Section 80D of Income Tax Act: Deductions Under Medical Insurance, Eligibility and Tax Benefits

What is Section 80D of the Income Tax Act?

Section 80D of the Income Tax Act allows individuals or HUF to claim a deduction for medical insurance premiums paid in a financial year. Section 80D provides a deduction for expenditure on the:

• Medical insurance premium
• Contribution to CGHS(Central Govt Health Scheme)/notified scheme
• Preventive health check-ups, and
• Medical expenditure (in case of senior citizens).

Section 80D offers tax deductions up to Rs. 25,000 for health insurance premiums paid by individuals and HUFs in a financial year. The deduction increases to Rs. 50,000 for senior citizens aged 60 and above.

Note:- This deduction can be claimed over and above the Rs 1.5 lakh limit deductions claimed under Section 80C. This deduction is available only under old tax regime.

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Who is Eligible to Claim Tax Deductions Under Section 80D?

Individuals or HUF can claim Section 80D deduction for:

• Self
• Spouse
• Parents
• Dependant Children

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What is the Maximum Deduction that Can be Claimed Under Section 80D?

For claiming deduction u/s Section 80D, the premium should be paid in any mode other than cash. Although the expenditure on preventive health check-ups can be incurred in cash. The deduction for the following premiums is allowed under section 80D -

A. Medical Insurance Premium: For Yourself & Your Family

• The maximum amount of deduction on the policy taken by you for self & for family is Rs. 25,000/-.
• In case of a senior citizen or any of your family members is a senior citizen(aged 60 years or more), the deduction amount will be Rs. 50,000/-.

Note: Under the 80D deduction, Family means your spouse & dependent children.

B. Medical Insurance Premium: For Parents

• In addition to the above, you can claim a deduction of the medical insurance premium paid u/s 80D for your parents as well.
• The maximum amount of deduction is Rs. 25,000/-. If your parents are senior citizens, the deduction will be Rs.50,000/-.

Notes :

1. Parents for 80D include father and mother(whether dependent or not). Father-in-law and mother-in-law are not included.

C. Preventive Health Check-Up

Preventive Health check-ups identify the illness and work at the initial level through regular health check-ups. It is conducted once or twice yearly by your physician or general practitioner. The government introduced deduction under preventive health checkups to encourage people to be more proactive towards health. It was implemented in the year 2013-14.

The cumulative deduction for this check-up is a maximum of Rs. 5,000/- for yourself, your family, and your parents. Even cash payment for this expenditure is eligible for an 80D deduction.

D. Deduction of Medical Expenditure on Senior Citizens (aged 60 & above)

The expenditure is allowed for the deduction when no medical insurance premium is paid for the senior citizen. The term medical expenditure has not been defined under the income tax act, but generally, it will include medical expenses such as medical consultation fees, medicines, impairment aid, etc.

The maximum deduction amount is Rs. 50,000/-.

E. Contribution to CGHS/notified scheme

Contribution to Central Govt Health Scheme(CGHS) or any other notified scheme is allowed to individuals for themselves and their family for Rs.25,000.

Any contribution for parents is not allowed for deduction.

Section 80D: Amount of deduction comparative chart for current & previous years

*Preventive Health Check up is included in overall limits

*Family includes spouse and dependent children

To claim tax deductions under Section 80D , it is important to submit the medical bills to your employer or while filing your ITR. This deduction can be availed by the taxpayer for themselves, their spouse, dependent children, or parents. File your Income Tax Return here.

What is a Preventive Health Check-up Under Section 80D?

Under Section 80D of the Income Tax Act in India, taxpayers can claim a deduction for medical insurance premiums paid for themselves and their family. In addition to the deduction for health insurance premiums, the section allows a deduction for expenses incurred on preventive health check-ups. Preventive health check-ups involve medical tests and examinations aimed at early detection of illnesses and monitoring an individual's health status. Such check-ups help identify health risks early on, potentially preventing serious health issues.

1. Tax Deduction: The Income Tax Act provides a tax deduction under Section 80D for expenses incurred on preventive health check-ups. Taxpayers can claim up to ₹5,000 per financial year for themselves, their spouses, children, and parents.
2. Overall Limit: The deduction for preventive health check-ups is part of the overall limit for medical insurance premiums paid under Section 80D. For individuals below 60 years, the overall limit is ₹25,000, and for senior citizens (60 years or older), the limit is ₹50,000. This means that the deduction for preventive health check-ups is not separate from the limit for health insurance premiums—it is included within the total limit.

How to Claim Deduction Under Section 80D?

The process of claiming deduction under section 80D is simple. The assessees are required to provide proof of payment for the amount of medical insurance premium paid or the amount paid for preventive health checkups. It helps reduce the total taxable income for families, individuals and HUFs.

To claim your deduction under section 80D, you can send proof of the payment made towards insurance premiums and medical bills to your employer. Or you can also furnish the proofs of payment directly while filing your ITR and claim your deductions.

And if you still need help, don’t worry! Connect with our tax experts who will not only help you file your ITR but also maximize your income tax refund. Get online CA Now!

