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

Section 80D provides Rs 25,000 deduction and Rs. 50,000 deduction for senior citizens, on medical insurance. Deductions under section 80D can be claimed only under the old regime, not the new regime. Proper documentation is required to claim deduction under section 80D.

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: 
  • Premium paid on health insurance, can be claimed as far as it is paid in any mode other than cash. 
  • The amount should be actually paid within the end of the financial year. Amount due for the financial but still unpaid cannot be claimed as a deduction.
• Medical expenses: 
  • For senior citizens who do not have any health insurance, deduction can be claimed on actual expenses paid within the ceiling limit. 
  • Expenses not covered under the insurance, for whatever reasons, cannot be claimed as a deduction, since it is paid while an insurance premium is also paid.
• 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: 
  • Preventive health check-up is eligible for 80D deduction in order to encourage senior citizens to be more health aware. 
  • Up to Rs. 5,000 can be claimed as a deduction and 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.

Mode of Payment Under Section 80D

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

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 2025-26. 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.

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.

Final Word

Section 80D is an attractive deduction, which allows the taxpayers to claim deduction on a very essential and crucial expense ,medical insurance premium. This does not require deliberate investments planning and altering your financial goals, thus making it a very popular deduction among the taxpayers.