Section 80D of Income Tax Act: Save Tax on Health Insurance

Section 80D of the Income Tax Act allows individuals to receive deductions on health insurance premiums that they pay for their own, their spouse's, children's, and parent's health insurance policies. The maximum deduction amount varies based on the age of the insured individual and the type of policy. This section encourages individuals to invest in health insurance for themselves and their loved ones.

What is Section 80D of the Income Tax Act?

Section 80D of the Income Tax Act provides tax deductions for expenses related to health insurance and maintaining health. It allows individuals to claim deductions on medical insurance premiums paid for themselves, family members, and parents. The deductions vary based on the age of the individuals covered and the premiums paid. 

Who is Eligible for Deduction Under Section 80D? 

Tax deductions under Section 80D of the Income Tax Act, 1961 in India are only available to individuals and Hindu Undivided Families (HUFs). This section allows individuals to claim deductions from their taxable income for various medical expenses.

• Health insurance premiums are paid for themselves, their spouse, dependent children, and parents.

• Preventive health check-ups for themselves and their family members.

Get Tax benefits up to Rs. 75,000* Under Section 80D: Contact Our Expert!

What Deduction & Limit Is Allowed Under Section 80D?

Section 80D of the Income Tax Act, of 1961 allows deductions for two categories of expenses related to medical care Health Insurance Premiums, and Preventive Health Check-ups.

• Up to Rs. 25,000 per financial year for premiums paid for yourself, spouse, and dependent children.

• Up to Rs. 50,000 per financial year if the insured person (yourself, spouse, or parents) is aged 60 years or above.

• Up to Rs. 5,000 per financial year for yourself and your family members.

Tax Deduction for Health Insurance Premium Paid for Parents Under Section 80D

When it comes to tax deductions under Section 80D, health insurance premiums paid for parents are eligible for up to Rs 25,000 per financial year. If either or both parents are senior citizens, the maximum tax deduction increases to Rs 50,000 per financial year.

For example: Let's consider the case of Jitendra, who bought a health insurance policy worth Rs 53,000 for his elderly parents, aged 62 and 58. In this scenario, Jitendra is eligible for a tax deduction of Rs 50,000 on the health insurance premium paid for his parents.

Get Additional Coverage for Existing Health Insurance at Low Cost: Buy Health Insurance!

Deduction Under Section 80D for Multi-year Health Insurance Premiums Paid in Lump Sum

Many individuals choose to purchase multi-year health insurance policies to take advantage of the discounts offered by insurance companies for long-term policies. By paying the premiums for multiple years in a lump sum at the time of purchasing the policy, policyholders are eligible for tax deductions under Section 80D of the Income Tax Act.

However, it is important to note that tax deductions on multi-year health insurance premiums are limited by the overall Section 80D cap of Rs 25,000 for individuals and Rs 50,000 for senior citizens. 

For example, if someone like Mohit pays Rs 45,000 for a 3-year health insurance policy, they can claim Rs 15,000 per financial year as tax deductions under Section 80D.

Preventive Health Check-ups under Section 80D

Section 80D of the Income Tax Act in India offers tax benefits for preventive health check-ups. This provision aims to encourage individuals to prioritize their health and well-being by making preventive healthcare more accessible and affordable.

• Deduction amount: You can claim a tax deduction of up to Rs. 5,000 per financial year for preventive health check-ups for yourself and your family members (spouse, dependent children, and parents).

• Overall limit: This deduction is within the overall limit under Section 80D, which is Rs. 25,000 for individuals below 60 years old, and Rs. 50,00 allocated for individuals aged 60 years and older.

• Eligibility: You can claim the deduction for preventive health check-ups conducted by registered medical practitioners or registered medical institutions.

• Documents required: To claim the deduction, you need to have the prescribed form from the doctor or institution and the payment receipt.

Mode of Payment Under Section 80D

Under Section 80D of the Income Tax Act, 1961, only payments made through non-cash modes are eligible for deduction. This means you cannot claim deductions for expenses paid in cash.

Acceptable payment modes for availing tax benefits under Section 80D:

• Online payment: This includes payments made through your bank's website, mobile app, or any other online payment gateway.

• Cheque: Payments made using a cheque drawn on your bank account are valid.

• Credit card: Using your credit card to pay for health insurance premiums or preventive health check-ups allows you to claim the deduction under Section 80D.

• Debit card: Similar to credit cards, deductions are applicable for payments made using your debit card.

Maximize Tax Benefits up to Rs. 75,000* under Section 80D: Contact our Experts!

Difference Between Section 80D vs 80C

Here is the comparison between Section 80D vs 80C which we talked about its definition, maximum tax deduction limit, and scope of tax benefits.

Things to Remember When Availing Tax Deductions Under Section 80D

Here are some important things to remember when availing tax deductions under Section 80D such as eligibility, deductible expenses, deduction limits, etc.

• Understand Eligibility: Only individuals and Hindu Undivided Families (HUFs) are eligible for this deduction.

• Know the Deductible Expenses: Deductions are allowed for health insurance premiums paid for yourself, spouse, dependent children, and parents, as well as preventive health check-ups for yourself and your family members.

• Be Aware of Deduction Limits: The maximum deduction amount varies depending on your age and the type of expense. It's currently Rs. 25,000 per year for individuals below 60 and Rs. 50, 000 for senior citizens who are 60 years old and above.

• Maintain Proper Documentation: Keep all relevant documents like premium payment receipts, medical bills, and certificates from doctors for preventive check-ups, as they might be required when filing your tax return.

• Claim for Dependents: You can claim deductions for health insurance premiums paid for your spouse, dependent children, and parents.

• Consider Senior Citizen Benefits: If you are a senior citizen (aged 60 and above), the deduction limit for health insurance premiums increases to Rs. 50,000 per year.

• Choose the Right Policy: Ensure the health insurance policy you choose qualifies for tax deductions under Section 80D. Some health insurance policies may not meet eligibility requirements.

• Pay Premiums Through Valid Modes: The deduction is only available for premiums paid through non-cash modes like online payment, cheque, or credit card. Cash payments are not eligible.

Conclusion 

In conclusion, Section 80D of the Income Tax Act provides valuable tax benefits to individuals and HUFs who purchase health insurance policies for themselves, their spouses, and dependent children. With deductions for premiums paid, preventive health check-ups, and medical expenses, this section encourages taxpayers to prioritize their health and well-being while also saving on taxes.