Section 80D of Income Tax Act - Tax Deductions and Limits

By Okbima 13 Dec 2023
What-is-Section-80D

 

Section 80D of the Income Tax Act, 1961, provides tax deductions on premiums paid for medical insurance. It is designed to offer financial relief to taxpayers who invest in health insurance policies for themselves and their families, encouraging a broader coverage for health-related expenses. 

Under Section 80D, individuals can claim deductions for premiums paid for self, spouse, dependent children, and parents. The amount of deduction varies based on the age of the insured and whether the parents are senior citizens. 

 

What is Section 80D of the Income Tax Act?

Section 80D of the Income Tax Act, 1961, tax deductions related to health insurance premiums paid by an individual or a family. It allows taxpayers to claim a deduction on premiums paid for health insurance for themselves, their spouse, dependent children, and parents. The limit for this deduction is set at INR 25,000 for individuals below 60 years of age and INR 50,000 for senior citizens, which includes an increased limit for insuring elderly parents.

 

Who is Eligible for Tax Deduction Under Section 80D?

In India, under Section 80D of the Income Tax Act, 1961, individuals and Hindu Undivided Families (HUFs) are eligible for tax deductions for the premiums paid on health insurance policies. Here's a breakdown of who is eligible for the deduction under Section 80D of the Income Tax Act:

• Individual Taxpayers: Individual taxpayers can claim this deduction for insurance premiums paid for themselves, their spouses, dependent children, and parents (whether dependent or not). The limits on the deductions vary based on the age of the person insured:

• Hindu Undivided Family (HUF): A HUF can claim a deduction for a health insurance premium paid on behalf of any member of the HUF. The same age-related limits as mentioned above for individual taxpayers apply here.

 

What Deductions are Allowed Under Section 80D of the Income Tax Act?

Under Section 80D of the Income Tax Act, taxpayers are allowed to claim deductions for premiums paid for medical insurance for themselves and their family members.

• Health Insurance Premium: Deductions are allowed for premiums paid for self, spouse, children, and parents.

• Preventive Health Check-ups: Payments made towards preventive health check-ups are eligible for deductions.

• Medical Expenses for Senior Citizens: Deductions can be claimed for medical expenses incurred on maintaining the health of senior citizens.

• Contributions to Government Health Insurance Schemes: Deductions are allowed for contributions made to any government health insurance scheme.

 

Tax Deduction Limit Under Section 80D of the Income Tax Act

Below we have mentioned the Tax Deduction Limit Under Section 80D of the Income Tax Act that you can look to get the exact deduction amount you can claim.

• Health Insurance Premiums: Tax deduction of up to Rs 25,000 per financial year is allowed on health insurance premiums for individuals below 60 years.

• Preventative Health Check-ups:  An additional deduction of Rs 5,000 is allowed for expenses incurred on preventative health check-ups. The combined deduction for premiums and health check-ups is capped at Rs 25,000 or Rs 50,000, depending on the age of the taxpayer.

• Senior Citizens (Aged 60 and Above): For individuals aged 60 and above (senior citizens), the deduction limit is extended to Rs 50,000 for both insurance premiums and health check-ups.

• Hindu Undivided Families (HUF): Members of HUF can claim tax deductions of Rs 25,000 if the policyholder is below 60 years and Rs 50,000 if the policyholder is a senior citizen.

 

Lets understand with an example: If an individual below 60, like Dinesh, pays a health insurance premium of Rs 35,000, the deduction claimed is Rs 25,000. For a senior citizen, like Dinesh's father, who paid Rs 55,000 as medical insurance premium, the deduction claimed is Rs 50,000.

 

What Are Preventive Health Check-ups under Section 80D of the Income Tax Act?

Preventive health check-ups refer to medical check-ups undertaken to prevent or detect any illness at an early stage. Under Section 80D of the Income Tax Act, taxpayers are allowed a deduction for the amount spent on health insurance premiums including expenses incurred on preventive health check-ups.

Section 80D deduction is primarily for the premium paid for medical insurance policies for self, spouse, dependent children, and parents. However, it also provides for deductions up to a specified limit for expenses on preventive health check-ups within the overall limit.

 

Expenses

Actual Expense

Maximum Deduction Under Section 80D

Total Deduction Applicable

Health Insurance Premium for Self, Spouse and Children

Rs 30,000

Rs 25,000

Rs 25,000

Preventive Health Check-up for Self, Spouse and Children

Rs 15,000

Rs 5,000

Rs 5,000

Total Expense for Self, Spouse and Children

Rs 45,000

Rs 25,000

Rs 25,000

 

Health Insurance Premium for Senior Citizen Parents

Rs 52,000

Rs 50,000

Rs 50,000

Preventive Health Check Up for Parents (Senior Citizens)

Rs 10,000

Rs 5,000

Rs 5,000

Total For Parents (Senior Citizens)

Rs 62,000

Rs 50,000

Rs 50,000

Total Deductions Available for the year

   

Rs 75,000

 

Mode of Payments Eligible for Deductions Under Section 80D of the Income Tax Act

Below we have mentioned the Mode of Payments Eligible for Deductions Under Section 80D of the Income Tax Act that you should look.

