Section 80D: Deduction on Premium (Medical Insurance Expenditure)

Section 80D applies for avail deduction on premium for medical insurance expenditure. As you are paying the premium of medical expenditure of yourself, spouse, children and parents to cover the risk of future uncertainties.

No doubt, you should have this type of medical insurance plan to secure any future uncertainties but sometimes it's premium of medical insurance are so high that you might think it is too much.

So, under section 80D of Income tax act 1961 you will avail deduction from your income of such medical insurance premium or medical expenditure.

     

    Applicability of section 80D of Income Tax act

    This section is applicable to individuals or HUF means deduction is allowed to an individual or HUF only and they may be either resident or non-resident.

     

    Which medical expenditure covers for deduction under section 80D?

    You shall be allowed to avail deduction in respect of payment towards:

    • Medical insurance premium under approved scheme or
    • Contributed to central government health scheme or any other scheme notified by central government or
    • Payment toward preventive health checkups

    Medical insurance should be as per the scheme framed by:

    • General Insurance Corporation (GIC) and approved by central government or
    • Any other insurer and approved by Insurance Regulatory and Development Authority (IRDA)

     

    Deduction available on premium for medical insurance expenditure under Section 80D

    Deduction available to Individual for the payment in respect of:

    • Self, spouse or dependent children
    • Parent (whether dependent or independent)

     

    Now let’s understand each point:

    Payment in respect of Self, Spouse or dependent Children:

    • Deduction can be maximum Rs.25,000 for medical insurance premium of self, spouse or dependent children.
    • But if the age of self, spouse and dependent children are more than 60 years when the payment is made and he is a resident, the deduction is maximum Rs.50000.
    • Deduction available for the payment toward preventive health checkup is upto Rs.5000.
    • This Rs.5000 for preventive health checkup is within the overall limit of Rs.25000/Rs5000 as the case may be. Means maximum deduction limit will be Rs.25000/ Rs.50000.

    Important point to be noted:

    • Whole payments should be made in any mode other than cash. Means you should make payment in electronic mode like through debit or credit card, online banking or cheque etc.
    • But it is allowed to make payment in cash only in cash or preventive health checkup.

    Following is the table shows the maximum limit of Self, Spouse or dependent children:

    Cases

    Maximum deduction limit

    Self, Spouse or dependent children below 60 years of age

    Rs. 25000

    Self, Spouse or dependent children above 60 years of age + Resident

    Rs.50000

    Preventive Health checkup

    Rs.5000 (within overall limit of Rs.25000/Rs.50000 as the case may be.

     

    Payment in respect of Parents (whether dependent or independent)

    • Deduction can be maximum Rs.25000 for medical insurance premium of parents.
    • But if the parents have age more than 60 years and he is a resident then the deduction is maximum Rs.50000.
    • Deduction available for the payment toward preventive health checkup is maximum upto Rs.5000.
    • This Rs.5000 for preventive health checkup is within the overall limit of Rs.25000/Rs.50000 as the case may be.
    • Payment in cash mode is available only for preventive health checkup. For rest you have to make payment in any mode other than cash.

    Following is the table shows the maximum limit for Parents:

     Cases

    Maximum deduction limit

    Parents below 60 years of age

    RS. 25000

    Parents above 60 years of age + Resident

    Rs.50000

    Preventive Health checkup

    Rs.5000 (within overall limit of Rs.25000/Rs.50000 as the case may be.

     

    Deduction available in case of HUF

    In case of HUF, health insurance premium paid in respect of health of any member of that HUF shall avail deduction of maximum Rs.25000. and if the age of member is 60 years or more than the maximum deduction is Rs.50000.


    Some additional points

    • For availing deduction in respect of payment towards self, spouse or dependent children point to be noted is that you will not receive deduction for the payment for brother, sister or any other relative other than spouse or dependent children.
    • Group health insurance premium provided by the company is not eligible for deduction.
    • If you pay a premium single (i.e. in lump sum) and the policy is for more than one year then you can claim deduction equal to the appropriate fraction of amount (i.e. divide the lump sum amount by number of year of policy) and the limit of Rs.25000/ Rs.50000 as the case may be applied.

     

     Conclusion

    Section 80D of income tax act 1961 provides deduction on premium paid for medical insurance expenditure. Deduction in this section is over and above the deduction under section 80C. So you can save your tax by using this deduction as well as your life from future uncertainties.


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