Section 80D - Income Tax Deduction

Understanding Section 80D & eligibility

Section 80D offers tax deductions. Individuals and HUFs (Hindu Undivided Families) can claim 80D tax deductions for the health insurance premium paid. The benefit is available to taxpayers under the old tax regime.²

Section 80D deductions are available for individuals and Hindu Undivided Families.¹

The deductions under Section 80D are over and above the ₹1.5 lakh deduction limit under Section 80C of the Income Tax Act of 1961². As a taxpayer, you can benefit from Section 80D at the time of filing returns.¹
 

Deductions under Section 80D
 

Section 80D offers several deductions to individuals and HUFs. Here are the details of the deductions that you can claim:

1. Premiums of health insurance

   Payments of health insurance premiums made by self, spouse, children, or parents can be claimed². Adults and older adults are eligible for the following claims:

2. ₹25,000 + ₹25,000 claim

   Adults can claim a deduction of up to ₹25,000 for health insurance premium payments for spouse, self, children, and an additional amount of ₹25,000 for health insurance premium paid for dependent parents.²

3. ₹25,000 + ₹50,000 claim

   You can claim a deduction of up to ₹50,000 if paying health insurance premiums for parents above 60 years of age over and above the ₹25,000 for yourself, spouse and children.²
   

   • Central government employees and pensioners
   • Family members of central government employees and pensioners
   • Sitting and former members of Parliament
   • Former governors and lieutenant governors
   • Freedom fighters
   • Former vice presidents
   • Sitting and former judges of the Supreme Court and High Courts
   • Employees and pensioners of certain autonomous organizations in Delhi
   • Journalists accredited with PIB in Delhi
   • Delhi Police Personnel in Delhi
   • Employees of the Railway Board

4. ₹1,00,000 claim

   If you as well as your parents are above 60 years of age you can claim a deduction of up to ₹1,00,000 if paying health insurance premiums for both. ²
   

5. Preventive health check-ups

   Expenses for preventive health check-ups can be claimed for up to ₹5,000. This limit is covered under the limit of ₹25,000 or ₹50,000 deductions.²

6. Medical expenses

   Resident senior citizens who do not have any active health insurance plans can avail of Section 80D deductions for medical expenses incurred. A maximum of ₹50,000 tax deduction can be claimed.²

7. CGHS/notified scheme payments

   Payments made by individuals towards the Central Government Health Scheme (CGHS) or similar notified schemes are also eligible for tax deduction. Up to ₹25,000 tax deductions can be claimed. However, the claim is not eligible for payments made on behalf of parents.²

   The members eligible for the CGHS Scheme are³:

Mode of payment permitted.

To claim Section 80D deductions, you need to be mindful of the payment mode. Cash payment is explicitly forbidden for certain claims. Here are the payment modes you need to follow:

Preventive health check-ups

Cash payment is permitted for preventive health check-ups. You may use other payment modes as well.²

Medical expenses/health insurance premiums

Cash payment is not accepted for tax deductions raised for medical expenses and health insurance premiums.²

Section 80D deductions: Factors to consider

Planning a financial year in advance can help you streamline essential expenses and also make the most of tax benefits. If you are aiming for tax deductions under Section 80D, here are a few things you must know:

Not for relatives

The health insurance premium payments for aunt, uncle, brother, sister, grandparents, or any other relatives are not eligible for Section 80D tax deductions.²

Not for financially independent children

Individuals and HUFs cannot claim 80D benefit for paying health insurance premium for financially independent children. They need to file it for themselves.²

Not for group health insurance

The group health insurance premiums paid by the company are not allowed for Section 80D tax deductions.³

Part payments

In case you and your parent make part payments towards the premium, both of you are eligible for Section 80D tax deductions up to extent of payment.²

Cess/service tax not covered

Cess and service tax on health insurance premiums are not allowed for tax deductions. Only the premium amount paid is accepted.²

Conclusion

The rising cost of medical treatments is evident to everyone. Be it the expensive lifestyle disease medicines, intervention therapies, or major surgery, medical bills can dig a hole in your savings. To avoid draining a major chunk of your income towards health care, purchasing a health insurance plan is crucial. Along with peace of mind, it also offers tax benefits under Section 80D of the Income Tax Act of 1961!

FAQs

1. Are preventive health check-ups covered under deductions of Section 80D?

Yes, in the 2013-14 financial year, preventive health check-ups were introduced under Section 80D deductions. You can claim preventive health check-up deductions of up to ₹5,000. The deductions are within the limit of ₹25,000 deductions or ₹50,000, as the case may be.²

2. What deductions are offered under Section 80D?

Section 80D of the Income Tax Act of 1961 offers tax deductions for preventive health check-ups, health insurance premium payments, and medical expenses for senior citizens.²

3. Can I claim Section 80D deductions for the multi-year health insurance premium paid?

Yes, multi-year health insurance premium payments are eligible for Section 80D tax deductions. However, the deductions are permitted in proportion and subject to the maximum limit of ₹25,000 and ₹50,000 (senior citizens). ²

For instance, person A purchases health insurance for 3 years at ₹60,000. The person is eligible for a tax deduction of ₹20,000 for 3 years each.

4. Can I claim Section 80D deductions for senior citizen medical expenses?

Yes. Resident senior citizens who do not have any health insurance plan are still eligible to claim up to ₹50,000 tax deductions under Section 80D in income tax.²

5. Who can apply for Section 80D tax deductions?

Individuals and HUFs (Hindu Undivided Families) are eligible to claim tax deductions under Section 80D in Income Tax.²

6. Are Section 80D deductions over and above Section 80C limit?

Yes, tax deductions under Section 80D of the Income Tax of 1961 are over and above the ₹1.5 lakh limit of Section 80C.²