Tax benefits on Medical Insurance Premium – section 80D

Medical or health insurance plan of general insurance companies works on the principle of reimbursement of your hospitalization expenses. If you have invested in any of such health insurance policy then you can claim tax deduction under section 80D of income tax act, 1961.

Eligibility to claim tax deduction under section 80D

Medical Insurance Premium - Income Tax Benefits U/S 80DAn individual like a salaried person or a self employer person or any other individual is eligible for income tax deduction under section 80D if he or she has paid any amount towards medical insurance or health insurance to ensure his, spouse, parents or dependent children’s health.

A Hindu undivided family is also eligible for tax deduction under section 80D if such family has paid any amount to ensure health of any member of the family.

Maximum Tax Deduction Limit under section 80D

Different benefits are provided under income tax act for making payment towards medical insurance premium;

SI No Medical Insurance Paid For

Maximum Limit of Tax Deduction Available for Medical Insurance under Section 80D

1 If the amount paid to ensure your own life or life of your spouse or dependent children Rs. 15, 000 or amount paid which ever is less
2 If amount paid to ensure the life of your parents not being a senior citizen of India Rs. 15, 000 or amount paid which ever is less
3 If amount paid to ensure the life of your parents being a senior citizen of India (additional benefit of Rs. 5000 is available for senior citizen) Rs. 20, 000 or amount paid which ever is less
4 If you paid to ensure your own life or life of your spouse or dependent children and the life of your parents not being a senior citizen of India Rs. 30, 000 (Rs. 15, 000 + Rs. 15, 000) or amount paid which ever is less
5 If you paid to ensure your own life or life of your spouse or dependent children and the life of your parents  being a senior citizen of India Rs 35, 000 (Rs. 15, 000 + Rs. 20, 000) or amount paid which ever is less

The tax deduction limit specified in above table is applicable to assessment year 2015-2016 i.e. financial year 2014-2015.

Finance Act 2015, has increased the tax deduction limit of Section 80D. Due to this increase, from assessment year 2016-2017 i.e. financial year 2015-2016 onwards, maximum limit of tax deduction will be as follows.

SI No Medical Insurance Paid For Income Tax Deduction Available for Medical Insurance under Section 80D
1 If the amount paid to ensure your own life or life of your spouse or dependent children Rs. 25, 000 or amount paid which ever is less
2 If amount paid to ensure the life of your parents not being a senior citizen of India Rs. 25, 000 or amount paid which ever is less
3 If amount paid to ensure the life of your parents being a senior citizen of India (additional benefit of Rs. 5000 is available for senior citizen) Rs. 30, 000 or amount paid which ever is less
4 If you paid to ensure your own life or life of your spouse or dependent children and the life of your parents not being a senior citizen of India Rs. 50, 000 (Rs. 25, 000 + Rs. 25, 000) or amount paid which ever is less
5 If you paid to ensure your own life or life of your spouse or dependent children and the life of your parents  being a senior citizen of India Rs 55, 000 (Rs. 25, 000 + Rs. 30, 000) or amount paid which ever is less

If any one of your family member is a senior citizen and medical insurance premium has been paid to ensure his life then additional deduction of Rs. 5000 is available under section 80D of income tax Act.

If you or your spouse is a senior citizen and you are spending money for medical insurance then Rs. 5000 has to be added in all of the above cases as an additional deduction under section 80D.

Relevant points related to tax deduction on medical insurance premium – Section 80D

  • You can claim tax deduction under section 80D for your payment irrespective of your residential status i.e. any individual being a resident or non resident can claim this deduction.
  • If you are not an Indian citizen (i.e. a foreign citizen) then you can claim tax benefit for paying medical insurance premium under section 80D of income tax act.
  • The insurer to whom you are making this payment should be an approved insurer (i.e. should have been approved by Insurance Regulatory and Development Authority).
  • The premium amount should have been paid in any mode other than cash. If it is paid by cash then the premium paid will not be eligible for income tax deduction under section 80D of income tax act.
  • Senior citizen means one who is a resident in India and who is at least of 60 years of age at any time during the previous year.

On buying a medical insurance or health insurance any one can take the benefit of tax deduction under section 80D and protect them against varied medical expenses. Your saving can be enhanced by reducing your tax liability.

Now tax benefit under section 80D can also be claimed for amount spent on preventive health check up. The restriction of paying health insurance premium in cash will not be applicable to preventive health check-up i.e. to claim tax deduction under section 80D you can pay your expenses for preventive health check-up in cash.

However, this tax deduction for preventive health check up will not be allowed as a separate deduction. Its allowed up to Rs. 5000 only if you are not claiming tax deduction on health insurance premium otherwise the limit will be included to the maximum limit of Rs. 15000 or Rs.20000 as the case may be.

FAQ on Medical Insurance Premium deduction available under section 80D of Income Tax Act, 1961

Section 80D also introduced tax deduction for medical expenditure paid for very senior citizen. As per this new provision, a maximum tax deduction of Rs 30000 is allowed on account of medical expenditure incurred on the health of the assesee, spouse and dependent children if such amount is paid or incurred in respect of a very senior citizen and no amount has been paid to effect of keep in force an insurance on the health of such person. However aggregate of maximum tax deduction limit for medical expenditure and amount paid for medical insurance of self, spouse and dependent children being a very senior citizen should not exceed Rs 30000.

Similar tax deduction in section 80D has been specified for parents if they are very senior citizen. This means, a maximum tax deduction of Rs 30000 is allowed on account of medical expenditure incurred on the health of the parents of the assesee being a very senior citizen and no amount has been paid to effect of keep in force an insurance on the health of such person. However, aggregate of maximum tax deduction limit for medical expenditure and amount paid for medical insurance of parents being a very senior citizen should not exceed Rs 30000.

4 thoughts on “Tax benefits on Medical Insurance Premium – section 80D

  1. S V Subramanian

    I am an 83 year old man.Kindly let me know how I can claim Rs 30000 as a deduction u/s 80D. I do not have any medical insurance. However I get my medical reimbursed from my ex company.
    Please let me know what documents are required to be submitted to IT authorities.
    Grateful for the response,
    Regds
    SVS

    Reply
  2. Venkat

    I am Central Government Employee, I spent Rs. 3, 50, 000/- for my son’s medical treatment in Non-CGHS hospital through direct billing method (Total amount paid by our employer) out of which only 30 % 9 i.e Rs.1, 05, 000 of the total amount is elgible as per our institute norms. Remaining amount is deducted from my salary in 4 installments. Please let me know whether the amount paid by me and our institute come under tax exemption.

    Reply

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