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Deduction Under Section 80D

Most of us must have asked ourselves a number of times- ‘What is Section 80D? Let’s try and answer that for you.

Section 80D of the Income Tax Act, 1961 relates to the tax deductions on medical insurance. This section lets you receive tax deductions on premiums made for medical insurance to secure yourself and your family members. Section 80D also offers deductions over and above the exemptions derived from the more popularly known Section 80C.

Section 80D Deductions

As we’ve already mentioned, Section 80D will only help you receive tax deductions on medical insurance premiums. The deductions allowed are:

Deductions for Family and Self:

  • A deduction allowed for self and family (Spouse, dependent children) is a maximum amount of Rs.25,000 per year on health insurance premium

  • A deduction allowed if you are a senior citizen is a maximum amount of Rs.50,000 per year

Deductions For Parents:

  • Maximum deduction of Rs.25,000 per year on health insurance premium paid on behalf of parents.

  • Maximum deduction of Rs.50,000 per year on premium payments for senior citizen parents.

Note: This deduction is in addition/ over and above the maximum deduction allowed for an individual and his family.

Additional Deductions:

  • A yearly deduction on expenses related to health check-ups of Rs.5,000 can be claimed. This limit is inclusive of the check-up expenses of all members in a family, including spouse, kids and parents and forms part of the applicable deduction limit.

Union Budget 2018

The Union Budget 2018 was announced on 1 February, by Finance Minister, Arun Jaitley. Mr. Arun Jaitley proposed a hike in the limit of tax deduction on health insurance premium. This was proposed to be revised from Rs.30,000 to Rs.50,000 under Section 80D of the Income Tax Act, 1961, for all senior citizens.

Primarily, Budget 2018 is focused on taking care of senior citizens, women, and farmers of the country. In order to help senior citizens lead a dignified life in their later years, the Government of India has come up with certain provisions for tax deductions on health insurance premiums and medical expenses. This is applicable for citizens between the ages of 60 to 80 years. This increase in tax deductions on premiums paid toward any health insurance policy for a senior citizen aims to benefit senior citizens along with anyone who pays health insurance premiums on behalf of a senior citizen, be it a parent or a spouse.

Eligibility Criteria for Tax Benefits under Section 80D

An individual taxpayer is eligible to claim deductions under section 80D. The health insurance premium paid for the family members listed below are eligible for deductions:

  • Self

  • Spouse

  • Dependent Children

  • Parents

Hindu Undivided Families are also eligible to claim deductions under this section. The premium payments of any member in a Hindu Undivided Family can be used for tax deductions, which is however, subject to upper limit as per the act.

Section 80D Limit

A taxpayer, according to Section 80D, is eligible to claim deductions on health insurance premiums paid for self or his family and parents, exclusive of the deductions on expenses related to health check-ups. The overall deduction limits are as follows:

Persons CoveredExemption Limit (in Rs.)
Self and Family25,000
Self and Family along with Parents25,000 + 25,000 = 50,000
Self and family along with senior citizen parents25,000 + 50,000 = 75,000
Self (Senior Citizen) along with senior citizen parents50,000 + 50,000 = 1,00,000

Example

Let’s understand this concept with an example. Consider you are 60 years old and end up paying a yearly premium of Rs.32,000 for yourself and your dependents. Moreover, you are also paying a health premium of Rs.35,000 for your parents’ policy, who are currently 80 years old. As per the terms of Section 80D, you are eligible for the following:

  • Tax deduction of Rs.32,000 paid as health insurance premium for you and your dependents.

  • If your parents are senior citizens, then the tax deduction is of Rs.35,000.

  • The tax deduction that can be claimed is Rs.67,000, in totality, out of the overall premium payment of Rs.67,000.

It is imperative to note that the maximum tax deduction which can be claimed is subject to the provisions under Section 80D of the Income Tax Act, 1961. Always consult an expert to get the most out of the tax saving provisions.

Difference between Section 80D and 80C

Sometimes, Section 80D is confused with its more popular Section 80C, and for obvious reasons. While Section 80C provides deductions up to Rs.1.5 lakhs per annum, Section 80D allows for deductions from Rs. 25,000 to Rs. 1,00,000 subject to certain conditions. Another major differentiating factor is the inclusion of investments in Section 80C which are made in a wide range of financial instruments such as life insurance premium, mutual funds, small savings schemes etc. On the other hand, Section 80D is exclusively meant for deductions on health insurance premiums paid.

Mediclaim Deductions under Section 80D

Under Section 80D, deductions of Mediclaim happens in order to keep your insurance policy active. This insurance policy could either be for the policyholder or for the spouse of the policyholder. Mediclaim is vital as it is a great means to take care of your medical bills, just in case you fall ill and require medical assistance.

FAQs for Section 80D

What happens in case my spouse and parents are not dependent on me?

Even in such a scenario, you can claim deductions if premiums are paid by you.

Are cash payments for premiums eligible for deductions?

Unfortunately, you cannot claim deductions on premiums paid through cash.

Can I claim deductions on premiums paid on behalf of my working children?

Unfortunately, deductions on premiums can only be claimed if the premium is paid for dependent children. Hence, you cannot claim deductions on premiums paid on behalf of working children.

Is the service tax I paid on my health insurance premium eligible for deductions?

Usually, service taxes are paid over and above the premium amount and collected by respective agencies. Therefore, this amount cannot be claimed as deductions.

Am I eligible to claim health check-up deductions for all dependents?

Health check-up deductions can be claimed only up to Rs.5,000, which also includes the dependents in the family. This deduction isn’t available separately for each individual.

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