Introduction

Section 80D involves the deductions which are related to Medical Insurance Premium paid to keep in force insurance by an individual either for his own health or spouse, dependent parents and children or HUF on the health of any members of the family. A Medi-claim policy is a must because should you fall sick or meet with an accident, your medical bills could wipe out your savings.

Deductions under Section 80D:

Section 80D will help in getting tax deductions on medical insurance premiums only. The deductions allowed are as follows:

For Self and Family:

  • The maximum deduction of Rs. 25,000 per year on health insurance premium for self and family.
  • The maximum deduction of Rs. 30,000 per year for senior citizens.

 For Parents:

  • The maximum deduction of Rs.25,000 per year on health insurance premium paid on behalf of parents.
  • The maximum deduction of Rs.30,000 per year on premium payments for senior citizen parents.

 Additional Deduction:

  • Every year expenditure related to health diagnosis of Rs. 5,000 can be claimed.

The limit includes the diagnosis expenses of all members in a family, including spouse, kids, and parents.

Eligibility for Tax Benefits u/s 80D:

A taxpayer can claim the deductions u/s 80D. The health insurance premium paid for the following members of a family are eligible for deductions:

  • Self
  • Spouse
  • Children
  • Parents

Hindu Undivided Families (HUF) can also claim deductions under this section. Premium payments can be used for a tax deduction of any member in an HUF.

Section 80D Limit:

As per Section 80D, a taxpayer can claim deductions for health insurance premiums paid for self/family and parents, apart from deductions on expenses related to health check-ups.

The deduction liabilities are as follows:

Persons Covered Exemption Limit Health Check-Up Exemption Total
Self and family Rs.25,000 Rs.5,000 Rs.25,000
Self and family + parents Rs.(25,000 + 25,000) = Rs.50,000 Rs.5,000 Rs.55,000
Self and family + senior citizen parents Rs.(25,000 + 30,000) = Rs.55,000 Rs.5,000 Rs.60,000
Self (senior citizen) and family + senior citizen parents Rs.(30,000 + 30,000) = Rs.60,000 Rs.5,000 Rs.65,000

Example

You live in a family of six members: Self (35), Spouse (34), two children (11 and 7), Father (63), and mother (59), Purchased health insurance that covers you, your spouse, and children. The yearly premium is Rs. 15,000. Whether paid a yearly premium for your parent’s medical insurance Rs. 28,000. You paid Rs. 15,000 for your health checkup. Furthermore, you paid Rs. 7,000 for your parents’ health checkup.

How many deductions can you avail?

Expense Actual Expense Maximum Deduction Deduction Applicable
Health Insurance Premium for You, Your Spouse, & Children Rs.15,000 Rs.25,000 Rs.15,000
Preventive Health Checkup for Self, Spouse, Children Rs.15,000 Rs.5,000 Rs.5,000
Total Expense for Self, Spouse, & Children Rs.30,000 Rs.25,000 Rs.20,000
Health Insurance Premium for Parents (Senior Citizens) Rs.28,000 Rs.30,000 Rs.28,000
Health Check Up for Parents (Senior Citizens) Rs.10,000 Rs.5,000 Rs.5,000
Total For Parents (Senior Citizens) Rs.38,000 Rs.30,000 Rs.30,000
Total Deduction Rs.50,000

As given, the total expense for insurance premium was Rs. 68,000 and received tax benefit of Rs. 50,000 for the year.

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