Medical Emergencies always take us by surprise so it is always better to be safe than sorry and it is no different when it comes to Health Insurance.A large part of the Indian Population is not covered under Health Insurance and depends on their savings and borrowings for medical emergencies.The Government encourages everyone to buy Health Insurance by allowing Tax Deductions under Section 80D.
What is Section 80D?
Every Individual or HUF is eligible to claim a deduction from their total income for medical insurance premiums under Section 80D.The benefit for Health Insurance premium is available not only for Self but also for policies to cover spouses, or dependent children or parents.Also this deduction is over and above the deduction of Section 80C.
Who is eligible for Deduction under Section 80D?
Individual or HUF Taxpayers, where insurance is availed for:
- Dependent Children
Payments eligible as Deduction under Section 80D
- A Medical Insurance premium is paid for self, spouse, dependent children or parents.
- Expenditure incurred on preventive health check-ups
- Medical Expenditure incurred on the health of a senior citizen(Age 60 years and above)
- Any contribution to the Central Government Health Scheme or any other scheme is notified by the government.
Deduction available under Section 80D
The Deduction allowed under Section 80D is Rs 25,000 in a financial year.However, in the case of Senior Citizens, the limit is raised to Rs 50,000.
- An Individual can claim a deduction of up to Rs 25,000 for the insurance of self, spouse or dependent children.
- An additional/separate deduction of Rs 25,000 for parents’ insurance is also allowed if they are less than 60 years of age, or Rs 50,000 if above 60 years of age.
- However, if both the Taxpayer and parents are aged more than 60 years, the maximum deduction that can be availed is Rs 1, 00,000.
- HUF can claim a deduction under Section 80D for mediclaim for any of the members.
- The deduction will be Rs 25,000 if the member is less than 60 years of age and Rs 50,000 if the insured is more than 60 years of age.
What is a preventive health check-up under Section 80D?
The main idea behind a preventive health check is to identify any illness and mitigate any risks due to early detection and treatment. This concept was introduced by the Government in 2013-14 to increase awareness of health.
Section 80D includes a deduction of Rs 5,000 made towards a preventive health checkup. This is within Rs 25,000 or Rs 50,000, as the case may be.
This deduction can be claimed by the taxpayer himself, spouse, dependent children or parents. Also, the payments can also be made in Cash.
Single-Premium Health Insurance Policies
Under the new provisions introduced by Budget 2018, where a taxpayer has made a lump-sum premium payment in a single year for a policy valid for more than one year, he can claim a deduction under Section 80D.
Such a deduction can be arrived at by dividing the lump sum payment by the number of years of the policy. However, this again would be subject to the limits of Rs 25,000 or Rs 50,000 as the case may be.
Points to be remembered at the time of purchase of Health Insurance for claiming deduction under Section 80D
- A Medical insurance premium paid for any person other than Self, Spouse Dependent Children or Parents is not eligible for Deduction for taking Tax Benefits
- Premiums paid on behalf of Working Children cannot be taken for Tax Benefits.
- In case of a part payment by the Taxpayer and a Parent, each is eligible for deduction to the extent of such payment.
- The deduction to be taken should only comprise the Gross element of Premium paid.
- Group Health Insurance premium provided by the company is not eligible for deduction
- Premium paid by any mode other than Cash is eligible for Deduction. Hence premium paid by online mode or Credit Cards is eligible for deduction.
Which Document is needed for preventive health checkup deduction under Section 80D?
The Income tax department does not require submitting any document / receipt for claiming the deduction while filing ITR.However, it is advisable to retain receipt of Insurance premium/ proof of payment for your own records.
Deduction under Section 80DDB (Treatment of Critical Illnesses)
A Health Insurance Policy also provides tax deduction up to Rs 40,000 and Rs 60,000 for senior citizens and up to Rs 80,000 for very senior citizens (80 years and above) . There are some specific types of illnesses covered under the list of Rule 11DD under this Section.
Such a deduction can be availed for:
Deduction under Section 80DD (Treatment of specified diseases)
Treatment expenses of a disabled dependent (Spouse, Parents, Children and Siblings) are eligible for a deduction of up to Rs 75,000 under this Section.Also, expenses incurred for Nursing, Medical Treatment, Rehabilitation and Maintenance of a dependent with a severe disability is also eligible for a deduction up to Rs 1, 25,000. Premiums paid for Health Insurance of Siblings are not eligible for deduction. Also, premiums in any mode other than cash are eligible for deduction under the Act.
FAQS How much Tax we can Save on Health Insurance
1:What is Section 80D?
Section 80D under the Income Tax Act,1961 provides a deduction for medical insurance premium paid for self, spouse and dependent children.
2:Can I claim a deduction for parents?
Yes you can avail of this deduction for your parents, spouse and dependent children.
3:Is 80D the same as 80D?
Yes the deduction is different from 1.5 lakhs of deduction of Section 80C and is available up to Rs. 65,000 subject to conditions.
4: How much deduction is available?
The maximum amount is Rs. 65,000 subject to conditions.