What is Section 80D of Income Tax Act: Deductions for Medical & Health Insurance
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.
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.
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.
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.
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
| Premium Paid for Self, Family & Children (Rs.) | Premium Paid for Parents (Rs.) | Section 80C Deduction (Rs.) | |
| HUF members | 25,000 | 25,000 | 25,000 |
| Individuals and parents below 60 years of age | 25,000 | 25,000 | 50,000 |
| Individual & family below 60 years, but parents above 60 years | 25,000 | 50,000 | 75,000 |
| Individual, family and parents above 60 years | 50,000 | 50,000 | 1,00,000 |
| NRI | 25,000 | 25,000 | 25,000 |
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.
| Section 80C | Section 80D |
| This section provides deductions up to Rs. 1.5 lakh per year. | Under this section of the Income Tax Act, individuals can claim deductions of up to Rs. 1,00,000. However, this is subject to different conditions. |
| This includes investments in an extensive range of financial instruments, such as small savings schemes, mutual funds, life insurance premiums, and more. | This is specifically meant for deductions in relation to health insurance premiums paid during a year. |
Things to Consider 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 and insure yourself and your loved ones today!
FAQs
Ans: Yes, individuals will be able to claim tax benefits under Section 80D even if his/her spouse is not dependent. However, they have to pay health insurance premiums on their spouse’s behalf.
Ans: No, individuals will not be able to claim tax deductions on medical insurance premiums if they are paid in cash.
Ans: Individuals have to pay the service tax amount in addition to the health insurance premium amount. They can’t claim this amount as tax deductions.
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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.
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