A Guide to Tax Benefits of Deductions for Medical Insurance Premium under Section 80D

One such crucial deduction is under Section 80D, specifically designed for medical insurance premiums. In this blog post, we unravel the details of Section 80D, exploring who is eligible, the purposes for which deductions are allowed, and the quantum of deductions permitted.

Eligibility and Purpose of Deduction:

Section 80D provides deductions to individuals, Hindu Undivided Families (HUFs), and senior citizens. For individuals, deductions are allowed for amounts paid to ensure the health of the assessee, family members, and parents. HUFs can claim deductions for ensuring the health of any family member. Senior citizens have the option to claim deductions for medical expenditures incurred, excluding payments made for health insurance.

• Deduction is permissible under this section, only to an individual or HUF.
• Deduction is allowed for the following purposes-
• In the case of an individual: It is allowed for
• The amount paid to effect or to keep in force an insurance on the health of an assessee or his family or his parent or parents,
• Any contribution made to the central government health scheme or any such other scheme as may be notified by the central government on this behalf.
• Any payment made on account of preventive health checkup of the assessee or his family or checkup of the parent or the parents of the assessee.

Family means the spouse and the dependent children of the assessee.

• In case of a HUF: it is allowed for the amount paid in effect or to keep in force an insurance on the health of any member of that Hindu Undivided Family.
• In the case of senior citizens: Deduction on the amount of medical expenditure incurred (Instead of the sum paid to effect any insurance of the health).
• The health insurance should be in accordance with a scheme framed on this behalf by
• GIC and approved by the central government.
• Any other insurer or approved by the Insurance Regulatory and Development Authority.
• The payment should be made by him by any mode of payment other than cash. However, preventive health checkups can be made in cash also.
• The amount is paid out of his income chargeable to tax.

Quantum of deduction

• Where the assessee is an Individual: The deduction allowed should be aggregated of the following, namely: –

(i) The whole of the amount paid to the effect or to keep in force insurance on the health of the assessee or his spouse and dependent children

(ii) Any contribution made to the Central Government Health Scheme (CGHS).

as does not exceed aggregate INR 25000.

• the whole of the amount paid to the effect or to keep in force an insurance on the health of the parent or parents (whether dependent or not) of the assessee as does not exceed in aggregate INR 25000.

However, for preventive health check-ups of the assessee or his family or his parent or parents, the maximum amount allowed shall be limited to INR 5000 and such amount subject to a maximum limit of INR shall be the overall ceiling of INR 25000 given in the aforementioned conditions.

Additional deduction of INR 25000: where the sum specified in clause(1)(a) or (b) is paid to effect or keep in force an insurance on the health of any person specified therein and who is a senior citizen, an additional deduction of INR 25000 shall be allowed. In other words, the deduction shall be INR 50000 instead of INR 25000.

• Where the assessee is a Hindu Undivided Family: The deduction allowed should be the whole of the amount paid to effect or to keep in force an insurance on the health of any member of that Hindu Undivided Family as does not exceed in aggregate INR 25000.

Additional deduction of INR 25000: Where the sum specified in clause (2) above is paid to effect or keep in force an insurance on the health of any person specified therein, and who is a senior citizen, an additional deduction of INR 25000 shall be allowed. In other words, the deduction shall be INR 50000 instead of INR 25000.

• Deduction on account of medical expenditure incurred (instead of the sum paid to effect any insurable health) to allowed in case of a senior citizen

The individual may claim the following deduction instead of the deduction available under clause (1) above:

• The whole of the amount paid on account of medical expenditure incurred on his health or any members of his family does not exceed the aggregate INR 25000.
• The whole of the amount paid on account of medical expenditure incurred on the health of any parent of the assessee does not exceed the aggregate INR 50000.

However, the following two conditions must be satisfied to claim a deduction of the amount referred to above which is as under:

1. The amount should be paid in respect of a senior citizen
2. No amount should have been paid to effect or keep in force insurance on the health of such a person.

Taxcellent helps you to file Income Tax Return in Delhi and assists you in claiming deductions along with tax advisory.