1. What is Sec 80D of income tax?
Sec 80D was introduced with the aim of improving public health planning and HUF. Sec 80D provides cost savings on:
- Health insurance premium
- Contribution to the CGHS (Central Govt Health Scheme) / notified program
- Health protection tests and
- Treatment costs (in the case of adults).
The amount of the deduction depends on the type of cost, method of payment and the age and the personal relationship for which the money is being made.
2. Who can claim deduction u/s 80D?
Section 80 D deduction can be claimed by:
- Individual (Indian / foreign citizen) is himself, his spouse,
- dependent children and parents (whether dependent or not).
- HUF of any members.
- NRIs are also eligible for this arrest.
3. What is the amount of deduction under Sec 80D?
In order to claim a deduction under Section 80D the costs need to be incurred in any mode other than cash. Although the cost of preventive health screening is allowed to be made in cash. Subsequent deductions are permitted under section 80D -
| Type of Expense | Limit | |
|---|---|---|
| A. | The health insurance premium is paid for you and your family. | Rs. 25,000 Rs. 50,000 (in the case of a senior citizen) |
| B. | A premium for medical insurance paid by your parents. | Rs. 25,000 Rs. 50,000 (if adult) |
| C. | Cost of protective health screening. | Rs.5,000 |
| D. | Medical expenses for adults or older people. | Rs.50,000 |
| E. | Contributions to the CGHS / knowledgeable scheme. | Rs.25,000 Rs.50,000 (if a senior citizen) |
| Maximum catch (A + B + C + D + E) Non-senior citizens (Personal and family and parents) Adults (Personal and family and parents) Personal and family (non-senior citizens) Parents (Senior Citizens) | Rs.25000 + Rs.25000 = Rs.50,000 Rs.50000 + Rs.50000 = Rs.1,00,000 Rs.25000 + Rs.50000 = Rs.75,000 |
Let’s start by discussing all the different situations one by one or you can just contact our eCAs.
A. Medical Insurance Premium: For You and Your Family- The maximum deduction for the policy taken against you and your family by Rs. 25,000 / -.
- If you are a senior citizen (aged 60 or older) the deduction will be Rs. 50,000 / -
In 80D Family it means your spouse and children you depend on.
B. Medical Insurance Premium: For Parents- In addition to the above, you can apply for a s / 80D health insurance deduction with your parents.
- Maximum catch is Rs. 25,000 / -. If your parents are adults then the deduction will be Rs.50,000 / -.
Parents aged 80D include father and mother (whether dependent or not). Cousins and in-laws included.
C. Cost of Preventive Health Screening- It is similar to regular medical check-ups once or twice a year by your doctor or general practitioner
- The aggregate value of the test is limited to Rs. 5,000 / - you, your family and your parents. D. Deduction of Medical Expenses for Adults (60 years and older)
- Expenses are allowed when holding medical insurance paid for by an adult. The term medical expenses are not defined under the Income Tax Act but we can generally say that they will cover medical expenses such as consultation fees, medications, medical aid etc.
- Maximum catch by Rs. 50,000 / -.
- Donations to the Central Govt Health Scheme (CGHS) and any other recognized scheme are allowed for individuals and families for Rs.25,000.
- Any parental contribution is not allowed to be deducted. Section 80D: Comparison chart of current and past years' s current chart
* Preventive Health Screening covers all limits
* The family includes the spouse and dependent children
4. Example for calculation of deduction available u/s 80D
Ram (57 years) is a taxpayer. Other members of his family - Sita (55-year-old ram's wife), Lav and Kush (dependent children) and parents. The following costs incurred by FY Ram for 2019-2020:
| Ram, Sita, Lav & Kush | Parents | |
| Payment for medical insurance paid by check | 22000 | - |
| Cost of medical expenses paid by check | - | 47,000 |
| Cost of Costs Payable in Cash | 7000 | 5000 |
| Health protection tests | 8000 | 4000 |
80D Deduction Amount
| Ram, Sita, Lav & Kush | Parents | |
| Payment for medical insurance paid by check | 22000 | - |
| Cost of medical expenses paid by check | - | 47,000 |
| Cost of Costs Payable in Cash | Not suitable as it is available to an adult, who has not been adopted by health policy | Unauthorized monetary costs. |
| Health protection tests | 3000 (maximum 25000 out of 22,000 used, only 3000 unwanted) | 2000 (maximum limit is 50000 out of 47,000 used, the remaining 3000. However, preventive health tests have a total limit of 5000 of which 3000 are used for you and your family so only 2000 can be claimed now) |
| The 80D catch required for Ram is Rs. 74,000 | 25000 | 49000 |
Notes: * The amount of deductions / s 80D will remain the same in FY 2019-20 & FY 2020-21 ( old income tax slab ).
5. Deduction for HUF
- HUF can take out health insurance or incur medical expenses for adults without the policy of any family member.
- Maximum catch is Rs. 25,000 / -. If the member is a senior citizen then the maximum arrest rate will be Rs. 50,000 / -.
- HUF is not eligible to apply for an arrest warrant for a health check.
6. Deduction on Single Premium Medical Insurance Policies
Deductions under section 80D may be required for a single payment by your health insurer. In each of these policies, a lump sum is paid into the standard installment during the full implementation of the policy. Since payment is a one-time payment, deductions will be allowed on average.
- Fair Value under Section 80D = One Premium Paid / Number of years for which policy was taken.
- A limit of 25,000 people under the age of 60 and Rs 50,000 others will also apply in this case.
7. What are the exclusions under section 80D?
No deduction for the following amounts will be allowed under section 80D:
- Premiums are paid in cash (excluding preventive health checks)
- Fees and expenses paid by a person other than the taxpayer.
8. What is the difference between sections 80D, 80DD, 80DDB and 80U?
| Particulars | 80D | 80DD | 80DDB | 80U | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Purpose | Medical Insurance & Medical expenditure | Medical treatment of a disabled dependent | Medical Treatment of Self/Dependant for specified diseases | Medical treatment of disabled assessee (self) | ||||||||||||||||||||
| Maximum Limit | 1,00,000 | 75,000(non-severe disability) 1,25,000(severe disability) | 40,000(age < 60) 1,00,000 (age 60 or above) | 75,000(non-severe disability)
|
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| Type of assessee | Individual/HUF | Resident Individual/ HUF | Resident Individual/ HUF | Resident Individual |
9. Our Thoughts
Health insurance policy is very important for each of us. These policies provide strong financial support if you suddenly need large amounts of money.
We hope that our blog has been able to clear up all your doubts about the deduction for health insurance.
If you have any doubts, do not forget to contact our eCAs. They are in your service 24 × 7.
10. Section 80D at a Glance
Frequently Asked Questions
Can a term insurance premium be claimed as a tax exemption under Section 80D?
Normally long-term insurance premiums are not eligible for tax exemption under this category. However it depends on the type of insurance you have taken out.
Can a son claim tax exemptions on paying for parents Mediclaim?
Yes, a son can apply for a parental drug claim in terms of section 80D
Does LIC premium payment of my dependent parents come under section 80D?
No, Sec.80D is for medical and health insurance.
Do I have to be the proposer of a health insurance for myself to get a deduction from income tax u/s 80d?
Yes, taxpayers can apply for a deduction under section 80D when making payment of insurance premiums.
What is the limit of income tax deduction under section 80D?
The maximum u / s 80D limit is Rs. 25000 (if the maximum citizen is Rs. 50,000) and in the event that both parents are adults, the amount may be claimed up to INR 1,00,000.
