Senior citizens can save on income tax by availing tax benefits on medical expenses under Section 80D of the Income Tax Act, 1961. Senior citizen refers to a person who is 60 years old and above. Thus, any medical bills or health insurance premium paid by an individual for his/her parents or by a senior citizen himself are eligible for tax benefits u/s 80D.
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The Income Tax Act allows you to claim a maximum deduction of Rs 50,000 (as of FY 2021-22) on medical expenses incurred on the healthcare of senior citizens (eligible parents) in a financial year. Hence, if you are aged 60 years and above, then you can claim a maximum tax deduction of up to Rs 50,000 on your medical expenses or health insurance premium.
Let’s understand tax deductions under Section 80D for senior citizens better with the help of the following table:
|Individual Paying Health Insurance Premium||Tax Deduction under Section 80D (FY 2021-22)||Maximum Tax Deduction under Section 80D|
|For Individuals||For Senior Citizens|
|If the premium is paid by the senior citizen himself||N/A||Rs 50,000||Rs 50,000|
|If the premium is paid by an individual < 60 years but parents are senior citizens||Rs 25,000||Rs 50,000||Rs 75,000|
|If a senior citizen pays his/her premium and his senior citizen parents’ premium||Rs 50,000||Rs 50,000||Rs 1,00,000|
As per Section 80D, you can claim tax deductions of up to Rs 50,000 on the money spent on your preventive health check-ups, health insurance policy premium, medical expenditure for you and your family members, and the Central Government Health Scheme (CGHS) if you are a senior citizen. However, the maximum tax deduction limit for preventive health check-ups is Rs 5000 per financial year. This limit for preventive health check-ups is included under the overall tax deduction limit of Rs 50,000 for senior citizens.
The following table shows tax deduction limits s per section 80D under different scenarios:
|Particulars||Maximum Tax Deduction Limit Under Section 80D (FY 2021-22)|
|Self, spouse and dependent children are NSC* & Parents are NSC||Self, spouse and dependent children are NSC & Parents are SC**||Self, spouse and dependent children are SC & Parents are SC|
|Health insurance premium of self, spouse & children (including preventive health check-up of up to Rs 5,000)||Rs 25,000||Rs 25,000||Rs 50,000|
|Medical insurance premium and preventive health check-up for parents||Rs 25,000||Rs 50,000||Rs 50,000|
|Medical bills of self, dependent children & spouse||N/A||N/A||Covered within the maximum tax limit of Rs 50,000|
|Medical bills for parents||N/A||Covered within the maximum tax limit of Rs 50,000||Covered within the maximum tax limit of Rs 50,000|
|Maximum Tax Deduction Limit u/s 80D||Rs 50,000||Rs 75000||Rs 1 lakh|
(Source: Clear Tax) *NSC stands for Non-senior citizen **SC stands for Senior citizen
Any disease or medical expenses that are not defined in the Income Tax Act won’t be covered for tax deduction under section 80D. However, expenses incurred on doctor’s consultations, medicines, hospitalization and medical devices, such as pacemakers, hearing aids, etc., shall be considered for deductions as per the government amendments to the Act.
In addition to Section 80D, there are certain medical conditions and diseases that are covered under Section 80DDB. These diseases include AIDS, cancer, Parkinson’s disease, etc. While non-senior citizens can avail a deduction of up to Rs 40,000, senior citizens can claim tax deductions of up to Rs 1,00,000 under this section. So, if the medical condition for which you are paying the bills comes under this category, then you can file a claim under Section 80DDB.
If a medical condition does not fall under Section 80DDB or if the limit gets exhausted, then you can claim the remaining medical expenses u/s 80D.
To claim tax deductions, use online payment modes to pay the premium of your health insurance plan or the cost of medical treatment. Do not use cash as a mode of payment; rather use a debit card, credit card, net banking, cheque payment, etc. You can also use other digital payment methods, such as UPI, mobile wallets, etc., to pay your medical expenses or the premium amount.
However, you can pay for preventive health checkups in cash. Preventive health checkups should be done periodically to protect yourself from any exposure to an illness or disease. If a disease or medical condition is diagnosed timely, then the right treatment can be availed.
The Income Tax Act does not specify any list of documents that are required to claim tax benefits under Section 80D. However, it would be smart to save documentary evidence like bills of medical expenses, medicine invoices, reports of diagnostic tests, documents regarding medical history, doctor’s prescription, etc. in case you ever need to show them.
So, when you file your income tax return for the next financial year or submit your proof at the end of this financial year, don’t forget your medical bills. If you are a senior citizen or have elderly parents for whom you pay the premium or medical bills, then you can claim those expenses too.
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