Income Tax deductions under 80D

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Health is wealth – you would have heard this umpteen number of times at different points of time and in this day and age, this adage is all the more relevant.

Purchasing medical insurance to protect one’s financial resources while safeguarding one’s health is an option that more and more people are resorting too. The addition to your investment portfolio has an added benefit – one can avail tax deductions under Section 80D of the Income Tax Act.

Tax deductions based on Section 80D in Income Tax Act

Section 80D allows the taxpayer an upper limit of INR 25,000 per annum for claiming deductions. This is for the premium that the taxpayer has to pay toward the medical insurance of oneself, his or her spouse and dependent children. If the taxpayer is aged 60 years or above, then the limit will be extended to INR 50,000.

Deductions on preventive health check-ups

Within the aforesaid limit of INR 25,000, the tax payer can claim a maximum of INR 5,000 per annum for preventive health check-ups.

Deductions on premiums for your parents’ health insurance

The taxpayer also has the option of availing this benefit for an additional INR 25,000 for his or her parents or guardian. If these beneficiaries happen to be a senior citizen, then the maximum limit will be extended to INR 30,000 (inclusive of INR 5,000 for annual preventive health check-ups).

Covered individuals

Exemption limit (in INR)

Health check-up included (in INR)

Total deduction (In INR)

Self and family

25,000

5,000

25,000

Self, family and parents

50,000

5,000

55,000

Self, family and senior citizens

55,000

5,000

60,000

Self (senior citizen), family and senior citizen parents

60,000

5,000

65,000

 

No tax benefits on cash payments

If the premium amounts are paid in terms of cash, then the benefit under Section 80D cannot be availed. The payment has to be made through online banking, cheque, draft, credit or debit card. Let is understand how this works with the help of examples.

Illustration 1:

 

Suresh’s household consists of his mother aged 65 years, his spouse aged 33 years and one child aged 10 years. Suresh is 37 years himself. He has a family floater health insurance that covers his wife, child and himself and other insurance for his mother. The yearly premium for the former is INR 15,000 and for the latter is INR 20,000. Suresh has also paid INR 15000 for his check-up and INR 7000 for his mother’s annual check-up.

Expense

Actual expense (in INR)

Deduction applicable (in INR)

Health insurance premium under family floater policy

15,000

15,000

Preventive health check-up for self

15,000

5,000

Health insurance premium for senior citizen

20,000

20,000

Preventive health check-up for senior citizen

7,000

5,000

Total deduction available

57,000

45,000

 

There is a shortfall of INR 12,000 between the deduction and the actual expenses incurred, but the amount saved is significant.

Illustration 2:

Soumya’s household consists of his father aged 95 years and two dependent children aged 25 and 23 years. Soumya is 60 years herself. He has a family floater health insurance has a yearly premium for the former is INR 27,000. Her father too has a medical insurance policy with INR 35,000 for her aged parent. Suresh has also paid INR 15000 for his check-up and INR 7000 for is mother’s annual check-up.

Expense

Actual expense (in INR)

Deduction applicable (in INR)

Health insurance premium under family floater policy

27,000

27,000

Preventive health check-up for self

15,000

5,000

Health insurance premium for senior citizen

35,000

30,000

Preventive health check-up for senior citizen

7,000

5,000

Total deduction available

84,000

67,000

 

There is a shortfall of INR 17,000 between the deduction and the actual expenses incurred, but the amount saved is significant.

What is the limit on deductions under Section 80D?

The deduction limits under this section are as follows -

Covered individuals

Exemption limit (in INR)

Health check-up included (in INR)

Total (in INR)

Self and family

25,000

5,000

25,000

Self, family and parents

50,000

5,000

55,000

Self, family and senior citizens

55,000

5,000

60,000

Self (senior citizen), family and senior citizen parents

60,000

5,000

65,000

 

Deduction on health insurance premiums for super-senior citizens

Super senior citizens can claim up to INR 30,000 every financial year toward medical treatment and check-ups.

If one of your parents is a super senior citizen and does not have an insurance policy and the other parent is a senior citizen, then you, as the taxpayer, can claim a deduction of INR 30,000 towards medical treatment for either of them.

Conclusion

Group health insurance policies by employers, service tax and cess paid on premium payment etc are not included for deductions under Section 80D. Get a complete understanding of how this section operates and use it effectively to save on your taxes.

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