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Section 80D Deductions of the Income Tax Act


Section 80D Deductions of the Income Tax Act

Section 80D is a facility introduced in the Income Tax Act to allow taxpayers to claim a deduction for medical insurance premium paid. Claiming a deduction under this section reduces the tax burden of individuals by allowing a claim of deduction for up to Rs. 25,000 per year for medical insurance premium. Section 80D Deduction can be claimed on eligible medical insurance premium paid for the individual, spouse and dependent children. This article mentions the facts related to Section 80D of the Income Tax Act.

Eligibility Criteria

Deduction under section 80D can be availed by all taxpayers for making remittances of any premium or mediclaim policy availed in the name of:

  • The taxpayer himself
  • The spouse of the taxpayer
  • Dependent children of the taxpayer
  • Parents of the taxpayer

Non-dependent Children

Insurance payments for non-dependent children do not qualify as a deduction under this section, though the children are entitled to avail the deduction from their individual total income.

Group Health Policies

Group health policies are generally excluded from the ambit of Section 80D, except if the taxpayer is in possession of an independent health insurance policy in addition to the group health policy.

Multiple Health Insurance Policies

Taxpayers are allowed to claim tax exemptions for multiple health insurance policies by ensuring the satisfaction of the stipulated eligibility conditions and the consistent remittance of premiums for the existing insurance policies.

Treatments Availed Abroad

Treatments availed abroad by the taxpayers can be claimed as a deduction if endorsement from the respective insurance entity is available. However, the business enterprise from which the policy is availed should be registered with the Insurance Regulatory Authority of India.

Mode of Cash Payment

Deductions for medical insurance premiums can be claimed exclusively if the supposed amount of payment to the service was remitted by means of online banking, cheque draft, debit/credit cards, or any other online mediums. However, instalments remitted for any preventive health check-ups can be remitted through cash.

Income Tax Deduction for Health Insurance & Medical Expenses

The deduction under Section 80D can be claimed for health insurance premiums, contributions to the Central Government Health Scheme and expenses incurred for preventive health checkups. It’s very important to note that deduction can be claimed only for premiums or contributions paid through online banking, credit cards, debit cards, cheques or demand drafts. Only for preventive health checkups cash payments made by the taxpayer can be claimed as a deduction.

Income Tax Deduction for Health Insurance

Medical insurance can help taxpayers reduce the cost of treatment in case they fall sick or become injured. Medical insurance not only helps meet unexpected medical expenses but can also help save taxes under Section 80D. In case medical insurance is purchased for the taxpayer, spouse or dependent children, the maximum deduction allowed is Rs.25,000. In case any of the persons covered, including parents, are over the age of 60, then a tax deduction of up to Rs.30,000 can be claimed under Section 80D.

Central Government Health Scheme

Central Government Health Scheme provides comprehensive medical care to Central Government employees and Pensioners enrolled under the scheme. Central Government employees and their dependant family members residing in CGHS-covered areas can enrol under the scheme. In case contributions are made to the Central Government Health Scheme, a deduction of up to Rs.25,000 is permissible if the persons covered are below 60. If the contribution covers a taxpayer, spouse or parent above 60, a maximum deduction of Rs.30,000 can be availed.

Preventive Health Checkup

In addition to health insurance premiums paid or contributions to the Central Government Health Scheme, taxpayers can also claim deductions for expenses incurred for preventive health checkups. The Rs.50,000 deduction for health checkup under Section 80D is within the overall limit of Rs.25,000 or Rs.30,000.

Amount of Deduction

An individual paying health insurance premium for himself, spouse or dependent children is allowed a deduction for an amount which can extend up to a maximum of Rs.25,000. If the assessee is a senior citizen than the maximum amount of deduction available is Rs.50,000. An individual paying health insurance premium for parents is also allowed a deduction for a maximum amount of Rs.25,000. In case parents are senior citizens, then the allowable deduction would be Rs.50,000. Let us understand the provisions of this section readily in the tabular format as narrated below:

Particulars Details of Deductions Available Total Deduction
Premium paid for self, spouse or
dependent children
The taxpayer is allowed to avail a tax deduction of Rs. 25,000. Rs. 25,000
Premium paid for self, spouse or
dependent children and parents
For the taxpayer, spouse and children, a maximum deduction of Rs.25,000 can be availed.
Additionally, Rs.25,000 will be allowed for parents.
Rs. 50,000
Premium paid for self, spouse or
dependent children and senior citizen
For the taxpayer, spouse and children, a maximum deduction of Rs.25,000 can be availed.
Additionally, Rs.50,000 will be allowed for parents who are senior citizens.
Rs. 75,000
Premium paid for self (being senior
citizen), spouse or dependent children
and senior citizen parents
For the taxpayer, spouse and children, a maximum deduction of Rs.50,000 can be availed in case the taxpayer is a senior citizen.
Additionally, Rs.50,000 will be allowed for parents who are senior citizens.
Rs. 1,00,000