 

Expenses

Modes of Payment Allowed

Health insurance premiums

All modes of payment (excluding cash)

Preventive health check-ups

Payment options include debit c

ards, credit cards, Unified Payment Interface (UPI) and cheques.

 

Tax Deductions Under Section 80D of the Income Tax Act

Take a look at the tax deductions available to you under section 80D of the Income Tax Act as of fiscal year 2022-23 which helps you to get the exact amount to claim.

 

Covered Individuals

Premium Paid (Rs)

Tax Exemption under 80D (Rs)

Self, Family & Children

25,000

25,000

Individual and parents < 60 years

25,000

50,000

Individual and family < 60 years but parents > 60 years

25,000

75,000

 

Individual, family and parents > 60 years

50,000

1,00,000

Members of HUF and NRIs

25,000

25,000

 

Difference between Section 80D vs 80C

The Income Tax Act 1961, Section 80D, and Section 80C are often confused, so let’s take a look at the main differences between the two.

 

Categories

Section 80D

Section 80C

Meaning

Section 80D provides tax deductions for health insurance premiums for individuals, families, and parents, as well as for preventive health care costs.

Section 80C provides tax credits for ULIPs, PPFs, ELSSs, EPFs, LIC premiums, etc.

Maximum Tax Deduction Limit

Up to Rs 1 lakh

Up to Rs 1.5 lakh

Scope of Tax Benefits

Lower tax benefits

Higher tax benefits

 

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

Under Section 80D of the Income Tax Act, individuals can avail themselves of tax deductions on health insurance premiums paid for their parents. This provision is designed to encourage individuals to ensure the well-being of their elderly family members. As per the current regulations, taxpayers can claim a deduction of up to Rs 25,000 per financial year for health insurance premiums paid for their parents.

If one or both parents are senior citizens, the permissible deduction limit is enhanced. In such cases, individuals can claim a tax deduction of up to Rs 50,000 per financial year. This higher deduction recognizes the potentially increased health-related expenses associated with senior citizens.

 

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

We have mentioned below the Deduction Under Section 80D for Multi-year Health Insurance Premiums Paid in Lump Sum that you should look.

• Multi-Year Health Insurance Premiums: Many individuals opt for multi-year health insurance policies to benefit from long-term policy discounts provided by insurance companies.  If the premiums for a multi-year health insurance policy are paid in a lump sum at the time of purchase, policyholders can avail proportionate tax deductions under Section 80D.

• Proportionate Deductions: The tax deductions on multi-year health insurance premiums are proportionate to the number of financial years covered by the policy. Policyholders can claim deductions for each financial year covered by the premium payment.

• Overall Section 80D Limit: Similar to other health-related expenses, tax deductions on multi-year health insurance premiums are subject to the overall Section 80D limit. The limit is Rs 25,000 for individuals and Rs 50,000 for senior citizens.

 

Let’s understand with an example: If an individual, like Mohit, pays Rs 45,000 for a 3-year health insurance policy at the time of purchase, he can claim Rs 15,000 per financial year as tax deductions under Section 80D, and the total claimed deductions over the policy duration should not exceed the overall limit set by Section 80D of the Income Tax Act.

 

Deduction for Medical Expenses of Senior Citizens Under Section 80D

Here we have mentioned the Deduction for Medical Expenses of Senior Citizens Under Section 80D that you should look.

• Deduction for Medical Expenses: Section 80D allows for a tax deduction on medical expenses incurred on the maintenance of senior citizens who do not have any health insurance policy.

• Deduction Limit: The deduction limit for medical expenses of senior citizens is up to Rs 50,000 per financial year.

• Eligibility Criteria: To be eligible for this deduction, the senior citizen must not have an existing health insurance policy.

• Limitation for Insured Senior Citizens: It's important to note that if a senior citizen already has medical insurance, they will not be eligible for this specific deduction. The provision is designed to support those senior citizens who do not have the financial protection of a health insurance policy.

 

Let’s understand with an example: Suppose Raj has incurred Rs 60,000 on the medical expenses of his parents, who do not have a health insurance policy. In this case, Raj can claim a tax deduction of Rs 50,000 per financial year under Section 80D.

