Deductions Under Section 80D Of Income Tax Act (2023)

Health insurance policyholders are eligible to benefit under Section 80D of the Income Tax Act 1961, which reduces yearly income tax burdens. Policyholders pay premiums towards their own and their family members’ health insurance policies.

As you may know, Section 80D falls under Chapter VI-A of the Income Tax Act, 1961 (for brevity, the ITA), which deals with ‘deductions that are to be made in computing total income’. Section 80D of the Income Tax Act deals with the deduction of amounts paid as part of health insurance premiums, medical expenditures, and preventive health examinations.

According to Section 80D of the Income Tax Act, taxpayers may deduct health insurance premiums from their income. There is no limit on the number of exemptions claimed under Section 80C if benefits under Section 80D areclaimed.

What is Section 80D?

Under Section 80D of the Income Tax Act, every individual or Hindu Undivided Family (HUF) can deduct from their total income up to a certain amount for the amount they have paid in premiums for medical insurance during any given year. This deduction is also applicable for top-up health insurance plans and critical illness plans.

Generally, you may take advantage of this deduction if you buy a health insurance policy for yourself or if you buy a policy to cover your spouse, your dependent children or a parent that is dependent on you. 

Who is eligible to get the benefit?

Individuals and HUFs are the only taxpayer categories allowed to deduct medical insurance premiums and medical expenses for senior citizens.

A wide range of insurance options is available to individual taxpayers as well as HUF taxpayers, including:

  • Self
  • Spouse
  • Dependant children
  • Parents

This deduction cannot be claimed by any other entity. An organisation or company, for instance, cannot make a claim under this section.

Tax-deductible payments under Section 80D

  1. Any method other than cash used to pay for an individual’s medical insurance premium for themselves, their spouses, children or dependent parents.
  2. Medical check-up expenses incurred as part of preventive health care
  3. Spending on medical care for senior citizens (over the age of 60) without any health insurance coverage.
  4. Contribution to the health scheme of the Central Government or any scheme as the government may notify.

The Section 80D deduction is available

In a financial year, a deduction of ₹25,000 is allowed under Section 80D. There is a limit of ₹50,000 allowed for deductions for senior citizens.

The table below captures the amount of deduction available to an individual taxpayer under various scenarios:

Kind of ExpenseLimit Available
1.The premium paid on medical insurance for you and your family.₹25,000 or ₹50,000(in case of senior citizen)
2.Premium paid on the medical insurance for your parents.₹25,000 or ₹50,000(in case of senior citizen)
3.Expenses on preventive health check-ups.₹5,000
4.The expenses of medical needs for senior citizens or super senior citizens.₹50,000
5.The contribution you made to CGHS/notified scheme.₹25,000-₹50,000(in case of senior citizen)
Maximum deductions for — Non-senior citizens (Self and family) Senior citizens (Self and family) Parents (Senior Citizens) Non-senior citizens (Self and family) Parents (Senior citizens)₹25000+₹25000= ₹50,000 ₹50000+₹50000=₹1,00,000 ₹25000+₹50000=₹75,000

What deductions are allowed under Section 80D?

In the case of a health insurance policy, money is spent on a premium. Spending on the healthcare of family members, including the parents, is one of the largest expenditures

As part of S. 80D money spent on maintaining a health insurance policy can be claimed.

There is a limit on the amount that can be paid under the plan based on the age of the insured. For people (who are insured under this policy) who are under the age of 80, the following restrictions are applicable:

InsuredDeduction Amount (₹)
Age Below 60 yearsAge Above 60 years
Self, Spouse and Children25,00050,000
Parents25,00050,000
Max Deduction50,0001,00,000
Opt: Preventive Healthcare*5,0005,000

80D for an individual

For insurance policies for the individual, spouse, and dependent children of the individual, there is a deduction of up to ₹25,000 that can be claimed. It is possible to get an additional/separate deduction for the cost of your parent’s insurance to the extent of ₹25,000 if your parents are younger than 60 years of age and ₹50,000 if they are older than 60 years of age.

Medical expenses incurred by senior citizens (self, spouse, dependent children, parents) that any medical insurance policy has not covered could be deducted from the above limitations of ₹50,000 if the expenses were incurred for senior citizens (self, spouse, dependent children, parents).

For a taxpayer who is either over the age of 60 years old, as well as parents who have taken out medical insurance, the maximum deduction available under this section is ₹ 1 lakh, provided both parents are more than 60 years old.

You may claim a deduction for the medical expenses incurred by a senior citizen (taxpayer/family/parents) if any health insurance plan does not cover them. If this is the case, you can claim a deduction for these expenses within a certain limit.

