors to consider when purchasing medical insurance to claim under section 80D

Key points to remember when buying medical insurance for claiming 80D deductions:

  • Policyholder eligibility: Ensure that the policyholder (self, spouse, children, or parents) meets the criteria for claiming a deduction under 80D.
  • Age consideration: Different deduction limits apply based on the age of the insured individual. For individuals below 60, the maximum deduction is Rs. 25,000, and for senior citizens, it is Rs. 50,000.
  • Preventive health check-ups: Expenses on preventive health check-ups are also eligible for deductions under 80D, but within the overall limit.
  • Premium payment method: The premium must be paid via cheque, digital transfer, or any mode other than cash to qualify for a deduction under 80D.
  • Policy type: Only health insurance policies (not life or term insurance) are eligible for these deductions.

What are the deductions under Section 80DD of the Income Tax Act?

Apart from Section 80D, the Income Tax Act also includes Section 80DD, which offers deductions for individuals who have dependants with disabilities. Under Section 80DD:

  • Taxpayers can claim deductions for the expenses incurred on the maintenance, including medical treatment, of dependants with disabilities.
  • The maximum deduction limit under Section 80DD is Rs. 75,000, which can go up to Rs. 1.25 lakh in cases of severe disabilities.
  • To be eligible for this deduction, the dependant must be a spouses, children, parents, or siblings of the taxpayer.

What are the deductions under Section 80DDB of the Income Tax Act?

Section 80DDB of the Income Tax Act provides deductions for expenses related to specified diseases and ailments. Here's what you need to know about Section 80DDB:

  • Taxpayers can claim deductions for the expenses incurred on the treatment of specified diseases for themselves, their family members, or dependants.
  • The maximum deduction limit under Section 80DDB varies depending on the age of the patient. For individuals below 60 years, the limit is Rs. 40,000, while for senior citizens (above 60 years), it is Rs. 1 lakh.
  • To claim this deduction, you need to provide a certificate from a specialist doctor confirming the ailment and treatment.

Difference between section 80D and 80C of the income tax act

Section 80D and Section 80C provide tax benefits but cover different types of expenses. Section 80D focuses on health insurance premiums, while Section 80C covers investments and expenses like ELSS, PPF, and tuition fees.

Aspect

Section 80D

Section 80C

Purpose

Health insurance premiums and check-ups

Investments and specified expenses

Eligible deductions

Rs. 25,000 - Rs. 50,000 (depending on age)

Up to Rs. 1.5 lakh

Covered expenses

Health insurance, preventive check-ups

ELSS, PPF, NSC, tuition fees, home loan principal

Beneficiaries

Self, family, and parents

Self, spouse, children, and HUF


Things to remember when availing tax deductions under Section 80D

While Section 80D offers significant tax benefits, it is crucial to keep the following points in mind:

• Premium payments:

Ensure that premiums are paid through banking channels like cheques, demand drafts, or electronic transfers. Cash payments are not eligible for deductions.

• Maintain documentation:

Retain all relevant documents, such as premium payment receipts and certificates from specialist doctors for specified diseases, as they may be required during tax assessments.

• Understand limits:

Familiarise yourself with the deduction limits based on the age of the insured individuals and the premiums paid.

• Claim for preventive health check-ups:

Do not forget to claim deductions for preventive health check-ups, which can help you maintain good health and save on taxes.

• Consider riders:

Explore the option of adding riders to your health insurance policy for additional coverage, as premiums paid for riders are also eligible for deductions.

Health insurance tax benefits - Important points to remember

When claiming tax benefits under Section 80D, keep the following key points in mind:

  • The premiums paid for policies must be in the taxpayer's name. Premiums paid for policies in someone else's name, even if they are family members, are not eligible for deductions.
  • The deductions are available for policies covering any kind of health-related expenses, including preventive care and hospitalisation.
  • The premiums paid for critical illness riders or riders offering additional coverage are also eligible for deductions under Section 80D.It is crucial to retain proof of premium payments, as it may be required during the tax assessment process.

Conclusion

In conclusion, Section 80D of the Income Tax Act provides valuable deductions for individuals investing in health insurance policies, especially for senior citizens. Opting for senior citizen health insurance not only ensures comprehensive coverage but also offers tax-saving benefits under this section. By investing in health insurance for yourself or your parents, you can reduce your taxable income while securing financial protection against health-related emergencies. Therefore, it is a wise decision to take advantage of these deductions and ensure the well-being of senior citizens while benefiting from tax relief.

Frequently asked questions

What is Section 80D of the Income Tax Act?

Section 80D of the Income Tax Act provides deductions for individuals and Hindu Undivided Families (HUFs) on medical and health insurance premiums paid. The deduction amount is excluded from an individual's gross total income, resulting in a lower income tax liability.

Are preventive health checkups covered under Section 80D?

Yes, preventive health check-ups are covered under Section 80D. An individual can claim a tax deduction of up to Rs. 5,000 for expenses incurred during such check-ups for immediate family members or HUF members.

Is there any deduction for medical expenses of senior citizens under Section 80D?

Yes, Section 80D provides an additional tax deduction for senior citizens. Any medical expense incurred for the treatment of a senior citizen, not covered under the medical insurance plan, is allowed as a deduction under Section 80D. The deduction limit is up to Rs. 50,000 for senior citizens.

What are the additional 80D deductions?

Section 80D also provides an additional deduction of Rs. 5,000 for expenses incurred for preventive health check-ups. This benefit is available within the overall limit of the section.

How to fill 80D in income tax return?

In the income tax return form, taxpayers can claim deductions under Section 80D by filling in the relevant details in the 'Income Details' and 'Deductions' sections of the form. This includes details such as the amount paid towards health insurance premiums, the age of the policyholder and the person covered, and other relevant information.

How can medical bills be claimed under 80D?

Medical bills can be claimed under Section 80D only for preventive health check-ups. The deduction is available up to Rs. 5,000 within the overall limit of the section. To claim this deduction, individuals need to submit the receipts of the medical expenses incurred along with the income tax return. This will help them reduce their tax liability and save money.

What is the maximum exemption under 80D?

The maximum exemption limit under 80D of the Income Tax Act varies according to the age of the taxpayer and the insured. For individuals under 60 years of age, the maximum exemption amount is Rs. 25,000 per financial year. For senior citizens above 60 years of age, the exemption limit is Rs. 50,000 per financial year. If the taxpayer is paying medical insurance premiums for their senior citizen parents, an additional deduction of up to Rs. 50,000 can be claimed.

What is the maximum deduction under Section 80D for self?

You can claim up to Rs. 25,000 annually for health insurance premiums paid for yourself, spouse, and dependent children. If you are a senior citizen (aged 60 or above), the limit increases to Rs. 50,000.

Is documentation required to claim deductions under Section 80D?

Yes, proof of payment is necessary to claim deductions. Maintain receipts or payment proof for health insurance premiums and preventive health check-ups. Ensure the payment is made through eligible modes.

Can Rs. 5,000 be claimed under Section 80D?

Yes, up to Rs. 5,000 can be claimed for preventive health check-ups. This amount is part of the overall deduction limit of Rs. 25,000 or Rs. 50,000, depending on eligibility.

What expenses are covered under Section 80D exemptions?

Section 80D allows deductions for health insurance premiums, preventive health check-ups, and medical expenses for senior citizens without insurance. Premiums for self, family, and parents are included in the exemption list.

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