Section 80D Medical Insurance Deduction

Roshni Bhagtani

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Section 80D Medical Insurance Deduction

We can not ignore the significance of health insurance. However, the vast majority of people are not protected by any form of medical insurance. When an unexpected situation leads to a medical crisis, it is essential to have it in your portfolio rather than relying on your savings or borrowings.

Certain initiatives have been taken by the government to encourage the purchase of medical insurance. The most significant step is a deduction under Section 80D of the Income Tax Act of 1961.

What is Section 80D

Section 80D allows deduction on the premiums paid under the health insurance policy. Individuals and HUFs can claim deduction under Section 80D at any time during the year. This section provides deductions in addition to those provided under section 80C.

Who can claim deduction under section 80D

The deduction is available to both individuals and HUFs, and it also covers medical expenditures. Section 80D coves following policies which are taken to cover:

  • Self
  • Spouse
  • Dependent parents
  • Dependant children

Policies taken for critical illness as well as top-up cover plans are also covered under section 80D.

As only individuals and HUF are allowed to claim deduction any other entities like partnership firms or a company are not eligible under section 80D.

Quantum of deduction allowed under section 80D

Let's have a look at the amount of deduction that is permissible in various scenarios. Individuals have a maximum limit of Rs. 25,000, while senior persons have a limit of Rs. 50,000 for the entire financial year.

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Explanation:

  • Individuals and parents under the age of 60 are both eligible for an Rs. 25,000 deduction, with the parents receiving the same amount.

  • Individuals and families under the age of 60 are entitled to Rs. 25,000 deduction, while parents beyond the age of 60 are eligible for an Rs. 50,000 deduction.

  • Both individuals and families above 60 years of age are allowed a deduction of Rs. 50,000.

  • Members of HUF irrespective of their age will get a deduction of Rs. 25,000.

  • Non-resident Indians are eligible for a deduction of Rs. 25,000.

Additional payments that are allowed as deduction

The following payments made by an individual and HUF are allowed as a deduction:

  • Expenditure incurred for the payment of preventive health care check-ups.

  • Medical expenses incurred as a result of senior citizen medical costs that are not covered by medical insurance.

  • Contribution to the central government or any other health system as specified by the government.

Preventive health check-up

In the 2013-2014 budget, the government included preventive health check-ups under Section 80D. The purpose behind this inclusion is to make people more proactive towards their health. This will result in the early discovery of sickness, allowing it to be diagnosed and treated.

The deduction allowed for preventive health check-ups is Rs. 5000 for both individuals and senior citizens. However, the upper limit will remain the same i.e, 25,000 for individuals and 50,000 for senior citizens.

For example, Mr. A paid a premium of Rs. 22,000 and incurred an amount of 5,000 towards preventive health check-up so his total amount of eligible deduction will be Rs. 25,000, (Rs. 22,000 premium + Rs. 3,000 preventive health check-up).

  • Factors to remember while buying health insurance to claim deduction under section 80D:

  • Ensure that payment for the insurance premium is made in a method other than cash.

  • Premiums paid on behalf of working children are not eligible as a deduction.

  • The amount claimed as a deduction should be exclusive of the service tax and cess component of the premium amount.

  • The company's provided group health insurance premium is not allowed as a deduction.

  • A medical insurance premium paid for siblings, grandparents, or other relatives is not allowed as a deduction.

  • If the part of the insurance is paid by you and the remaining part by your parents then both individuals can claim a deduction to the extent of the premium part paid.

Deduction for senior citizens under section 80D

Even if they do not have insurance, super elderly persons above the age of 80 can claim a deduction for medical costs up to Rs. 50,000 every financial year. Medical costs and check-ups are allowed as deductions, but personal expenses are not and cannot be claimed as a deduction.

The need for health insurance cannot be denied, and if you are not insured, you are putting your family and savings at risk. There are some significant things you should know before purchasing health insurance, so read our blog on why you need health insurance to discover more.

At Equiseed Wealth, we have partnered with all top insurance providers. We are here to cater to your needs and guide you accordingly.

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