What is Section 80D of Income Tax Act?

What is Section 80D in Income Tax?

Section 80D is a section of the Income Tax Act, 1961 that has provisions for tax deductions related to the health insurance premiums you pay. Income tax deductions under Section 80D can be claimed for medical insurance paid for you, your parents, children and partner. Moreover, Hindu Undivided Families can also claim income tax deductions related to health insurance under Section 80D of the IT Act.

Section 80D of the Income Tax Act was changed in 2018, where the maximum amount of deductions in health insurance premiums was raised from ₹30,000 to ₹50,000 for senior citizens. This change was made to promote medical planning and encourage more senior citizens to get health insurance coverage. Let’s take a look at Section 80D in detail and explore the types of investments covered, the inclusions and exclusions under this section.

Investments That Come Under Section 80D

Section 80D of the Income Tax Act covers the following list of investments that can be claimed for income tax deductions. You can claim these deductions when filing for your income tax returns.

1. Premiums paid on a health insurance policy for you, your spouse, and your children.

2. Premiums paid on a health insurance policy for your parents.

3. Expenses related to preventive medical check-ups.

4. Health insurance riders such as critical care cover, maternity cover, among others, can also be claimed under Section 80D of the Income Tax Act, 1961.

Section 80D Deductions and Limits

The following is the list of income tax deductions and their limits that can be claimed under Section 80D:

1. You can claim income tax deductions of up to ₹25,000 on the premiums paid on a health insurance policy for you, your spouse and your children.

2. You can additionally claim income tax deductions of up to ₹25,000 on the premiums paid on a health insurance policy for your parents if they are under the age of 60 years.

3. Health insurance premiums paid for senior citizens are eligible for income tax deductions of up to ₹50,000. If both you and your parents are above the age of 60 and you are paying for the health insurance premiums for your family as well as your parents, you are eligible for a combined income tax deduction of ₹1,00,000 (₹50,000 for you and your family, ₹50,000 for your parents).

4. You can also claim an additional ₹5,000 as income tax deductions for preventative health check-ups.

Section 80D Exclusions

Section 80D also comes with certain exclusions. Below is a list of the same:

1. Health insurance premium payments are made for your siblings, grandparents, employed children.

2. Health insurance premium payments are made using cash.

3. Premiums on group health insurance provided by employers to their employees.

4. You cannot receive any tax benefits on Cess and GST charges on your health insurance premiums.   

Section 80D Limit

According to Section 80D, you can claim income tax deductions on health insurance premiums paid for self/family and parents along with deductions on medical expenses incurred on check-ups. Let’s explore what is the limit for Section 80D in income tax.

Note: The health check-up exemption will be within the maximum limit i.e. ₹25,000 and ₹50,000.

Section 80D and 80C

Section 80D is generally confused with Section 80C. While Section 80C provides deductions up to ₹1.5 lakh, Section 80D provides income tax deductions up to ₹1 lakh (If you are a senior citizen who has purchased a coverage for self and family + senior citizen parents). Section 80C focuses on investments, whereas health insurance premium is what comes under Section 80D.

Deduction for Mediclaim Under Section 80D

The government offers tax deductions on mediclaim to ensure policies stay active. Since medical costs keep soaring, mediclaim has become paramount. It alleviates the financial pressure during medical emergencies. Hence, tax deductions are a way of encouraging citizens to buy mediclaims.

Things to Remember While Buying Medical Insurance

Ensure that you consider the following points while buying a health insurance cover.

• If you pay premium for a working child, you cannot claim a deduction under Section 80D

• If you pay premium for your siblings, grandparents, uncles, aunts, and other relatives, you cannot claim a deduction under Section 80D

• If you and your parents have shared the expense on premiums, you both can claim a deduction under this section

• If you paid premium for group health insurance, which is provided by your employer, it won’t be deducted from your taxable income