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Section 80D - Deductions for Medical & Health Insurance
As a taxpayer, knowing about the tax exemptions and deductions that fall under the Income Tax Act, 1961 is important. Various sections outline what is allowed as an exemption as well as a deduction from your income.
Before you start your tax planning, you must know what tax deductions are. A tax deduction is defined as an amount that you can reduce from your taxable income to bring down the tax liability that you will need to pay to the income tax department.
One such deduction, which is available for expenses made for medical and health insurance, is Section 80D of the Income Tax Act.
What is section 80D of the income tax act?
Health insurance is a great tool for financial as well as tax planning. The entire premise of health insurance is simple; it helps you cover certain medical costs that may arise during your lifetime.
When you buy health Insurance online, you must pay a premium against it. Health insurance can be purchased for yourself or your direct family members, including your spouse, kids, parents, Hindu Undivided Family (HUF).
This premium is the regular cost that one has to spend to hold health insurance. This is where Section 80D comes in.
Section 80D Deductions allows you to deduct the premium you pay against your health insurance from your taxable income. This also includes any expenses you incur as a part of preventive health checkups.
Section 80D of Income Tax is applicable over and above any exemptions claimed from Section 80C.
What deductions are allowed under section 80D?
The premium you pay on your health care falls under Section 80D. The deduction allowed includes
- Premium on health insurance policy
- Health care expenses incurred by you and your family.
- This applies to an insured individual below the age of 80 years
Frequently Asked Questions About 80D
How is 80D calculated?
To calculate the amount available to you as a deduction under Section 80D, you must know the premium you pay on health insurance in a particular financial year. This health insurance can be for yourself or your dependents, including parents and children. The amount you pay as a premium will be deducted from your taxable income, thus bringing down your income tax liability. Depending on age and family criteria, this is subject to pre-defined limits.
How much deduction can I claim under section 80D?
To understand the amount that you can claim as an individual or payment of premium for your family under section 80D, check the table below:
| Sr No | Insured | Premium Paid in Rs. for individuals below 60 years | Self, spouse, and dependent children are under 60, and parents over 60 years | Self, spouse, and parents over 60 years |
|---|---|---|---|---|
| 1 | Self, spouse & dependent children | ₹ 25,000 | ₹ 25,000 | ₹ 50,000 |
| 2 | Parents | ₹ 25,000 | ₹ 50,000 | ₹ 75,000 |
| 3 | Maximum deduction available | ₹ 50,000 | ₹ 50,000 | ₹ 1,00,000 |
The maximum 80D deduction limit that you can claim for yourself and as a family together is Rs 1,00,000, provided the members of the family are over 60 years of age, and this is not a group policy.
While considering preventive health care expenses as tax-deductible, you need to remember that the total insurance premium paid is less than the maximum limit. You can then claim up to Rs. 5,000 for you and your family below 60 years of age in the financial year. This amount increases up to Rs. 25,000 if you are claiming preventive health check-up costs of parents who are over the age of 60.
What investment comes under section 80D?
Expenses made for preventive health care check-ups or health insurance premiums are categorised as the cost incurred or investment under section 80D.
> Who is eligible for a tax deduction under section 80D of Income Tax Act,1961?
An individual who pays health insurance premiums for self, spouse, children, parents, and Hindu Undivided Family is eligible for an 80D tax deduction.
What is the limit of deduction under section 80D of the Income Tax Act, 1961?
Rs. 25,000 is the limit for an individual below the age of 60 years, and Rs. 50,000 is the 80D limit for citizens over 60 years of age.
What are the exclusions under section 80D?
Exclusions under Section 80D include:
- Any Goods or Service Tax paid and CESS on the insurance or preventive health care.
- Premium paid through any third party
- Premiums paid in cash
- Tax benefits can only be claimed by the taxpayer
- Tax benefits cannot be claimed if you have a group health insurance
Can we claim medical bills under 80D?
Medical expenses like insurance premiums or preventive health care can be claimed under 80D.
Disclaimer:
Our content given in this article is as per the existing provisions, laws and regulations as per the Income Tax Act, 1961 and Income Tax Rules, 1962 issued thereunder. Tax laws are subject to amendments made thereto from time to time. The benefits / guidance mentioned herewith should not be considered as opinion / view of the Company. We request to seek independent view from your personal tax advisor on applicable tax benefits / guidance under the said article.
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