Tax Deduction under Medical Costs - Section 80D of Income Tax Act Provision
In the realm of personal finance, understanding tax deductions can be a game-changer. One such section that warrants attention is Section 80D of the Income Tax Act. This section allows taxpayers to claim deductions for various healthcare expenses.
Let's delve into the key aspects of Section 80D.
Firstly, the section covers deductions for medical insurance premiums, preventive health check-ups, medical expenses for senior citizen parents (if they do not have health insurance), and contributions to Central Government Health Schemes.
However, there are some caveats. For instance, if you have paid health insurance premiums for working children, you are ineligible for the deduction. Similarly, service tax and cess paid are not eligible for deduction under Section 80D.
Group health insurance provided by your employer is also not eligible for deduction. On the contrary, you can benefit from Section 80D by purchasing a health insurance plan for yourself, your spouse, dependent children, or parents.
When it comes to senior citizen parents, you can claim a deduction of Rs 50,000 for the health insurance premiums paid by you, and an additional Rs 50,000 if you are paying for their premium. However, it's important to note that this deduction is only applicable if they do not have any health insurance.
In a scenario where senior citizens do not have health insurance coverage, the expense incurred for their treatment within the limits can also be claimed under this deduction.
The expense for preventive health check-ups is capped at Rs 5,000 and is within the overall limit. Insurance premiums paid for a brother, sister, cousin, uncle, aunt, or any other relative are not eligible for deduction.
When buying a multi-year health insurance plan, you can claim a deduction on a proportionate basis, not the total premium paid.
The deduction under Section 80D can be claimed by individuals and HUF (Hindu Undivided Family).
The maximum tax deduction under Section 80D for an individual and their family members depends on the age of the insured persons:
- For self, spouse, and dependent children below 60 years of age, the maximum deduction is ₹25,000.
- If the individual or any family member covered is a senior citizen (60 years or above), the deduction limit increases to ₹50,000 for that group.
- For parents, an additional deduction of up to ₹25,000 is allowed if they are below 60 years, or up to ₹50,000 if they are senior citizens.
- Preventive health check-up expenses can be claimed up to ₹5,000 within these limits.
Thus, if you are under 60 and your parents are senior citizens, you can claim up to ₹25,000 for yourself and family plus ₹50,000 for your parents, totaling ₹75,000 in deductions in one financial year.
Note that payments for health insurance must be made by modes other than cash (except preventive health check-ups for which any mode is acceptable) to qualify for a deduction.
To sum up, the deduction limit under Section 80D varies based on the family situation, with a maximum limit of Rs 1 lakh. The limit for tax deduction can be up to Rs 25,000 for all family members under 60 years, up to Rs 75,000 if the eldest member in the family is under 60 and parents are over 60, and up to Rs 1 lakh if all members are over 60.
[1] https://www.incometaxindia.gov.in/Pages/resources/tax-benefits-under-section-80d.aspx [2] https://www.cleartax.in/s/section-80d-tax-deduction-on-health-insurance-premium [3] https://www.taxmann.com/articles/section-80d-tax-deduction-on-health-insurance-premium/ [4] https://www.financialexpress.com/taxes/tax-deductions-under-section-80d-know-how-to-maximise-your-benefits/1326374/
- Section 80D of the Income Tax Act allows taxpayers to claim deductions for medical insurance premiums, preventive health check-ups, and contributions to Central Government Health Schemes.
- If you have a health insurance plan for yourself, your spouse, dependent children, or parents, you can benefit from the tax deduction under Section 80D.
- For senior citizen parents, you can claim a deduction of Rs 50,000 for the health insurance premiums paid by you, and an additional Rs 50,000 if you are paying for their premium, as long as they do not have any health insurance.
- The expense for preventive health check-ups is capped at Rs 5,000 and is within the overall limit for tax deduction under Section 80D.
