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An Insight into Section 80D Deductions for Health Insurance Premium and Checkups

The Income Tax Act of India has provided us with certain deductions under section 80D, based on the premium paid for the coverage. You cannot exceed this limit of deduction. Let us illustrate an example to help you understand this in a better way:

Mr. Suresh (age 35 years) has made the following payments for health insurance coverage and preventive health checkups during the financial year 2016-2017

Payments Made For

Premium

Premium for health insurance for self

Rs. 15,000

Premium for health insurance for his spouse

Rs. 4,000

Premium for health insurance policy for his younger daughter who isdependent on Mr. Suresh

Rs. 3,000

Premium for health insurance policy for his elder daughter who is selfemployed and not dependent on Mr. Suresh

Rs. 5,000

Premium for health insurance policy for his Father who is 68 years old

Rs. 18,000

Premium for health insurance policy for his Mother who is 68 years old

Rs. 18,000

Payment towards preventive health check-up up (for his own check-up and check-up of his wife).

Rs. 3,000

 

Section 80D: Considering the above expenditure, the tax deduction, in this case, will be as follows:

  1. Health insurance premium paid for his policy is Rs. 15,000, which is eligible for the deduction.
  2. Health insurance premium of Rs. 4,000 for his spouse policy is eligible for the deduction.
  3. Health insurance premium of Rs. 3,000 for his younger daughter’s policy (dependent on him) is eligible for the tax deduction.
You may like to Read: 80C Deduction for AY 2016-17

However, the premium of Rs. 5,000 for of his elder daughter’s policy (not dependent on him) is not eligible for the tax deduction.

  1. Health insurance premium for the policy of his parents of Rs. 36,000 is eligible for the deduction up to Rs. 30, 000.
  2. Expenses incurred for preventive health checkups are also eligible for the tax deduction, but up to the limit of Rs. 3,000

Health Insurance Premium

The total deduction under section 80D of Income Tax Act will be the Rs. 22,000 on account of the following:

Expenses incurred for the premium paid for health insurance for self, his spouse and his dependent daughter and Rs. 30,000 for the premium paid on health insurance policy of his parents.

The tax Deduction based on preventive health checkups will be Rs. 3,000

Total tax deduction under section 80D of Income Tax Act will amount to Rs. 55,000 (Rs. 22,000 + Rs. 30,000 + Rs. 3000).

Tax Saving under Section 80D: Deduction for Preventive Health Checkups

An updated clause under Section 80D of Income Tax Act allows policyholders to avail the tax deduction based on the expenses incurred for Preventive Health Checkups. The Deduction allowed would be up to Rs. 5000 under Section 80D against the payment of preventive health checkups of self or family members, including parents and dependent children.

It is important to note that the maximum amount allowed for deduction is Rs. 5000. So, irrespective of the amount you pay for preventive health checkups of your dependent children, parents, and you, the total deduction permitted to you would be no more than Rs. 5000.

When we plan to buy a health insurance policy, the very first question that hits the mind is, “How much coverage is the ideal?” Read below to fetch your query:

To get this question answered, you’ll need to calculate your medical expenses incurred in the past and consider the expenses that you may incur in the future. You’ll also need to consider any medical facility you or your family may require today or in the future. A health insurance policy will help you to prevent your family from facing financial problems when you come across a medical emergency.

You may also like to Read: How to Save Tax with Health Insurance?

Make sure your policy offers all kinds of coverage mandatory for you and your family members. Also, seek a policy that fulfills all your requirements at an affordable premium. You can search it online or take help meet an insurance broker in person to buy the best health insurance policy.

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