Section 80D Deduction for A.Y 2016-17

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There is no question about the requirement for satisfactory medical coverage in your insurance portfolio. If you know that you can't bear the cost of your insurance premium, then you need to think that how you will manage the cost of the treatment, in case you somehow get hospitalized. Indeed, even the government needs you to buy medical coverage. In spite of the fact that the premium will not be paid on your behalf, the government positively completes its role and put the weight on your pocket through tax benefits.

Deduction on Section 80D in Income Tax Act (Tax deduction based on Health Insurance Premiums Paid)

You are allowed to claim a deduction up to Rs. 25,000 per budgetary year for medical insurance premium installments. The premium should be for you, your spouse, and dependent children. On the other hand, if there is a chance that either you or your spouse is a senior citizen (60 years or above), the limit goes up to Rs. 30,000.

Deduction on Preventive Healthcare Checkups

You get tax reduction on preventive health checkups annually. Inside the aforementioned limit of Rs. 25,000 (or Rs. 30,000 all things considered) under Section 80D income tax, you can also claim expenses incurred for preventive health checkups up to Rs. 5,000 for each budgetary year.

Remember: The premiums paid for health insurance availed by your siblings are not qualified for tax benefits.

Deduction on Health Insurance Premium Payment for Parents

Medical insurance premium paid for guardians is additionally qualified for deduction up to Rs. 25,000 every financial year. If your father or mother, or either of them is a senior citizen, the maximum limit goes up to Rs. 30, 000 a year. This limit additionally subsumes Rs. 5,000 that can be caused towards your parents’ annual health checkups.

Income Tax Act

No tax benefit on cash payment

Medical insurance premium should be made through online banking, a cheque, draft, debit or credit cards, etc. Tax reduction is not accessible for cash installments of the premium. In any case, installments for preventive health checkup can be paid in cash.

Example 1

You live in a family of six members: Self (35), Spouse (34), two children (11 and 7), Father (63), and mother (59). You purchase a family floater health insurance that covers you, your spouse, and children. The yearly premium is Rs. 15,000. Moreover, you 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 much deduction 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 Your Parents (Senior Citizens)

Rs. 28,000

Rs. 30,000

Rs. 28,000

Preventive 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 Available for the Year

   

Rs. 50,000

 

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

Example 2

You are 60 years old and pay a premium of Rs. 32,000 annually for your dependents and you. If, you are also paying a premium of Rs. 35,000 for your guardians’ health policy, who are super senior citizens, i.e. of 80 years of age. Under section 80D of ITA, you can avail the following benefits:

  • Tax benefit of Rs. 30,000 based on the health insurance premium of Rs. 32,000 paid for your dependents and you.
  • Tax benefits of Rs.30, 000 for your parents who are senior citizens, apart from the payment of Rs. 35,000 made.
  • All in all, a tax deduction of Rs. 60,000 can be claimed and not the total expense incurred.
Read about Section 80D Deductions for Health Insurance Premium

Limit on Deduction under Section 80 D

According to Section 80D, you can claim the tax benefit subject to the health insurance premiums paid for your family (including your spouse and children) and parents, which are different from the benefits, based on costs related to health check-ups. The deduction limits 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

 

Deduction on Health insurance premium for very senior citizens

Super-senior citizens (80 years or more) who don’t have any insurance policy can claim a deduction up to Rs. 30,000 every financial year towards medical checkups and treatments. However, this is not for own expenses.

On the other hand, if your dad is a super senior citizen and he has no insurance and mother is a senior citizen, then you are allowed to claim a tax deduction of Rs. 30,000 towards your medical treatment for guardians, medical coverage and registration of both guardians.

Deduction Under Section 80DDB (Treatment of Specified Illnesses)

You can get a deduction up to Rs. 1, 40,000 (Rs. 60,000 for senior citizens and Rs. 80,000 for extremely senior citizens) for medicinal expense incurred for determined ailments. For example, cancer, chronic renal failure, Parkinson infection, etc. The complete list of such diseases is given in Rule 11DD.

You have to attach an endorsement from specialist while filing income tax forms.

You can claim for self, spouse, guardians, children, and siblings.

Deduction Under Section 80DD (Treatment of a dependent with disability)

You can claim the benefit up to Rs. 75,000 based on the expense incurred for nursing, training, medical treatment, preservation, and rehabilitation of a dependent with disability (Rs. 1.25 lakh for an extreme and serious disability). Reliant can be any of your parents, children, your spouse, or siblings. You need to show or submit a supporting medical certificate.

You may also like to Read: Section 80D of ITA

Deduction Under Section 80U (Person with disability)

A person who is a disabled can claim benefits of Rs. 75,000 under Section 80U. In case of disability, the limit increases up to Rs. 1.25 lakh. There is no other relation to the treatment costs.

Deduction on Medical Allowance under Section 17

The sum paid (with your salary) by your employer towards the treatment cost for an ailment of your family (self, spouse, children, siblings and dependent parents) is excluded from the income tax, which is up to Rs. 15,000 per financial year.

The Sum paid (with your compensation) by your manager towards the cost for the medical treatment of your family (self, life partner, kids, dependent guardians and siblings) is excluded from the pay expense, i.e. up to Rs. 15,000 for each fiscal year.

Deductions on Section 80D and 80C

Section 80D is often puzzled with its more visible partner, i.e. Section 80C. Section 80C includes deductions up to Rs. 1.5 lakhs per year while Section 80D offers benefits up to Rs. 65,000.

