Section 80D

According to the report ‘Indian Life and Health Insurance Sectors published in 2017, the health insurance industry of India is at its embryonic stage with just 44% of the total Indian population having medical insurance . India still has a long way to go to penetrate a larger population and give the Indian working class access to comprehensive health insurance cover.

Given the steep cost of healthcare in India, it is of utmost importance that one’s financial portfolio has medical insurance coverage in it. The medical trend rate in India (which refers to the increase in the cost of healthcare per person) is all set to grow at a whopping 10%. This is practically double the rate of inflation, which is set to grow at a rate of 5%. Thus, medical insurance is a financial necessity in today’s day and age.

What is Section 80D?

The 2018 budget was focused specifically on maintaining proper health and welfare for the Indian citizens. Hence, then Finance Minister Arun Jaitley made an effort to help with provisions for tax deductions on premiums of health insurance.

Section 80D of the Income Tax was introduced in 2018 with the aim to promote medical planning. Section 80D provides you with financial relief with the help of tax deductions on medical insurance premiums paid for yourself and your family. Make the most of your medical insurance by claiming your tax deductions at the time of filing your Income Tax Returns.

Let us have a look at the specifics of deductions under section 80D.

Deduction Under Section 80D - Terms & Conditions

Terms and conditions for deductions under section 80D are given below.

  • You can claim deductions of up to Rs. 25, 000 on the premiums paid for medical insurance for yourself, your dependent children, and spouse.

  • You can claim separate deductions on medical insurance premiums for your parents under Section 80D. If your parents are less than 60 years of age, you can claim additional deductions of ₹25,000, bringing your total deduction limit to Rs. 50,000.

  • If your parents are more than 60 years of age, you can claim tax deductions of up to ₹50,000 on premiums paid for them. In the 2018 budget, this amount was increased from ₹30,000 to ₹50,000. Combined with your own deductions, the deduction limit would be raised to ₹75,000.

  • If the taxpayer and their parents are both over 60 years of age, deductions of up to ₹1 lakh can be claimed.

  • You can claim Rs. 5,000 on expenditure towards health check-ups for yourself, your dependent children, parents, and spouse. This deduction comes under the umbrella of the ₹25,000 deduction limits and cannot be claimed over and above this limit.

Deduction under Section 80D of Income Tax Act

Eligibility for Claiming Deductions under 80D

  • It can be claimed by the person who has incurred the expenditure on medical insurance premiums.

  • An individual can claim deductions on premium payments for oneself, as well as their family members. Here, ‘family’ corresponds to the spouse, parents, and dependent children.

  • You can be an individual or a part of the Hindu Undivided Family (HUF) to claim the 80D.

  • NRIs too can claim this deduction.

Section 80D Limit

Though insurance premiums paid in cash are not eligible for 80D tax benefits, the installments for health checkups can be paid in cash. Here’s a table that elucidates in detail the deduction limits you must be aware of under different circumstances:

Covered individuals

Exemption limit

Exemption for a health check-up

Total

The medical insurance premium paid our family and yourself

₹25000

₹5000

₹25000

Medical insurance premiums for self, family, and parents

₹50000

(₹25,000 + ₹25,000)

₹5000

₹50,000

Medical insurance premiums for self, family, and parents over 60 years of age

₹75000 (₹25,000+50,000)

₹5000

₹75,000

Medical insurance premiums for self (age over 60), family, and parents (age over 60)

₹1 lakh

(₹50,000+₹50,000)

₹5000

₹1 lakh

 

Claiming 80D Tax Deduction

Here are some important factors to keep in mind while claiming 80D tax deductions:

  • HUFs can claim tax deductions for medical expenses incurred or premiums paid for health insurance for senior citizens and any family member under 80D.

  • HUFs are, however, not eligible for health insurance tax benefits for preventive health-care check-ups.

  • You can even claim for tax deductions under 80D if you have a single-premium medical insurance policy.