Features of Section 80D Deduction

  • In order to claim deduction under section 80D, any mode of payment of premium is acceptable provided the payment is routed through a bank. However, premium payment in cash is not allowable as a deduction under section 80D.
  • Deduction available under section 80D is over and above deduction available of INR 1,50,000 under section 80C.
  • An additional deduction of INR 5,000 is available on account of expenses for a health check-up. It includes health check-up of all the dependent members.
  • Deduction under section 80D is available on medical expenditure incurred by an assessee (Individual / HUF) on the health of super senior citizens (above 80 years of age) and senior citizens (between 60 and 79 years of age) provided no amount has been paid to effect or to keep in force an insurance on the health of the person. The deduction available for medical expenditure is subject to the overall limit of deduction under section 80D.

Benefits of Health Insurance under Section 80D

A health insurance policy is a shield that protects the taxpayer and family from any financial loss at the time of hospitalisation during a medical emergency. The insurer bears the treatment cost and ensures that the assessee avails the best medical assistance. The benefits of health insurance are listed below:

Cashless Hospitalisation

A health insurance policy offers the cashless hospitalisation facility at various multi-speciality hospitals nationwide, which offers a person cashless treatment. These empanelled hospitals are referred to as network hospitals of the insurance company.

Ambulance Charges

The ambulance expenses incurred in case the assessee comes across an unfortunate event like a medical emergency are covered by a health insurance policy. Generally, these policies cover the complete or a share of the ambulance expense.

Domiciliary Expenses

Apart from the treatment, the assessee may sometimes be asked to avail a domiciliary treatment such as physiotherapy treatment. The health insurance policy also covers the cost incurred for domiciliary treatments, subject to the policy norms.

Pre-existing Disease

A health insurance policy also provides coverage for certain pre-existing conditions. It also means that the policy additionally covers expenses incurred for the treatment of a disease that existed before buying the policy. A waiting period of 2 to 4 years may be applicable in case the assessee is suffering from pre-existing diseases. 

Pre and Post Hospitalisation

Apart from hospitalisation and ambulance expenses, there are several other expenses that occur when a person comes across a medical emergency. A health insurance policy takes care of these expenses. It covers both pre and post hospitalisation expenses for a certain period of time. This duration is clearly mentioned in the policy wordings.

Permissible Deductions

Under Section 80D of the Income Tax Act, an individual can claim a deduction for the following medical expenses incurred during the financial year:

  1. Medical insurance premium paid by the taxpayer through any mode of payment other than cash.
  2. Expenses incurred under any Central Government health schemes.
  3. Sum paid on account of preventive health checkups.
  4. Medical expenses incurred for the health of a senior or super senior citizen who is a dependant member belonging to the family of the taxpayer

Other Relevant Provisions

Provided below is an overview of the provisions which are relevant yet distinct from that of Section 80D:

Section 80DDB

This section entitles the taxpayers to avail a deduction of up to Rs. 1,40,000; the limit is bifurcated into Rs. 60,000 for senior citizens and Rs. 80,000 for super-senior citizens for undergoing treatment of specific diseases.

Section 80DD

This section provides the taxpayers with benefits ranging up to Rs. 75,000 for treatment of dependents with any disability. The deduction is calculated by considering the expenses incurred for nursing, training, medical treatment, preservation, and rehabilitation of the assessee’s dependents. The amount of deduction can scale up to Rs. 1.25 lakhs for extreme and serious disabilities. The dependents, in this case, could be parents, children, spouse or siblings. The benefit can be claimed by submitting a medical certificate that substantiates the cause of the disease.

Section 80U

While the Section 80DD is applicable for disabled dependents, a deduction under section 80U is provided for the taxpayers who are disabled. The benefit could be anywhere between Rs. 75,000 and Rs. 1.25 lakhs.

Section 17

Section 17 facilitates the tax deduction of employer’s remittances (from the employee’s salary) towards the treatment of ailments of family members. Family members in this context include self, spouse, children, siblings, and dependent parents. A deduction of up to Rs. 15,000 can be obtained under these provisions in a financial year.

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