Section 80D

What is Section 80D of the Income Tax Act?

Section 80D of the Income Tax Act, 1961 offers tax deductions of up to Rs 25,000 on health insurance premiums paid in a financial year. The tax deduction limit increases to Rs 50,000 per fiscal year for senior citizens aged 60 years and above. Individuals can claim tax deductions under Section 80D on a health insurance policy purchased for themselves, their spouse, dependent children and parents.

Tax deductions available under Section 80D are over and above those claimed under Section 80C of the Income Tax Act.

Who is Eligible for Tax Deduction Under Section 80D?

Only individuals and Hindu Undivided Families (HUFs) are eligible for tax deductions under Section 80D of the Income Tax Act, 1961. Any other entity, such as an organization or firm, cannot claim tax deductions under Section 80D.

What Deductions Are Allowed Under Section 80D?

Under Section 80D, an individual or HUF can claim tax deductions for the following:

1. Health insurance premium paid for self, spouse, children and parents
2. Payments made towards preventive health check-ups
3. Medical expenses incurred on maintaining the health of senior citizens without any medical insurance
4. Contributions made to any government health insurance scheme

Tax Deduction Limit Under Section 80D

Section 80D allows a tax deduction of up to Rs 25,000 per financial year on medical insurance premiums. Section 80D also includes a Rs 5,000 deduction for any expenses paid for preventative health check-ups. This deduction is limited to Rs 25,000/Rs 50,000, as applicable. For senior citizens (i.e. aged 60 years and above), the 80D deduction is up to Rs 50,000. The limit includes health insurance premiums paid for self, spouse and dependent children.

Let’s understand this with the help of an example. Suppose 40-year-old Dinesh has purchased health insurance for a premium of Rs 35,000. As per Section 80D, he can claim a tax deduction of Rs 25,000 as he is below 60 years. But Dinesh’s father, who is 65 years old, paid Rs 55,000 as medical insurance. In this case, his father can claim a tax deduction of Rs 50,000 as he is above 60 years old.

Similarly, tax deductions for members of HUF are Rs 25,000 if the policyholder is below 60 years and Rs 50,000 if the policyholder is a senior citizen.

Tax Deduction for Health Insurance Premium Paid for Parents Under Section 80D:

Health insurance premiums paid for parents are also allowed for the Section 80D tax deduction of up to Rs 25,000 per financial year. If one or both parents are senior citizens, a tax deduction of up to Rs 50,000 can be claimed in a financial year.

For example, suppose Jitendra purchased a health insurance policy of Rs 53,000 for his elderly parents, aged 62 years and 58 years. In this case, Jitendra can claim a tax deduction of Rs 50,000 on the health insurance premium paid for his parents.

Tax Deductions Under Section 80D

Check out the tax deduction available to an individual under Section 80D of the Income Tax Act as of FY 2022-23:

What Are Preventive Health Check-ups under Section 80D?

Preventive health check-ups are frequent medical examinations conducted to identify an illness at an early stage and reduce the risk factors. The government introduced tax deductions on preventive health check-ups in FY 2013-24 to encourage people to monitor their health proactively. You can avail this tax benefit on the payment made towards the preventive health check-up undertaken for yourself, your spouse, children and parents.

As per Section 80D, a tax deduction of up to Rs 5,000 per financial year can be claimed towards preventive health check-ups. However, this preventive health check-up deduction is subject to the overall Section 80D limit of Rs 25,000 for individuals and Rs 50,000 for senior citizens.

Let us understand this with the help of an example:

Suppose Prashant has a family of six members, i.e. self (35), wife (34), two children (11 and 7), father (63), and mother (59). He purchased a family floater health insurance plan that covers him, his wife, and his children for a yearly premium of Rs 30,000. Moreover, he has also paid Rs 52,000 for his parent's medical insurance. Besides, Prashant has also paid Rs 15,000 for his health check-up and Rs 10,000 for his parents’ health check-up.