80D for a HUF

If a member of a HUF files a medical claim for any of its members, the HUF can claim a deduction under S. 80D of the Income Tax Act.

If the insured member is less than 60 years of age, then this deduction will be ₹ 25,000, while if the insured member is 60 years of age or older, this deduction will be ₹50,000.

To illustrate:

A 45-year-old man, Aryan, has a 75-year-old father. For Aryan and his father’s medical insurance, he has paid premiums of ₹30,000 and ₹35,000, respectively. As far as deductions under S. 80D are concerned, what would be the maximum amount he could claim under that section?

According to Aryan’s policy, he can claim a maximum of ₹25,000 as a reimbursement for the premium he paid on the policy. Aryan is eligible to claim a maximum of ₹ 50,000 for the policy taken for his father, an elderly citizen.

As you can see in the given case, the deduction allowed in this case is

₹25,000 and ₹35,000, respectively. In this case, the deduction he can claim for the year is ₹60,000, which is the total amount he can claim for the year.

In terms of preventive health checkup under 80D, what is that?

A deduction for preventive health check-ups was introduced by the government in 2013-14 in order to encourage citizens to be more proactive when it comes to their health. Preventive health check-ups are designed to identify illnesses and mitigate risk factors in a timely manner through frequent health checks so that any illness or risk factor can be mitigated at an early stage.

There is a deduction of ₹5,000 under Section 80D for any payments made to preventive health check-ups, and this is subject to taxation. As far as the overall deduction is concerned, this deduction will be within the overall limit of ₹25,000/₹50,000, depending on the case.

Individuals can also take this deduction for themselves, their spouses, their dependent children or their parents. Cash can be used to pay for preventive health check-ups.

Things to remember while claiming benefits under 80D

The following points are to be remembered when purchasing medical insurance so that you can claim the 80D deduction at the time of purchase:

  • The number of medical insurance premiums paid for brothers, sisters, grandparents, aunts, uncles or any other relative of the taxpayer cannot be deducted for the purpose of taking advantage of tax benefits.
  • Children who are working cannot claim a tax benefit from the premiums they pay on behalf of their parents.
  • When you and a parent each pay part of the tuition fees, you are both entitled to claim a deduction up to the amount paid by each of you.
  • In order to qualify for this deduction, the service tax and cess portion of the premium must not be included in the deduction.
  • Deductions are not available for group health insurance premiums paid by the company on behalf of its employees.
  • You could deduct premiums paid through any mode other than cash if they were paid by any other means other than cash. There is, therefore, no restriction on the deduction of premiums paid by credit card or any other online method.

Conclusion

Senior citizens can now deduct up to ₹50,000 from their health premiums under Section 80D under the Union Budget announced in 2018. Taking care of India’s senior citizens was one of the main objectives of the Union Budget 2018. In addition, modifications are also made to medical expenditures for individuals older than 60 and younger than 80. Senior citizens and those who pay senior citizen health insurance premiums will benefit from the increase in the tax deduction amount.

Frequently Asked Questions (FAQs)

How does section 80D apply to investments?

In accordance with Section 80D, the premiums paid on health insurance policies, as well as the expenses incurred towards preventive health check-ups, can be deducted from your income.

Do you get deductions on the service tax you paid on your health insurance premium?

A service tax is paid over and above the premium amount and is collected by the corresponding agency. There is no deduction for this amount.

As per section 80D of the Income Tax Act, 1961, what is the maximum deduction that can be claimed?

There is no limitation on the deduction that a person can claim under Section 80D if he or she is younger than 60 years old. There is a limit of ₹25,000 that includes ₹5,000 for preventive health check-ups as part of the limit. Increasing the limit for deduction if the insured is above the age of 60 years increases the amount of deduction to a maximum of ₹5,000.

In accordance with section 80D, what are the exclusions from tax?

A: It is not possible to claim a deduction under Section 80D
B: In the case of cash payments for health insurance premiums. A cash payment can be made for medical expenses.
C: If you are making a payment on behalf of your working children, siblings, grandparents, or other relatives who work.
A company makes a premium payment on behalf of its employees for group health insurance.

How do Section 80D and Section 80C differ?

Depending on the circumstances, Section 80C allows deductions of up to ₹1.5 lakh per year and Section 80D provides deductions of up to ₹65,000 per year.

Credit Principal at Wint Wealth

Vaibhav is Chartered Accountant by profession, having experience of 4+ years in banking & finance sector.
Since past one year associated with Wint Wealth as Credit Principal. Previously worked with Northern Arc Capital for 2 years in FI-Credit Team and AU Small Finance Bank for 1 year in LAP-Credit Team.

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