Section 80D of the tax Act provides tax deductions for medical insurance premiums made for the self and therefore the family which may go up to Rs.50,000. Self, parents, children, spouse and Hindu Undivided Families (HUF) can claim this.

The Section 80D of the tax Act, 1961 deals with tax deductions on medical insurance. This section always helps you to receive tax deductions on premiums made for medical insurance for himself and on behalf of his family. The Section 80D offers assumption over and above the exemptions derived from the more popular Section 80C.

Deductions under Section 80D:

As mentioned before, Section 80D will guide you in getting tax deductions on medical insurance premiums only. The deductions allowed are as follows:

For Self and Family:

  • Maximum deduction of Rs.25,000 p.a. on insurance premium for self and family.
  • Maximum deduction of Rs.50,000 p.a. if you’re a old person.

For Parents:

  • Maximum deduction of Rs.25,000 p.a. on insurance premium paid on behalf of parents.
  • Maximum deduction of Rs.50,000 p.a. on premium payments for old parents.

Additional Deduction:

  • A deduction of Rs.5,000 are often claimed each year on expenses associated with health check-ups. This limit includes the check-up expenses of all members during a family, including spouse, kids and fogeys .

Union Budget 2018: Rise in tax deduction under Section 80D

On 1 February, the Union Budget 2018 was announced by Finance Minister Arun Jaitley. He proposed an increase with the limit of tax write-off on insurance premium from Rs.30,000 to Rs.50,000 under Section 80D of the tax Act, 1961, for all senior citizens. Budget 2018 is particularly focused on taking care of senior citizens, women, and farmers of the country. In an effort to help senior citizens lead a dignified life in their old age, the government has made provisions for tax deductions on health insurance premiums and medical expenses incurred by the people aged 60 years and above (below 80 years). The current increase in tax deductions on premiums paid toward any insurance policy for a old person will prove beneficial to senior citizens also as anyone who pays insurance premiums on behalf of a old person, say a parent or spouse.

Eligibility for Tax Benefits u/s 80D:

A taxpayer can claim the deductions u/s 80D. The insurance premium purchased for the following members in a family are eligible for deductions:

  • Self
  • Spouse
  • Children
  • Parents

Hindu Undivided Families (HUF) also can claim deductions under this section. Premium payments of any member during a HUF are often used for tax write-off subject to upper limit as per the act.

Section 80D Limit:

As per Section 80D, a taxpayer can claim deductions on insurance premiums purchased self/family for their parents, except for deductions on expenses associated with health check-ups. The overall deduction limits are as follows:

Persons Covered Exemption Limit Health Check-Up Exemption Total
Self and family Rs.30,000 Rs.5,000 Rs.25,000
Self and family + parents Rs.(30,000 + 30,000) = Rs.60,000 Rs.5,000 Rs.55,000
Self and family + senior citizen parents Rs.(30,000 + 50,000) = Rs.80,000 Rs.5,000 Rs.80,000
Self (senior citizen) and family + senior citizen parents Rs.(50,000 + 50,000) = Rs.1,00,000 Rs.5,000 Rs.1,05,000

Example:

Suppose you’re 60 years old paying an yearly premium of Rs.32,000 for yourself and your dependents. Apart from this, you’re also paying a health premium of Rs.35,000 for your parents’ policy, who are 80 years old. As per Section 80D terms, you’re eligible for:

  • Tax deduction of Rs.32,000 on Rs.32,000 paid as insurance premium for you and your dependents.
  • Tax deduction of Rs.35,000 for your parents (senior citizens) out of the general payment of Rs.35,000.
  • Total tax write-off which will be claimed is Rs.67,000 out of the general premium payment of Rs.67,000.

Note: Please note that the uppermost tax write-off which may be claimed is subject to the provisions under Section 80D of the tax Act. Always consult an expert to urge the foremost out of the tax saving provisions.

Section 80D and 80C:

Section 80D is typically confused with its more visible cousin, Section 80C. Section 80C provides deductions up to Rs.1.5 lakhs p.a. while Section 80D offers assumptions up to Rs.65,000, subject to conditions.

Another differentiating point is that Section 80C includes investments made during a wide selection of monetary instruments like small savings schemes, life assurance premium, mutual funds etc., while Section 80D is supposed exclusively for deductions on insurance premiums paid.

Deduction for Mediclaim under Section 80D:

The deduction of Mediclaim under Section 80D happens in order so that your policy stays active. This insurance are often for the policy holder or for the spouse of the policy holder. Mediclaim is of utmost importance because it takes care of your medical bills, if you fall ill and need medical assistance.

FAQs

  1. Are cash payments for premiums accepted for deductions?No, you can’t claim deductions on premiums paid through cash.
  2. Can I claim deductions on premiums paid on behalf of my children who is working?No, deductions can only be claimed if the premium is purchased dependent children.
  3. What if my spouse and parents are not dependent on me?You can claim deductions in these cases.
  4. What about the sales tax I paid on my health insurance premium?Service taxes are paid over and above the premium amount and picked up by respective agencies. This amount cannot be claimed as deductions.
  5. Can I claim health related deductions for all dependents?Health check-up deductions are often claimed up to Rs.5,000 inclusive of all dependents within the family. This deduction isn’t available separately for each individual.

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