What is Section 80D of Income Tax Act: Deductions for Medical & Health Insurance

Income Tax

Section 80D of the Income Tax Act, 1961, offers health insurance policyholders tax benefits to reduce yearly income tax liabilities. This provision is applicable to the premium amount paid by the policyholders towards their health insurance policies for themselves and their family members.

How much tax deduction can you claim? What is the eligibility criteria? Are there any limits to Section 80D? This post answers all questions relating to Section 80D. Keep reading! 

What is Section 80D of the Income Tax Act?

As per Sec 80D of the Income Tax Act, taxpayers can claim tax deductions on health insurance premiums. Benefits under Section 80D are applicable even after claiming exemptions under Section 80C. 

Note: Section 80C offers tax exemption of up to Rs. 1.5 lakh from total taxable income. It is applicable to various investments like life insurance, 5-year FD, tuition fees paid towards the education of 2 children, etc.

Simply put, the health insurance premium that individuals pay for themselves or their family members is subtracted from their taxable income. This, in turn, reduces their tax liability. 

Deductions on Preventive Health Check-Ups under Section 80D 

Considering three different scenarios, Section 80D deductions are as follows:

• In case of self and family

The maximum amount of deduction that individuals can claim on health insurance policy premiums for themselves and their family members (spouse, dependent children) is Rs. 25,000 per year. However, if the taxpayer is a senior citizen, the maximum amount will be Rs. 50,000 every year. 

• In case of parents

A maximum of Rs. 25,000 per year will be available as a tax deduction on health insurance premiums if an individual pays the amount on behalf of his/her parents (below 60 years of age). Nevertheless, if the parents are senior citizens, the highest amount of tax deduction that one can claim for a year is Rs. 50,000. 

• Further deductions 

Individuals will be able to claim a deduction of up to Rs. 5,000 each year in relation to the expenses incurred for health check-ups. Note that this amount includes the preventive medical check-up expenses of all family members, including dependent children, parents, and spouse. 

Eligibility Criteria for Deductions under Section 80D

As per Section 80D, individual taxpayers are eligible for this tax benefits on health insurance. They can pay health insurance premiums for themselves and the following family members to claim deductions:

• Self
• Spouse
• Dependent Children
• Parents

Deduction Limit Under Section 80D

Example of Total Tax Deduction under Section 80D 

Let’s understand the concept of Tax deduction with the help of this example:

Suppose Ravi, who is above 60 years of age, is paying Rs. 30,000 annually as a premium for health insurance on behalf of himself and his family members. Moreover, he pays Rs. 33,000 for his parents’ medical insurance plan separately. Note that both of his parents are above 60 years of age. 

According to Sec 80D, Ravi will be able to claim the following exemptions on his taxable income:

• Tax deduction of Rs. 25,000 on the Rs. 30,000 that he paid as a health insurance premium for himself and his family members. 
• Tax deduction of Rs. 33,000 on the entire amount paid for his parents’ medical insurance policy.

Thus, the overall tax deduction amount that he can claim per year is Rs. 58,000.  

Difference between Section 80C and 80D

Individuals often tend to confuse Section 80C with Section 80D of the Income Tax Act. So here are two key distinguishing points between the two. 

Points to Remember at the time of Buying Health Insurance

To be able to claim tax deductions under Section 80D, you must remember the following points at the time of buying a health insurance plan:

• If your children are working, you cannot claim tax benefits for paying their health insurance premium.
• Group health insurance premium paid by a company is not eligible for tax deductions. 
• A medical insurance premium paid for an aunt, uncle, siblings, grandparents or any other relatives cannot be claimed under Section 80D.
• If you and one of your parents have made a part payment, you and your parent can claim a tax deduction under Section 80C.
• The deduction must be claimed minus the cess and service tax. 
• Premium paid in cash, card or online transfer is allowed for deduction.

Final Word 

For taxpayers, opting for health insurance policies can be an excellent way to reduce their tax liability.  Also, having health insurance coverage can bail one out financially in case of a medical emergency. That said, individuals must make sure to choose a health insurance provider that offers the best facilities. 

Navi provides health insurance policies to individuals in less than two minutes. Furthermore, it offers cashless claims through a network of more than 10,000 hospitals all over India in 20 minutes. Download the Navi app on Android or iOS and insure yourself and your loved ones today!

FAQs on Section 80D 

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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.