Section 80D Deductions for Medical and Health Insurance | Tax Benefits

Section 80D Deductions in Health Insurance Policy

Section 80D of Income Tax Act, 1961 offers various tax benefits for premiums paid towards Health Insurance Policies with an intention of encouraging more people to purchase Health Insurance. A Health Insurance Policy provides many benefits such as providing cover against high medical bills, coverage for pre and post-hospitalisation expenses, international coverage etc. One underappreciated benefit of Health Insurance is the tax benefit that it offers. This article provides details about the key aspects of Section 80D of the Income Tax Act, 1961 and how you can maximize your tax savings while ensuring comprehensive health insurance coverage for yourself and your loved ones.

What is Section 80D of the Income Tax Act, 1961?

Section 80D of the Indian Income Tax Act allows for deductions on the taxable income for payments made towards Health Insurance Premiums and Health Check-Ups for Self, Spouse and Dependent Children. Section 80D allows a total deduction of upto Rs25,000 in a financial year for Health Insurance Premiums paid for Self, Spouse and Dependent Children aged below 60 years and up to Rs50,000 in a financial year for Self, Spouse and Dependent Children aged 60 years and above.
Taxpayers can also avail deduction under Section 80D for Health Insurance Policy purchased for Dependent Parents. Section 80D allows a total deduction of up to Rs25,000 in a financial year for Health Insurance Premiums Paid for Parents aged below 60 years and up to Rs50,000 in a financial year for Parents aged 60 years and above. Tax-Payers can claim a total deduction of Rs1 lakhs under Section 80D of Income Tax Act 1961.

Tax Deductions for Self and Family under Section 80 D of Income Tax Act, 1961

1. Deduction for Health Insurance Premiums paid for Self, Spouse, and Dependent Children aged below 60 years: Up to Rs25,000 per annum.
2. Deduction for Health Insurance Premiums paid for Self, Spouse, and Dependent Children, if any of them is a Senior Citizen (60 years and above): Up to ₹50,000 per annum.
3. Section 80D of the Income Tax Act 1961 Deduction for health check-ups up to Rs5,000 per annum (included within the overall limits mentioned above)

Tax Deductions for Parents under Section 80 D of Income Tax Act, 1961

1. Section 80D of the Income Tax Act 1961 allows deduction for Health Insurance Premiums paid for Dependent Parents aged below 60 years up to Rs25,000 per annum.
2. Section 80D of the Income Tax Act 1961 allows deduction for Health Insurance Premiums paid for Dependent Parents who are Senior Citizens (60 years and above) up to Rs50,000 per annum.

Tax Deductions for Medical Expenses of Senior Citizens under Section 80D of Income Tax Act, 1961

Section 80 D of Income Tax Act, 1961 allows for Deductions for Medical Expenses for Senior Citizens provided that the person claiming deduction for medical expenses has no health insurance policy in force. Following deductions are allowed for Medical Expenses under Section 80D of the Income Tax Act, 1961

1. Section 80D of the Income Tax Act 1961 allows deduction for Medical Expenditure incurred on Self, Spouse and Dependent Children aged 60 and above years without any medical insurance up to Rs50,000 per annum.
2. Section 80D of the Income Tax Act 1961 allows deduction for Medical Expenditure incurred on Parents aged 60 years and above without any medical insurance up to Rs50,000 per annum.

What Are Preventive Health Check-ups under Section 80D?

Preventive Health Check-Ups aim to detect illnesses early and lower risk factors. The Government has introduced tax deductions on Health Check-Ups under Section 80D of the Income Tax Act to encourage proactive health monitoring. The Taxpayer can claim tax benefits on payments made for check-ups for Self, Spouse, Children, and Parents.

Section 80D of the Income Tax Act 1961 allows a deduction of up to Rs5,000 per fiscal year for preventive health check-ups. However, this deduction falls within the overall limit specified, which is Rs 25,000 for individuals and Rs 50,000 for senior citizens.

Deductions under Section 80D of Income Tax Act, 1961

The Deduction under Section 80D of the Income Tax Act is available to Individuals and Hindu Undivided Families (HUFs) and the Premium can be paid by any mode other than cash to claim the deduction. It’s important to note that these deductions are subject to change based on amendments made by the government from time to time.