Example for the Calculation of 80D Deduction

Ram(57 years) is a taxpayer. Other members of his family are Sita(55 years old, Ram’s wife), Lav and Kush (dependent children), and his Parents. The following expenditures incurred by Ram for FY 2023-24:

80D Deduction Amount

Notes : *The amount of deduction u/s 80D will remain the same for the FY 2024-25 (old income tax slab).

Section 80D Tax Deductions for HUFs

• A medical claim can be taken under Section 80D for any of the members of HUF.
• The maximum amount of deduction is Rs. 25,000/-. If the member is a senior citizen, then the maximum deduction will be Rs. 50,000/-.
• HUF is not eligible to claim a deduction for a preventive health check-up.

Deduction on Single Premium Medical Insurance Policies

In such policies, a one-time lump sum payment is made against the regular installment for the complete policy tenure. Since the payment is a one-time payment, the deduction will be allowed on a proportionate basis.

• Amount Eligible under section 80D = Single Premium Paid / Number of years for which policy has been taken.
• The limit of 25,000 for individuals below 60 years of age and Rs 50,000 for others shall also apply in this case.

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Mode of Payment under Section 80D

Here are the payment modes allowed to avail the tax deduction under section 80D:

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Deduction of Medical Expenses for Senior Citizens (Section 80D)

Section 80D of the Income Tax Act is indeed a beneficial provision for senior citizens in India. It offers tax deductions on medical expenses, providing relief from high healthcare costs. Let's review and discuss the key points and eligibility criteria under Section 80D for senior citizens in more detail:

Eligibility Criteria:

• Age: The taxpayer must be a resident Indian and a senior citizen, meaning they should be 60 years of age or above.
• Medical Expenses: The medical expenses must be incurred for oneself, a dependent spouse, children, or parents.
• Insurance Premiums: In addition to medical expenses, senior citizens can claim deductions for health insurance premiums paid for themselves, their spouse, and their dependent children.
• Preventive Health Check-ups: Expenses incurred on preventive health check-ups for the senior citizen and their spouse can also be claimed as part of the total deduction available under Section 80D.

Deductions Allowed:

• For Medical Expenses and Health Insurance: Senior citizens can claim deductions of up to ₹50,000. This includes health insurance premiums and expenses for medical treatments.
• Specific Ailments: If a senior citizen incurs expenses on treatments for specific diseases such as neurological diseases, cancers, renal failure, etc., additional deductions might be available under Section 80DDB.

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What is the Difference Between Sections 80D, 80DD, 80DDB, and 80U?

Sections 80D, 80DD, 80DDB, and 80U are different sections under the Indian Income Tax Act that provide deductions to taxpayers for various medical and disability-related expenses. Here's a brief overview of each section:

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Exclusions under Section 80D of the Income Tax Act

• Premiums Paid in Cash: Any premium paid in cash for health insurance policies is not eligible for deduction under Section 80D. The deduction is allowed only for premiums paid through digital modes or by cheque.
• Default in Premium Payments During a Financial Year: If there is a default in paying the health insurance premium during the financial year, no deduction will be allowed under Section 80D for that year.
• Premium Paid by the Employer for Group Health Insurance: If your employer pays the premium for a group health insurance policy covering you and your family members, you cannot claim a deduction for the amount paid by the employer. The tax benefit is available only for the premiums paid by you.
• Premium Paid on Account of Working or Employed Children or Other Relatives: The deduction under Section 80D is available only for health insurance premiums paid for self, spouse, dependent children, and parents. Premiums paid for working or employed children, uncles, aunts, grandparents, or siblings are not eligible for tax benefits under this section.

It's essential to be aware of these exclusions and ensure that you meet the eligibility criteria for claiming deductions under Section 80D while filing your income tax return.

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Things to Remember When Availing Tax Deductions Under Section 80D

When availing tax deductions under Section 80D of the Indian Income Tax Act for premiums paid on health insurance policies, it's important to keep several key considerations in mind.

• The benefits under Section 80D of the Income Tax Act, 1961, are in addition to the tax benefits available under Section 80C. This allows you to claim further deductions on your taxable income.
• HUFs can also claim tax deductions under the Income Tax Act, 1961. This can help in reducing the overall tax liability for the family unit.
• It's important to carefully review the tax exemptions included in your health insurance policy to understand the benefits you are entitled to and ensure you are fully utilizing them.
• To qualify for the deduction under Section 80D, the premium must be paid through a non-cash method, such as a cheque, bank transfer, or credit card, except for preventive health check-ups, which can be paid in cash.
• Paying a health insurance premium in full can offer tax benefits for the entire duration of the insurance policy, providing long-term financial advantages.
• from the Income Tax Department can help ensure you are aware of any new deductions or changes in existing ones.

Claiming deductions under Section 80D is an important way to reduce your taxable income and save on healthcare costs. Know more on how to reduce your taxable income with the experts.

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Section 80D at a Glance

ITR Filing for FY 2024-25 has started. If you are eligible for section 80D deduction, make sure you file your ITR on time and choose the old regime. And if you find taxes confusing, don’t worry! Get in touch with our experts who can not only help you file your ITR but also ensure you receive maximum tax refund and avoid penalties and notices. Book an eCA Now!

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