Medical and Health Insurance Expense Deductible under Income Tax
Medical and Health Insurance Expense Deductible under Income Tax
Medical and health insurance expenses incurred by a taxpayer are covered by the tax deduction benefits offered under Section 80D 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. The deduction under Section 80D is allowed from the gross total income of the taxpayer in relation to the eligible medical expenses. This article describes the provisions available in 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
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:
- Medical insurance premium paid by the taxpayer through any mode of payment other than cash.
- Expenses incurred under any Central Government health schemes.
- Sum paid on account of preventive health checkups.
- Medical expenses incurred for the health of a senior citizen (between 60 and 80 years of age) or a super senior citizen (above 80 years of age) who is a dependent member belonging to the family of the taxpayer
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 more easily 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 parents |
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 |
The taxpayer should note that the above amounts are only ceiling limits and not the deductions that should be actually applied. The actual amount of deduction allowed will be the applicable ceiling limit or the actual amount of expenditure incurred on medical treatment, whichever is less. To claim the deduction under this section, the expenditure in question should have been settled through any mode other than cash. Only payments made through banks will be considered for providing a deduction under this section. Deductions can be allowed only on payment basis and not accrual basis.
Expenses of Self, Spouse and Children
The specified medical and health insurance can be deducted from gross total income. The maximum deduction allowed under Section 80D is subject to the prescribed limit corresponding to each of the specified items. Hence, a maximum deduction of up to Rs.25000 can be claimed by regular taxpayers. A maximum deduction of Rs.30,000 can be claimed if the expenditure included expenses on medical treatment of a senior citizen.
Health Insurance Premium
Regular taxpayers can claim a deduction on health insurance premium of up to Rs. 25,000. In case the health insurance premium covered a senior citizen or super senior citizen, then a deduction of Rs.30,000 can be claimed.
Contribution to Government Health Scheme
If the taxpayer made a contribution to the Central Government Health Scheme or any other notified scheme, then a deduction of up to Rs.25,000 can be claimed.
Medical Expense
In terms of medical expense incurred on preventive health checkup, a deduction of up to Rs.5000 can be claimed by regular taxpayers. In case of medical expenditure for a super senior citizen who is not covered under health insurance, a deduction of up to Rs.30,000 can be claimed.
Expenses of Parents
In addition to claiming the deduction of medical or health insurance expenses incurred for self, spouse or children, taxpayers can also claim an income tax deduction for expenses incurred for parents.
Health Insurance Premium for Parents
Taxpayers can claim a deduction of up to Rs.25000 when the health insurance premium is paid to cover a parent. Deduction of up to Rs.30,000 can be claimed under Section 80D when the health insurance premium is paid for covering a Senior Citizen or Super Senior Citizen.
Medical Expense of Parents
Taxpayers can claim an aggregate maximum deduction of up to Rs.5000 when medical expenditure is incurred for preventive health checkup for parents. In case of medical expense for parents who are not covered under health insurance, a maximum deduction of up to Rs.30,000 is allowed under Section 80D.
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. Online payment methods are also accepted. 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 80 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.
To know about the Senior Citizen Identity Card, click here.
