You must have seen section 80D or Medical Insurance Premium multiple times but ever wondered what it is exactly and how you can claim deduction out of it. Section 80D is specifically for Medical Insurance Premium; the amount spent by you for Medical Insurance can be claimed as deduction and eventually it will help you to reduce your tax liability.
What is Section 80D?
Section 80D of Income Tax Act, 1961 provides income tax deductions related to medical Insurance Premium paid for yourself and your family members. You can claim a tax deduction for the health insurance premium paid for self, parents, children, and spouse.
Moreover, this section also allows Hindu Undivided Family (HUF) to claim deduction.
Deduction as per Rules:
Section 80D only connected with medical insurance premiums. These deductions are as follows:
· Individual and Family:
If you pay insurance premium for yourself, your spouse, your kids then you are eligible to claim a maximum tax deduction of RS 25,000 per annum. In case of senior citizens, the limit is Rs 50,000 per annum.
· Parents:
If you pay a health insurance premium for parents, you can claim maximum deductions of Rs 25,000 a year if your parents are less than age of 60 years. However, if your parents are above 60 years of age you are eligible for deduction of Rs 50,000 a year.
According to union Budget increase in tax deduction limit:
According to the union budget, the maximum amount of deduction has been increased from Rs 30,000 to Rs 50,000 under section 80D.
Senior citizens can avail benefits. One of the important objectives of the union budget was to take care of senior citizens. This rise in tax deduction amount is a welcome change for senior citizens and the persons who pay health insurance premiums for senior citizens.
For better understanding you can refer table created by Taxofile Team.
| Cases For FY 2020-21 (AY 2021-22) |
Premium Paid | Deduction under 80 D | |
|---|---|---|---|
| Self, Family, Children | Parents | ||
| Assessee and parents below age 60 years | 25,000 |
25,000 |
50,000 |
| Assessee and family below 60 years but parents above 60 years |
25,000 |
50,000 |
75,000 |
| Assessee and parents both above 60 years |
50,000 |
50,000 |
1,00,000 |
| Members of HUF |
25,000 |
25,000 |
25,000 |
| Non-Resident Individual |
25,000 |
25,000 |
25,000 |
Additional deduction under section 80D:
You are eligible to claim an additional 80D deduction of RS 5,000 for the expenses associated with health check-ups. These include complete health check-up for the entire family.
Taxofile expert’s advice before investing:
1) In following cases deduction under section 80D cannot be claimed:
· Payment for health insurance premium paid by cash.
· Payment is done on behalf of working children, siblings, grandparents, or any other relative.
· Group health insurance premium made by company on behalf of employees.
2) The deduction has to be taken without showing the Service Tax/GST and Cess portion from premium amount.