Another point is that Section 80C incorporates investments made in an extensive range of financial instruments, such as small savings schemes, mutual funds, life insurance premium etc., whereas Section 80D is meant entirely for deductions on the health insurance premiums paid.

Difference between Section 80D and Section 80C

A lot of people remain confused between Section 80D and Section 80C. Just like Section 80D of the Indian Income Tax Act 1961, Section 80C also gives you the opportunity to save taxes. However, the upper limit to save taxes under Section 80C is greater as compared to Section 80D.

Here are some basic point of differences between 80C and 80D deductions:

  • Under Section 80D, tax payers can avail tax exemptions for health insurance premiums of self, family and parents and for expenses incurred in preventive health check-ups. On the other hand, Section 80C of the Income Tax Act includes many, different types of tax saving investments and expenses.
  • Under Section 80D, the maximum tax exemption limit is Rs 1.5 lakhs. On the other hand, the maximum tax exemption limit under section 80D is Rs 65,000.

Exclusion in Section 80D Income Tax Act

Mode of Premium Payments: In order to get tax benefits under section 80D, only the tax payer, and no third party, must pay health insurance premiums. In case the premium payments are paid in cash, tax payers are not eligible for tax benefits. However, one can avail tax benefits, under Section 80D, if you’re making payments for preventive health care check-ups in cash.

Service Tax: Tax payers are not liable to receive any tax benefits on the Service Tax and Cess charges levied on the premium payment. Service tax is chargeable on the health insurance premium payments. The amount of service tax payable on health insurance premium payments is pay 14%.

Group Health Insurance: Group Health Insurance policies are not liable to attract any tax benefits under Section 80D. However, if tax payers choose to make the extra premium payments to enhance the group cover, they can claim deduction for the extra amount.

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

Now that you know everything about tax exemptions under Section 80D of the Income Tax Act, it’s time to get acquainted to some FAQs that may get you started with tax savings under Section 80D.

FAQ On Section 80D

Question 1: Am I eligible to avail tax exemptions under Section 80D?

Answer: You’re eligible to avail tax benefits under Section 80D, if you’re pay premium towards the health insurance policy of self, your spouse and, children and parents. In addition, if you’re paying the expenses of the medical treatment/check-up of your elderly parents, aged above 80, you’re eligible to avail tax exemption. However, in such cases, you need to ensure that your parents do not have a health insurance policy in place.

Question 2: How much tax exemption can I avail under section 80D?

Answer: You and your family members can claim tax exemption of up to Rs 25,000. However, one can avail Rs. 30,000, if tax payer is a senior citizen. You can claim extra exemption of up to Rs 25,000 for your parents. If your parents are senior citizen, you can claim tax exemptions for amount up to Rs 30,000.

Question 3: Can HUFs also avail tax exemptions?

Answer: Just like individual tax payers, HUFs or Hindu United Families are also allowed to claim tax exemption for all or any members, under section 80D of the Income Tax Act. However, there is an upper limit to this exemption. The total tax exemption cannot exceed Rs 30,000.

Question 4: I make cash payments for my health insurance policy, can I still avail tax exemptions?

Answer: No, if you make premium payments in cash, you’re not liable to avail tax exemptions on the premium payments. You should make your health insurance premium payments via cheques or electronically to claim tax deduction under section 80D.

Question 5: My employer has provided me group health insurance policy? Am I eligible to avail tax exemption for my group health insurance?

Answer: No, you cannot avail tax benefits for group health insurance policies. However, if you have an independent health insurance policy, in addition to the group health insurance policy provided your employer, you can claim tax exemption.

Question 6: I got medical treatment outside the country, can I avail tax exemptions under section 80D for my overseas health insurance?

Answer: Yes, you can avail tax exemptions for treatments received outside of the country. However, your health insurance must permit this and your insurer must be registered with the Insurance Regulatory Authority of India.

Question 7: My children aren’t dependent on me; can I claim tax exemptions for their health insurance under section 80D?

Answer: No, if your children aren’t dependent, you can’t avail tax benefits for their health insurance premium payments and preventive health check-ups. Your children can avail tax benefits on their overall income.

Question 8: My parents are not dependent on me; can I claim tax exemptions for their health insurance? What if my father (working) and I both pay for his health insurance premiums; can both of us avail tax exemptions?

Answer: Yes, you may avail tax benefits for the health insurance premium payments of your parents, who are not dependent on you. In case both you and your father can avail tax exemptions for the part premium payment made against your father’s health insurance policy.

Question 9: In the course of the financial year, I made a premium payment of Rs. 10,500 for my health insurance for self and my wife. Can I avail tax exemption of Rs. 15, 000 under section 80D of the income tax act 1961?

Answer: In this case, you’re eligible for a maximum tax exemption for up to Rs 10,500. The maximum deductions allowed under Section 80D is Rs. 65000.

Question 10: What happens if I pay more than what is allowed for tax deduction towards health insurance premium under Section 80D?

Answer: You’re eligible for the maximum income tax deduction available under section 80D and not the amount that you’re spending on your health insurance premium.

Question 11: Can I avail tax benefits for more than one health insurance policies?

Answer: You can avail tax exemptions for more than one health insurance policy. However, you’ll need to ensure that all the eligibility conditions are met and premiums are paid for all the insurance policies.

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