Section 80D of Income Tax Act: Deductions Under Medical Insurance, Limit, Eligibility And Policies

Section 80D provides Rs 25,000 deduction on medical insurance premium, preventive health checkup and contribution to central government health scheme. For senior citizens, up to Rs 50,000 deduction can be claimed.

What is Section 80D?

Section 80D of the Income Tax Act allows individuals and Hindu Undivided Families (HUFs) to claim a tax deduction for health insurance premiums paid. The deduction is available for insurance taken for self, spouse, children, and parents. You can also claim a deduction for preventive health check-ups and top-up health plans, subject to specified limits.

Persons Eligible for Deduction under Section 80D

Individuals or HUFs can claim a deduction under this section. Taxpayer can claim deduction on health insurance premium paid for

• Self
• Spouse 
• Dependent children 
• Parents

Expenses eligible for Deduction under Section 80D

An individual or HUF can claim a deduction under Section 80D for:

• Health insurance premiums paid in any mode other than cash:
• Medical expenses for resident senior citizens who do not have  any health insurance.  
• Contribution to CGHS/notified scheme can be claimed. Any contribution made on behalf of parents is not eligible for this deduction.  
• Preventive health check-up: Up to Rs. 5,000 can be claimed. The payment for preventive health check-ups can be made in cash.

Section 80D Deduction Limit

Deduction under section 80D is over and above the deduction limit of Rs 1.5 lakh under section 80C. The table below captures the amount of deduction available to an individual taxpayer under various scenarios:

The deduction for preventive check-up of up to Rs 5,000 will be within the overall limit of Rs 25,000 / 50,000. Please note that 'family' under this section includes only the spouse and dependent children.

If any senior citizen is a non-resident or the assessee is a non-resident, the extended limit of Rs.50,000 is not applicable.

Regime Restriction 

• This deduction can be claimed only if an individual or HUF chooses to pay taxes under the old tax regime.

Section 80D -  An Illustration 

Rahul has paid a health insurance premium of Rs 23,000 for the health insurance of his wife and dependent children in the financial year 2024-25. He also had a health check-up done for himself and has paid Rs 5,000. For his father, he pays a health insurance amount of Rs 35,000.

Answer:

Rahul can claim a deduction of Rs 75,000 under Section 80D of the Income Tax Act. 

Rs 23,000 has been allowed towards the insurance premium paid, and Rs 2,000 has been allowed for a health check-up. The deduction towards preventive health check-ups has been restricted to Rs 2,000 as the overall deduction cannot exceed Rs 25,000 in this case. For his parents health insurance he can claim the entire Rs 35,000 as it is within the ceiling limit of Rs 50,000.

Below is a summary image explaining the provisions under section 80D.

Mode of Payment Under Section 80D

For claiming such deduction under section 80D, the payment has to be made in the specified mode:

Multi-year Health Insurance Premium Paid in Lump-sum

• Sometimes, people buy multi-year health insurance plans because of the discounts offered. 
• For this they pay the premium amount upfront for all the years. 
• In this case, deduction is allowed proportionately under section 80D. 
• However, this would again be subject to the limits of Rs 25,000 of Rs 50,000 as discussed above.   
  Example: Mr. A bought 2-year health insurance policy and paid Rs 30,000 upfront. In this case, Mr. A can claim Rs 15,000 as deduction under Section 80D in each of the two years. 

Points to Remember while Purchasing Medical Insurance for Claiming 80D Deductions

• A medical insurance premium paid for a brother, sister, grandparents, aunts, uncles or any other relative cannot be claimed as a deduction for taking tax benefits.
• Premium paid on behalf of working children cannot be taken for tax benefit.
• In the case of part payment by you and a parent, both of you can claim a deduction to the extent paid by each.
• The deduction must be taken without showing the service tax and cess portion from the premium amount.
• Group health insurance premium provided by the company is not eligible for deduction.
• Premium paid by any mode other than cash is allowed for deduction. Hence premium paid by credit card or other online mode is also allowed for deduction.

Related Articles:   
Section 80EE - Deduction for Interest on Home Loan  
Section 80CCD - Deductions under NPS & APY  
Section 80TTB - Deduction for Senior Citizens  
Section 80TTA  - Deduction on Interest  
Section 80GG - Deductions for Rent Paid