How to Claim Tax Benefits on Medical Insurance Premium

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Medical insurance or health insurance premium payment and payment for expenditures on medical tests and treatments can be filed for tax exemptions under section 80 D of the Income Tax Act 1961. Most people become unsure when they are introduced to sections of the Income Tax Act. The first reaction of people who do not do work related to finance or tax is to push the matter into some corner of the mind and keep procrastinating claiming exemptions. It is in the benefit of all taxpayers to acquire basic literacy on tax matters.

What is section 80 D of the Income Tax Act?

Section 80 D of the income tax act lays down all the guidelines of claiming tax exemption for expenditures on health insurance premium payments and also for expenditures on medical tests and treatments for self and family members subject to ceilings.

The Ceiling of Tax Exemption Under Section 80 D

under section 80 D an amount up to Rs 60,000 maximum can be claimed for tax exemptions. This is expected to go up by Rs 40,000 in the next financial year, as according to 2018 budget announcements. That is from the next financial year this ceiling will be Rs 1,00,000 instead of earlier Rs 60,000 due to the increase in exemption limits for senior citizens.

Tax Exemption Breakup Under Section 80 D

Tax Exemption for Self and Family:

section 80 D specifies detailed guidelines for claiming tax exemption for self and family. Here, the family includes self, spouse and two dependent children. A spouse may or may not be dependent on the taxpayer if the taxpayer has paid for an insurance premium of the spouse from own income then too while filing income tax returns s/he can claim exemptions for the same.

Extended tax exemptions are also available for expenses incurred by the taxpayer for parents for their medical insurance premium payment, medical tests/treatments. It is important to note here that under section 80 D provision, parents need not to be dependent on the taxpayer.

In brief, the provisions of section 80 D are:

  • A tax filer can file up to Rs 25, 000 tax exemption for expenses on medical insurance premium on self and family.
  • If tax filer is a senior citizen or if the spouse of tax filer is a senior citizen, tax filer can file tax exemption for expenses on medical insurance for self and family up to Rs. 30,000.
  • A tax filer can file tax exemptions for expenses incurred on preventive medical tests or for expenses incurred on medical treatments for self and family up to Rs 5000.
  • A tax filer can file for tax exemptions for expenses incurred on medical insurance of parents up to Rs 25,000.
  • If either parent of the tax filer is a senior citizen, tax filer can file for tax exemptions for expenses incurred on medical insurance of parents up to Rs 30,000.
  • A tax filer can file for tax exemptions for expenses incurred on medical tests/treatment of parents up to Rs 5000.
  • A tax filer can file for tax exemptions for expenses incurred on medical tests/treatments of parents up to Rs 30,000 if the parents are super senior citizens and cannot have medical insurance.

From the above provisions of section 80 D, it is clear that tax expenses can be claimed for expenses incurred on payment of health insurance premium as well as a small exemption amount is also applicable for expenses incurred on medical tests/treatments for self and family and parents.

Several people who know about the provisions of section 80 D, while filing their income taxes, often remember to file for an exemption for medical insurance premium payments they have made. They may forget to file for the small exemption available for payment of medical expenses.

To completely benefit from section 80 D provisions, tax filer should remember to claim exemptions for both medical insurance premium payments as well as for payments made for treatments and tests.

Is There any other Section Related to Tax Exemption on Medical Insurance Premium Payment?

Section 80 D essentially details the guidelines for claiming exemptions for medical insurance premium expenses, a very small amount can be claimed for actual medical expenses. If you are seeking further exemptions on expenses incurred on health insurance premium payment, then there are no other exemptions possible other than the provisions of section 80 D.

Several times medical expenses have to be incurred by the taxpayer for self or dependents as in certain cases medical insurance company refuses to provide cover. These cases include handicap, disability or certain critical illnesses. If you are a taxpayer and you have incurred expenses for managing disabilities/handicap/critical illnesses for self or dependent then you can claim exemption under section 80 DDB and section 80 DD. The list mentioning the handicap/disabilities/critical illness is included as section 80 D attachments. Since these sections are also related to exemptions for medical expenditures they are sometimes considered an extension or subsection of section 80 D. However these are also considered as separate sections by many.