Check out the table below to understand the total tax deduction allowed under Sec 80D of the Income Tax Act:

So, while Prashant incurred Rs 1,07,000 on health insurance premiums and preventive health check-ups, he could claim only Rs 75,000 as tax deductions under Section 80D of the Income Tax Act in a financial year.

Mode of Payments Eligible for Deductions Under Section 80D

The following modes of payments are allowed to avail tax deductions under Section 80D:

Deduction Under Section 80D for Multi-year Health Insurance Premiums Paid in Lump Sum

Many people buy multi-year health insurance to avail a long-term policy discount offered by insurance companies. If multi-year health insurance premiums have been paid in a lump sum at the time of policy purchase, policyholders can avail proportionate tax deductions under Section 80D of the Income Tax Act.

But just like preventive health check-ups, tax deductions on multi-year health insurance premiums are subject to the overall Section 80D limit of Rs 25,000 for individuals and Rs 50,000 for senior citizens.

For example, Mohit paid Rs 45,000 for a 3-year health insurance policy at the time of purchase. In this case, he can claim Rs 15,000 per financial year as tax deductions under Section 80D.

Deduction for Medical Expenses of Senior Citizens Under Section 80D

As per Section 80D, medical expenses paid on the maintenance of senior citizens without any health insurance policy are eligible for a tax deduction of up to Rs 50,000 per financial year. However, if a senior citizen already has medical insurance, they will not be eligible for this deduction.

For example, Suppose Raj has paid Rs 60,000 on the medical expenses of his parents, who do not have a health insurance policy. In this case, he can claim a tax deduction of Rs 50,000 per financial year under Section 80D.

Deduction Under Section 80DD(Treatment of a Dependent with Disability)

Under Section 80DD of the Income Tax Act, people can claim a tax deduction of up to Rs 75,000 per financial year on the medical expenses incurred on the treatment of a dependent who is a person with a disability. In case of severe disability of 80% or more, a tax deduction of Rs 1,25,000 per financial year is allowed. A medical certificate of disability issued by the central or state government’s medical board has to be submitted when filing income tax returns.

Tax deductions under Sec80DD can also be claimed if an individual has made annuity or lump sum payments for any scheme with LIC or any insurer for maintaining the health of the dependent person with a disability.

Tax deductions under Section 80DD are allowed on medical expenses incurred on the cost of medical treatment, nursing, training, and rehabilitation of a dependent with a disability. Dependents can either be the spouse, children, parents or siblings.

However, you need to submit a medical certificate issued by the central or state government’s medical board stating the disability at the time of filing income tax returns.

Deduction Under Section 80DDB (Treatment of Specified Illnesses)

As per Section 80DDB of the Income Tax Act, a tax deduction of up to Rs 40,000 per financial year can be claimed on medical expenses incurred on the treatment of specified diseases, including malignant cancers, AIDS, chronic renal failure, dementia and Parkinson’s Disease. For senior citizens, a tax deduction of up to Rs 1 lakh per financial year can be claimed on the treatment cost of specific ailments.

However, proof of availing treatment for a specified disease has to be attached while filing income tax returns. Besides, people can claim Section 80DDB deduction on the medical expenses incurred on the treatment of themselves, their spouse, parents, children, and siblings.

Section 80D vs 80C

Many people get confused between Section 80D and Section 80C of the Income Tax Act 1961. To clear the confusion, check out the basic differences between Section 80D and 80C:

Things to Remember When Availing Tax Deductions Under Section 80D

Take a look at the things you must remember while availing tax deductions under Section 80D:

• Health insurance premiums paid in cash are not eligible for tax deductions.
• If an individual and the parent have paid medical insurance premiums in part, then both can claim tax deductions for their paid amount under Sec 80D.
• Premiums paid for siblings, grandparents, uncles and aunts are not qualified for tax deductions.
• Premiums paid on behalf of working children are not eligible for Sec 80D deductions.
• Group health insurance premiums paid by the employer are not eligible for deductions.
• No deduction is provided on the service tax and cess amount added to health insurance premiums.

FAQs on Section 80D