The table below shows a breakdown of the Total Tax Deductions available under Section 80D of the Income Tax Act, 1961:

Note: In the above example, the total deduction applicable for Self, Spouse, and Children is limited to Rs25,000, even though the actual expense is Rs 45,000. Similarly, the total deduction for Senior Citizen Parents is limited to Rs 50,000, despite the actual expense is Rs 62,000.

Tax Deduction for Multi-year Health Insurance Policies under Section 80D of Income Tax Act, 1961

Many times, people by multi-year Health Insurance Policies by making lumpsum premium payments in order to avail discounts. If Insurance Premiums are paid in a lumpsum at the time of purchasing the Health Insurance Policy, Policyholders can claim proportionate tax deductions under Section 80D of the Income Tax Act.

However, just like a single year policy, the premium payments towards multi-year policies are subject to the overall Section 80D deduction limit of Rs25,000 for Individuals and Rs50,000 for senior citizens.

Tax Deduction Under Section 80DD (Treatment of a Dependent with Disability) under Section 80D of Income Tax Act, 1961

Under Section 80DD of the Income Tax Act, individuals are eligible to claim a tax deduction of up to Rs75,000 from the Gross Total Income per financial year for medical expenses incurred in the treatment of a Dependent with a Disability. For severe disabilities of 80% or more, the deduction limit increases to Rs1,25,000 per financial year. To avail these deductions, a medical certificate of disability from a medical authority is required when filing income tax returns. Additionally, tax deductions under Section 80DD can be claimed for annuity or lump sum payments made to LIC or any insurer for maintaining the health of the dependent person with a disability.

Deduction Under Section 80DDB (Treatment of Specified Illnesses) under Section 80D of Income Tax Act, 1961

Under Section 80DDB of the Income Tax Act, individuals can claim a tax deduction of up to Rs 40,000 per financial year for medical expenses related to specified diseases such as malignant cancers, AIDS, chronic renal failure, dementia, and Parkinson’s Disease. For senior citizens, the deduction limit increases to Rs 1 lakh per financial year for the treatment of specific ailments. Proof of medical treatment from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist for a specified disease must be provided when filing income tax returns. Additionally, individuals can claim Section 80DDB deductions for medical expenses incurred on the treatment of Self, Spouse, Parents, Children, and Siblings.

Mode of Payments Eligible for Deductions Under Section 80D

Under Section 80D of Income Tax Act, a Taxpayer can make payments through the following modes to avail tax deductions:

Tax Saving Through Health Insurance Best Practices

1. Separate Insurance Policies for self and parents: If you have a separate Health Insurance Policy for yourself and your parents, you can claim deductions for both policies up to their respective limits.
2. Preventive health check-ups: Don’t forget to include the costs of preventive health check-ups when calculating your total deduction. These check-ups are subject to a limit of Rs5,000 within the overall limit.
3. No cash payments: Health Insurance Premiums paid by cash are not eligible for tax deduction.
4. Tax Deductions for HUFs: HUFs are also eligible to claim tax deduction under Section 80D of Income Tax Act, 1961

By following these best practices, a Policyholder can make the most of the tax benefits available while ensuring comprehensive Health Insurance Coverage for himself and his family.

Availing Tax Deductions Under Section 80D - Things to Remember

Here are important points to consider when claiming tax deductions under Section 80D:

1. If both, an Individual and parents have contributed to Medical Insurance Premiums, each can claim deductions for their respective contributions under Sec 80D.
2. Premiums paid for siblings, grandparents, uncles, and aunts are not eligible for tax deductions.
3. Premiums paid on behalf of employed children are not eligible for Sec 80D deductions.
4. Group Health Insurance Premiums paid by employers do not qualify for deductions.
5. The deduction should be claimed without considering the portion of service tax and cess included in the premium amount.

Need More Information on Section 80D Deductions for Health Insurance Premiums?

Understanding the various deductions available under Section 80D allows you to make informed decisions about your Health Insurance Policy and optimise the tax benefits. Learn more about Section 80D Deductions in Health Insurance by reaching out to us via email at insurance@qian.co.in or call us on 022-35134695. Our expert advisors are ready to guide you through the process and help you find the best Health Insurance Plan that suits your needs and maximizes your tax savings.