  • For Single-Premium Medical Insurance Policy, a lump-sum payment is made just once instead of regular payments on a monthly basis. Here, deductions will be allowed on a proportionate basis. You can calculate your tax deductions under 80D for a single premium paid by using the following formula: 80D deduction= Single premium paid/ years (n) the policy is taken

  • While claiming tax deductions under 80D, make sure that the premiums are not paid in cash. You can claim for the deductions only if the premiums are paid either by credit card or cheque.

  • Further, the premium that you pay must be from your taxable income for the respective financial year.

Difference between Sections 80D, 80DD, 80DDB, and 80U

The government has provided various deductions for us to avail on income tax paid towards medical expenditures. 80D, 80DD, 80DDB, and 80U are some of the most popular ones.

However, taxpayers can experience confusion when trying to distinguish between these three sections. In order to make things clearer, here’s a table elucidating the difference between sections 80D, 80DD, 80DDB, and 80U.

 

80D

80DD

80DDB

80U

Insurance

Medical expenditure and insurance

Medical treatment of disabled dependent

Medical treatment of specific diseases for self/dependent

Medical treatment for the disabled assessee

Limit

Highest possible deduction limit - ₹1 lakh

Severe disability-₹1 lakh,

Non-severe disability- ₹75000

Age less than 60 years-₹40,000,

Age more than 60 years- ₹1 lakh

Severe disability-₹1 lakh,

Non-severe disability- ₹75000

Assessee type

Indian citizen/HUF

Indian citizen/HUF

Indian citizen/HUF

Indian citizen

 

Key points Related to Section 80D

  • To get a deduction claim under 80D, only the taxpayer, and no third party can claim section 80D deductions.
  • For cess charges and service charges levied on health insurance premiums, you cannot claim a deduction under 80D. Usually, on medical insurance payments, only service charges are levied. Service tax on health insurance premiums is 14%.
  • Under section 80D, group health insurance policies are not eligible for any tax deductions. However, if the assessee chooses to pay an extra premium to get a better health cover, they can claim tax deductions under the extra paid premium amount.
  • You can also avail tax benefits if you are paying for premiums of health insurance for parents who are not dependent on you.
  • If you don’t have a health insurance plan, but you are a life insurance or term insurance policyholder, then you can claim tax deduction under section 80C.  

Conclusion

Now that you’ve understood the vast tax benefits available under Section 80D, you can opt for a health insurance policy to avail of these benefits. A comprehensive health insurance policy that lets you avail of tax benefits, as well as offer up its own set of perks is the Bajaj Allianz Health Insurance policy on Finserv MARKETS. Bajaj Allianz Health Insurance helps you with hefty hospital bills, treatments, and other unforeseen emergencies.

If you are a salaried individual or a part of HUF, you can easily claim tax benefits under section 80D for insurance premiums paid towards your plan. Here, you don’t need to worry about waiting for weeks to settle your claims. Your claims will be settled within an hour. In addition to that, Bajaj Allianz Health Insurance offers personalized health insurance plans that completely sets it apart. You get free medical check-ups, coverage for alternative medical treatments and high sum assured of up to Rs. 50 lakhs. What’s more, health insurance on Finserv MARKETS also provides ambulance coverage and cashless services to ease your distress during unforeseen emergencies. Tackle your medical woes and emergencies head-on without worrying about your claim settlements. Go ahead and avail the Bajaj Allianz Health Insurance today!cmd

FAQs

  • ✔️Can I claim tax deductions for premiums paid by cash?

    No, you cannot claim tax deductions if you have paid your medical insurance premiums in cash.
  • ✔️My children are currently working in a company. Can I claim for tax deductions under section 80D on their behalf?

    No, you can claim income tax deductions under 80D only if your children are dependent on you.
  • ✔️Can I claim the service tax that I paid on my health insurance premium?

    No, the service tax paid during your insurance premium is collected by respective agencies. Hence, you cannot for the said service tax.
  • ✔️I pay the LIC premiums of my dependent parents. Am I eligible to claim 80D deductions?

    No, you cannot. 80D is for health insurance and medical premiums.
  • ✔️I am the only son of my parents. I pay their mediclaim premiums regularly. Can I claim for 80D while filing an ITR?

    Yes, you can.

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