 

Deduction Under Section 80DD(Treatment of a Dependent with Disability)

Section 80DD of the Income Tax Act provides individuals with a tax deduction for medical expenses incurred on the treatment of a dependent person with a disability. We have mentioned some points regarding for  Deduction Under Section 80DD(Treatment of a Dependent with Disability) that you should look.

  1. Deduction Limits: A tax deduction of up to Rs 75,000 per financial year is allowed for medical expenses related to the treatment of a dependent with a disability. In cases of severe disability, defined as 80% or more, the deduction limit is Rs 1,25,000 per financial year.
  2. Documentation Requirements: To avail of this deduction, individuals must submit a medical certificate of disability issued by the central or state government’s medical board when filing income tax returns.
  3. Scope of Deduction: Tax deductions under Section 80DD can be claimed for expenses related to medical treatment, nursing, training, and rehabilitation of the dependent with a disability.
  4. Dependents Covered: Dependents eligible for this deduction include the spouse, children, parents, or siblings of the taxpayer.
  5. Additional Deductions: Individuals can also claim deductions under Section 80DD for annuity or lump sum payments made for any scheme with LIC or any insurer aimed at maintaining the health of the dependent person with a disability.
  6. Submission of Medical Certificate: It's crucial to submit a medical certificate issued by the central or state government’s medical board, specifying the nature and extent of the disability, at the time of filing income tax returns.

 

Deduction Under Section 80DDB (Treatment of Specified Illnesses)

Section 80DDB of the Income Tax Act allows individuals to claim a tax deduction for medical expenses incurred on the treatment of specified diseases. Below we have mentioned some points that you should look.

  1. Deduction Limits: The deduction limit is up to Rs 40,000 per financial year for medical expenses related to the treatment of specified illnesses. For senior citizens, the deduction limit is increased to up to Rs 1 lakh per financial year for the treatment cost of specific ailments.

  2. Specified Diseases: Specified diseases include malignant cancers, AIDS, chronic renal failure, dementia, and Parkinson’s Disease, among others.

  3. Eligible Individuals: Taxpayers can claim Section 80DDB deduction on the medical expenses incurred on the treatment of themselves, their spouse, parents, children, and siblings.

  4. Proof of Treatment: To claim the deduction, individuals must attach proof of availing treatment for a specified disease when filing income tax returns.

  5. Scope of Deduction: The deduction covers medical expenses incurred for the treatment, including diagnostic tests, medicines, and other related costs.

 

Things to Remember When Availing Tax Deductions Under Section 80D of the Income Tax Act

There are some common terms that you should know while availing the tax deductions under the Section 80D of the Income Tax Act.

  1. Mode of Premium Payment: Health insurance premiums paid in cash are not eligible for tax deductions under Section 80D.

  2. Partial Premium Payments: If an individual and their parent have jointly paid medical insurance premiums, both can claim tax deductions for their respective paid amounts under Section 80D.

  3. Qualified Family Members: Premiums paid for siblings, grandparents, uncles, and aunts are not eligible for tax deductions under Section 80D.

  4. Working Children's Premiums: Premiums paid on behalf of working children are not eligible for deductions under Section 80D.

  5. Employer Group Health Insurance: Group health insurance premiums paid by the employer are not eligible for deductions under Section 80D. Individual policies qualify for deductions.

  6. Exclusion of Service Tax : No deduction is provided on the service tax and cess amount added to health insurance premiums under Section 80D.

 

How to Fill Section 80D of the Income Tax Act In ITR?

Filling out Section 80D of the Income Tax Act in your Income Tax Return (ITR) involves providing details about the health insurance premiums you've paid during the financial year. Here's a step-by-step guide to filling out Section 80D in your ITR:

Step 1: Visit the “deduction under section 80D” page, and enter the details such as assessment year, status (Individual or HUF), payment for medical insurance premium, and payment made for preventive health check up.

Step 2: Enter the total premium amounts paid for each policy. Ensure accuracy in the figures to avoid discrepancies.

Step 3: Some ITR forms may require you to upload required documents. Ensure you have copies of premium receipts, policy documents, and any other relevant proof.

Step 4: If you are claiming deductions for premiums paid for senior citizens, ensure you correctly enter the applicable amounts as per Section 80D.

Step 5: Once you've completed all relevant sections, submit your ITR. Follow the instructions provided in the form or on the online portal.

 

Conclusion on Section 80D

In conclusion, Section 80D of the Income Tax Act, India, provides many benefit to taxpayers, promoting healthcare affordability through tax incentives. It allows deductions for premiums paid on health insurance for self, family, and parents, thereby encouraging individuals to invest in health policies. The deduction limit under Section 80D is subject to conditions and varies based on the age of the insured, covering preventive health check-ups as well.  By offering this incentive, the government not only facilitates better health management but also reduces the financial burden on the healthcare system. 

 

 

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