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

Under section 80D, deduction can be claimed on medical insurance premium paid by the tax payer up to Rs. 1 lakh. Deduction can be claimed for self, spouse, dependent children and parents. Up to Rs. 25,000 of insurance premium paid can be claimed for the self, and a deduction of Rs. 50,000 can be claimed for self, spouse, children and parents put together. 

In case of senior citizen, the maximum limit is relaxed to Rs.50,000. Apart from insurance premium, medical expenses for senior citizens and preventive health check-up can be claimed under this section. 

What is Section 80D?

• Persons Eligible: 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: Expenses incurred on the following can be claimed under Section 80D 
  • Medical insurance premiums (including top-up plans, critical illness plans)
  • Medical expenses incurred for senior citizens
  • Preventive health check-up
• Deduction Limit:
  • This deduction is over and above the Rs 1.5 lakh limit deductions claimed under Section 80C.
  • A deduction ranging from ₹25,000 to ₹1,00,000 can be claimed under Section 80D, depending on the age of the taxpayer and their parents.
• Regime Restriction: This deduction can be claimed only if an individual or HUF chooses to pay taxes under the old tax regime.

Payments Eligible as Deduction Under Section 80D

An individual or HUF can claim a deduction under Section 80D for the payments mentioned below:

• Health insurance premiums paid in any mode other than cash:
  • Up to Rs. 25,000 paid for self, spouse, dependent children or parents
  • Up to Rs. 50,000 if family or your parents are senior citizens (resident aged 60 years and above) 
• Medical expenses
  • Senior citizens (resident aged 60 years or above) who do not have any health insurance can claim a deduction up to Rs 50,000 on the medical expenses incurred.    
    Note: While the Income Tax Act doesn't explicitly define "medical expenditure," it typically means costs like medical consultations, impairment aids, medicines, etc.   
• Contribution to CGHS/notified scheme
  • Individuals can claim a tax deduction of up to Rs. 25,000 for contributions made to the Central Government Health Scheme (CGHS) or any other notified scheme. However, any contribution made on behalf of parents is not eligible for this deduction.  
    
• Preventive health checkups (Cash payment allowed):
  • Taxpayers can claim up to Rs. 5,000 for preventive health check-up for self, spouse, dependent children or parents  
  • This is within the overall limit of Rs 25,000 or Rs 50,000, as the case may be.
  • The payment for preventive health check-ups can be made in cash.

For Example:   
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.

Rahul can claim a maximum deduction of Rs 25,000 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.

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. 

Deduction Limits Under Section 80D

The deduction allowed under Section 80D is Rs 25,000 in a financial year. In the case of resident senior citizens, the deduction limit allowed is Rs 50,000.

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.

Example: 

Rohan is aged 45 years, and his father is aged 75 years. Rohan has taken medical cover for himself and his father, for which he pays insurance premiums of Rs 30,000 and Rs 35,000, respectively. What would be the maximum amount he can claim by way of a deduction under Section 80D?

Answer: 

Rohan can claim up to Rs 25,000 for the premium paid on his policy. As for the policy taken for his father, a senior citizen, Rohan can claim up to Rs 50,000. In the given case, the deduction allowed is Rs 25,000 and Rs 35,000. Therefore, the total deduction he can claim for the year is Rs 60,000.

Mode of Payment Under Section 80D

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

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.

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Section 80CCD - Deductions under NPS & APY  
Section 80TTB - Deduction for Senior Citizens  
Section 80TTA  - Deduction on Interest  
Section 80GG - Deductions for Rent Paid  
Section 80U – Tax Deduction for Disabled Individuals 
Who can claim a deduction under section 80DD?   
Income Tax Deductions List   
Section 80DDB of Income Tax Act   
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