Section 80 DDB allows up to Rs 60,000 exemption. Section 80 DD allows up to Rs 1.25 lakhs exemption.

Can HUF file for Medical Insurance Premium Expenses Tax Exemption Under Section 80D?

Section 80 D provisions are applicable for the individual as well as HUF. HUF can file tax exemption up to Rs 25,000 for medical insurance premium payments. If HUF includes senior citizen, then the exemption for medical insurance premium expenditures is up to Rs 30,000. Additionally HUF can also claim exemption up to Rs 5000 for expenses on medical treatments/tests. Section 80 D treats HUF like an individual.

Are Exemptions Under Section 80 D only Applicable for Online Payments?

The medical insurance premium payment needs to be done online to qualify for exemption claim under section 80 D. However for expenses incurred on medical treatments and tests; exemptions can be claimed for both online and cash payments.

What is the Procedure for Claiming Exemptions Under Section 80 D while filing Income Tax Returns?

There is an offline as well an online procedure. If you are still using the offline procedure, then you can download the particular income tax filing form and fill it and attach all supporting documents. The completed form with all the supporting documents can be submitted directly to IT office branch nearest to your home, or if you are getting your tax filing work done by tax consultancy, then you may submit the same to your tax consultant.

If you are an individual taxpayer, then you may also file your tax online in a few simple steps and claim the exemptions applicable for you. You need to create an account on the IT department portal and log in with your id and password. Your homepage tabs will carry instructions for form filling and importation of documents. Just fill the form and the exemption amount under the necessary columns and import all the supporting documents and submit your tax filing.

What is the Format for Claiming Exemption Under Section 80 D?

The format given below is the format of the Income Tax Department for claiming exemptions under section 80 D.

Assessment Year: Choose from dropdown menu

Status: Choose from drop down menu

 

 

Assessee, Spouse and dependent children (C1)

Assessee’ Parents

(C2)

R1

Payment for medical insurance premium

-- 

-- 

R2

Payment for a medical insurance premium of senior citizen

 --

-- 

R3

Payment for a preventive health checkup

 --

-- 

R4

Medical expenditure on Super Senior Citizens who are out of medical cover

-- 

-- 

Deduction Under Section 80 D                    Rs.--------------------------------------------

The following are the guidelines for filling up the cells:

  • The amount in R1C1 can be up to Rs 25,000.
  • The amount in R1C2 can be up to Rs 25,000.
  • The amount in R2C1 can be up to Rs. 30,000
  • The amount in R2C2 can be up to Rs 30,000
  • The amount in R3C1 can be up to Rs 5000
  • The amount in R3C2 can be up to Rs. 5000
  • The amount in R4C1 can be up to Rs 30,000
  • The amount in R4C2 can be up to Rs 30,000
  • Deduction under section 80 D’ cannot exceed Rs 60,000

What is the Most Recent Deduction Limit Under Section 80 D as per 2016 Budget Announcement? What are its Implications?

In this year’s budget (2018 budget) the Finance minister has included an increase in the limit of deduction for senior citizens up to Rs 50,000 instead of the earlier Rs 30,000 under section 80 D of the Income Tax Act. The changes will be applicable from April 2019 that is from the beginning of the next financial year.

What will be the implications? This can be understood from the section 80 D deduction format given above.

  • The amount under R2C1 can be up to Rs. 50,000 instead of the earlier Rs 30,000.
  • The amount under R2C2 can be up to Rs. 50,000 instead of the earlier Rs 30,000.
  • The amount under R4C1 can be up to Rs. 50,000 instead of the earlier Rs 30,000.
  • The amount under R4C2 can be up to Rs. 50,000 instead of the earlier Rs 30,000.
  • Deduction under section 80 D cannot exceed Rs 1, 00,000 instead of earlier Rs 60,000 ceiling. (ceiling can go above Rs 60,000 only if senior citizens included).

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