What is Section 80D deduction covering medical health insurance premium ?

Under Section 80D, individuals or Hindu Undivided Families (HUFs) are eligible to receive a deduction for the premiums paid towards medical insurance during the financial year. This benefit extends to top-up health plans and critical illness insurance as well. It will help to reduce the income tax liability & important for tax planning.

Note: This deduction is available only if the individual or HUF opts to pay taxes under the old tax regime.

Individuals & HUFs are eligible to claim deduction under Section 80D who have adopted for old tax regime.

Who is Eligible to Claim a Deduction Under Section 80D for Helath insurance Premium?

Individuals & HUFs are eligible to claim deduction under Section 80D who have adopted for old tax regime. This deduction is not available to any other entities, such as companies or firms, which are ineligible to claim it under this section.

What Deductions are Available Under Section 80D covering Health insurance Premium?

The following expenses are eligible for a deduction under Section 80D:

1) Medical insurance premiums paid for self, family, and parents

2) Medical expenses incurred for senior citizens

3) Individual or HUF taxpayers can claim a deduction for the insurance premiums paid for: Self, Spouse Dependent Children or Parents

Which Mode of Payments Eligible for Deduction Under Section 80D covering Health insurance Premium?

For claiming such deduction under section 80D, the payment has to be made in the specified mode:
Preventive health check-up: Any mode (including cash)

Medical Insurance Premium: Any mode other than cash

Medical Expenses: Any mode other than cash Note: Cash payments under Section 80D are not allowed as Deduction.

Which Payments are Eligible for Deduction Under Section 80D for Health Insurance?

An individual or HUF can claim a deduction under Section 80D for the following payments:

Health insurance premiums paid through any mode other than cash:

1) Up to Rs. 25,000 for self, spouse, dependent children, or parents

2) Up to Rs. 50,000 if the family or parents are senior citizens (60 years and above)

3) Preventive health checkups (cash payment allowed): Up to Rs. 5,000 for self, spouse, dependent children, or parents

Medical expenses:
Senior citizens (residents aged 60 years or above) who do not have health insurance can claim a deduction of up to Rs. 50,000 for medical expenses incurred.

Note: Although the Income Tax Act does not provide a specific definition for "medical expenditure," it generally refers to costs such as medical consultations, assistive devices, medicines, and similar expenses.
Contribution to CGHS/Notified Scheme:

Individuals can claim a tax deduction of up to ₹25,000 for contributions made to the Central Government Health Scheme (CGHS) or any other notified scheme. However, contributions made on behalf of parents are not eligible for this deduction.

What is a Preventive Health Check-up Under Section 80D?

The government introduced the preventive health check-up deduction in the 2013-14 financial year to encourage citizens to take a more proactive approach to their health. Preventive health check-ups help identify potential illnesses and mitigate risk factors at an early stage through regular health assessments.

Under Section 80D, a deduction of up to Rs. 5,000 is available for payments made towards preventive health check-ups. This deduction is included within the overall limit ofRs. 25,000 (or Rs. 50,000, depending on the taxpayer's circumstances).

The deduction can be claimed by the individual for themselves, their spouse, dependent children, or parents. Notably, the payment for preventive health check-ups can be made in cash.

What are the deductions for Multi-year Health Insurance Premium Paid in Lump-sum under Section 80D?

Sometimes, individuals purchase multi-year health insurance plans to avail of discounts, paying the premium upfront for all the years. In such cases, the deduction under Section 80D is allowed proportionately for each year. However, the total deduction is still subject to the limits of Rs. 25,000 or Rs. 50,000, as applicable, as discussed earlier.

What are the Points to Remember While Purchasing Medical Insurance for Claiming 80D Deductions?

Ineligible Relatives: A medical insurance premium paid for a brother, sister, grandparents, aunts, uncles, or any other relative cannot be claimed for tax deductions under Section 80D.

Premium for Working Children: Premiums paid on behalf of working children are not eligible for tax benefits.

Part Payment by Both You and a Parent: If both you and a parent contribute towards the premium, each of you can claim a deduction for the amount paid individually.

Exclusion of Service Tax and Cess: The deduction should be claimed without including the service tax and cess portions of the premium amount.

Group Health Insurance: Premiums paid for group health insurance provided by an employer are not eligible for deduction under Section 80D.

Eligible Payment Modes: Premiums paid by any mode other than cash, including credit card or other online payment methods, are eligible for the deduction.