Tax saving under Sec 80D - Health Insurance

A deduction of INR one lakh and fifty thousand (1.5 lakh) from the total taxable income is permissible as a claim under Section 80C of the Income Tax Act, 1961. Hence, it provides an excellent way for individuals in India to reduce their tax liability. However, what most individuals fail to realize is that beyond 80C, there is much more to tax planning. There are other sections and methods which help you minimize your tax liability, and you have been ignoring them for a long time. Deductions under numerous other sections can help you enjoy tax-related benefits. One such part is Section 80D which is related to payment of premium for medical insurance.

What is Section 80D?

Tax deductions of premiums paid on Medical Insurance are mentioned in Section 80D of the Income Tax Act, 1961. Any premium which is paid  by you whether towards your medical insurance or that of a family member makes you eligible for tax deductions. For the medical insurance premium paid for children, spouse and self, a maximum tax benefit or deduction amounting to INR 25,000 can be claimed annually. Additionally, if you spend on the medical insurance premium on behalf of your parents, an additional deduction of INR 25,000 can be claimed by you. Senior citizens are allowed to claim a maximum tax benefit of INR 35, 000. This is because senior citizens are allowed a claim of INR 30,000 as per the given section and in addition to the same, an additional deduction of INR 5,000 can be claimed by them, thus increasing their claimable deduction up to INR 35,000 on the medical insurance premium paid during the particular financial year.

It won’t be wrong to say that ensuring you have a health cover for both yourself and your family is not just a necessity but is also something that can help you during times when you need it the most. It will help you by covering costs in case of a medical emergency and is also an additional way to get some amount of relief from your tax liabilities. Tax benefits nonetheless, can be claimed for every health policy which is purchased, either for self, parents, children or your spouse.

A detailed guide of benefits that can be availed under Section 80D

Following are the benefits which can be availed by individuals on tax payments if the requirements are fulfilled as per the section.

• If your age is less than sixty years, the maximum amount that can be claimed by you is INR 25,000.

• According to the tax law, an exemption claim of up to an amount of INR 5,000 can be claimed by individuals under this section, for the expenses which are incurred due to preventive healthcare checkups of individuals older than sixty years in age.

• An exemption of INR 30,000 can be availed in case the medical insurance premium is paid for insurance obtained for your parents who fall under the category of senior citizens as per the law. This holds true if either or both of the parents are more than sixty years in age.

• A deduction amounting up to INR 30,000 can be claimed as part of the medical expenditure incurred in case of super seniors (individuals older than eighty years), even if they are not insured.

•  As far as the amount stays within the permissible limit as per this section, all premium payments made towards medical insurance policies for more than one member in the family are eligible for availing tax benefits. 

• The Hindu Undivided Families (HUFs) are considered for tax benefits under this section. Hence, apart from individuals claiming deductions on the basis of their own medical insurance premiums, the same can be availed on behalf of any member(s) of the HUF. 

• Even if a partial payment is made towards a due premium, the taxpayer is eligible to claim a deduction on it. Tax benefits can be availed by children on behalf of their parents, regardless of the fact, whether or not the parents are dependent on them. 

• Under this section, tax benefits can also be availed by non-proposers making the premium payment for the medical insurance.

Exclusions under Section 80D

If you plan to file a claim under Section 80D, for tax deductions, you must keep in mind that there are certain exclusions. This will simply help keep any kind of confusion at bay.

• Deductions are not allowed under Section 80D of the Income Tax Act if the premium payments are remitted by cash. Payment made by an alternative mode like electronic transfers, debit cards, credit cards, etc. is acceptable.

• The actual premium amount which is payable is the only amount against which the tax deduction can be claimed. Other levies and service tax are not considered to receive tax benefits.

• In case you have a group health insurance policy such as that provided by the corporate plans, you being the taxpayer can only claim a deduction up to the extent that to enhance the policy value, you have paid some additional amount. The entire premium amount is herein not considered to receive tax benefits.

• The primary assesse is not eligible to avail any tax benefits if the health insurance premium is paid for securing cover for children who are financially independent and eligible for tax payment themselves.