Section 80 Deductions - Income Tax Deductions under Section 80D

Health is wealth goes a famous saying, and it is quite right. You cannot live a fulfilling life if you don't take of your health. In today's times, medical expenses have become quite unaffordable, and with medical inflation steadily on the rise, the costs are expected to increase. Meeting such high medical expenses might prove prohibitive for many, and that is why there are health insurance plans available in the market. Health insurance plans cover the medical expenses which are incurred in a health emergency. Besides providing financial assistance, health insurance plans also allow you tax benefits under Section 80D. Do you know how? Let’s understand –

What is Section 80D deduction?

The Income Tax Act, 1961, allows health insurance premiums to be claimed as a deduction under Section 80D. This deduction is contained under Chapter VI A of the Income Tax Act, 1961. Under Section 80D deduction, the premium paid for health insurance is allowed as a deduction from your taxable income.

• Eligibility for availing 80D deductions
• To avail deduction under Section 80D, the following parameters should be kept in mind –

80D deduction is available for individual taxpayers and Hindu Undivided Families (HUFs). The deduction is not allowed to any other type of taxpayer.

• Non-resident individuals can also claim deduction under Section 80D
• The deduction can be availed only if the premium is paid towards a health insurance coverage
• The coverage can be taken for self, spouse, dependent children and dependent parents
• The amount of deduction available under Section 80D depends on the age of the member being covered under the insurance policy
• The premium should not be paid in cash

Section 80D deduction is available even if you have claimed deductions under Section 80C on eligible investments and expenses, Section 80CCC on life insurance pension plan premium and Section 80CCD towards investments in the National Pension Scheme

Amount of deduction available under Section 80D

There is a maximum limit up to which deduction under Section 80D can be claimed. This limit, as mentioned earlier, depends on the age of the insured member. The limit of deduction available for taxpayers who are below 60 years of age is INR 25,000, and for senior citizens, it is INR 50,000. Moreover, if the taxpayer buys an additional policy for his dependent parents, he/she can claim additional deduction under Section 80D. Let's understand the allowed 80D limit under different instances –

Let’s understand the deductions with some examples –

Example 1 – Mr. Sharma, aged 45 years, buys a health insurance policy for himself and his family by paying a premium of INR 20,000. He also invests in a health plan for his senior citizen dependent parents, and the premium paid is INR 30,000. The deduction available to Mr. Sharma under Section 80D would be INR 50,000, i.e., INR 20,000 for the premiums of his family floater health plan and INR 30,000 for the premiums paid for senior citizen parents.

Example 2 – Mr. Khurana, aged 30 years, buys a health plan for him and also covers his dependent senior citizen parents under the same plan. The premium paid is INR 32,000. In this case, the maximum deduction available to Mr. Khurana would be INR 32,000 since the plan also covers his senior citizen parents and so the limit of deduction becomes INR 50,000. Thus, the premium of INR 32,000 would be allowed as a deduction from Mr. Khurana’s income.

Example 3 – Mr. Verma buys two health insurance plans. One covers him and his spouse aged 34 years and 32 years respectively and the other covers his dependent senior citizen parents. The premium paid for his policy is INR 26,000, and for his parents' policy is INR 30,000. The deduction available would be limited to INR 55,000, i.e. up to INR 25,000 on his policy and INR 30,000 on his parents' policy. Thus, Mr. Verma would not be able to avail a deduction of the extra INR 1000 which he paid on his health insurance policy since the premium exceeded the available deduction limit of INR 25,000.

Deduction for preventive health check-ups

Section 80D also allows you a deduction towards the expenses incurred on preventive health check-ups in a financial year. So, if you undertake preventive health check-ups, you can claim the expenses incurred as a deduction from your taxable income under Section 80D. The limit of deduction is INR 5000, which is included in the limit of INR 25,000 or INR 50,000 as the case may be.

When you are planning your taxes, do remember the deduction is allowed by Section 80D, and if you have bought a health insurance policy or have invested towards preventive health check-ups, the expenses incurred would be allowed as a deduction, which would help in lowering your tax liability. For a hassle-free experience, IndiaNivesh experts can help you to choose the right products as per your goals and guide you on tax deductions as well.

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