Section 80D – Deduction in respect of medical insurance premia

Deduction under section 80D is available to an Individual and Hindu Undivided Family. To get eligible for tax deduction under section 80D, medical insurance is to be paid by an individual or Hindu undivided family out of the income that is chargeable to tax during the financial year.

Eligibility Under Section 80D

Premium paid on Medical insurance Policy issued by GIC or any other insurer approved by IRDA (Insurance Regulatory and Development Authority) is eligible for tax deduction under section 80D.

In case of an individual, payment can also be made to the Central Government health scheme and/or on account of preventive health check up.

Section 80D – Deduction in respect of medical insurance premia

Mode of Payment under section 80D

Amount towards health insurance premium under section 80D should be paid by any mode other than cash. However payment on account of preventive health check up can be made by any mode including cash.

To get eligible for deduction under section 80D, in case of individual, insurance should be paid for self, spouse, parents and/or dependent children. Similarly in case of HUF, insurance should be paid on health of any member of HUF.

To claim tax deduction under section 80D its not required that parents are to be dependent on assessee.

Deduction under section 80D – For Individual

For taxpayer, his/her spouse and dependent children

Amount of tax deduction under section 80D is subject to the maximum ceiling limit of Rs. 15000 per year i.e. the amount paid toward health insurance or Rs. 15, 000 which ever is lower will be allowed as deduction under section 80D of Income tax act 1961.

However if health insurance has been paid in respect of a senior citizen then the deduction ceiling limit under section 80D of Rs. 15000 per year will be increased to Rs. 20,000 per year.

Senior citizen will be the person who has attained the age of 60 years or more during the previous year in which you are calculating your eligibility.

Additional deduction for parents of the taxpayer whether dependent or not

If your parents are senior citizen then you are eligible for an additional deduction under section 80D of Rs. 20,000/- per year or the amount paid which ever is lower. In case your parents are not senior citizen then instead of Rs 20000, Rs 15,000 per year will be allowed as maximum tax deduction.

Please remember this deduction is in addition to the deduction that we talked about in our above discussion.

Section 80D tax deduction limit has been enhanced in budget 2015 from of Rs 15000 and Rs 20000 to Rs 25000 and Rs 30000 respectively.

This means from financial year 2015-2016 onwards, a higher tax deduction cab be claimed by the assessee under section 80D.

Table showing maximum tax deduction limit for financial year 2014-2015 – Section 80D

Particulars Medical insurance premium paid in respect of and Maximum deduction allowed under section 80D Total Deduction Under section 80D
Self, spouse and dependent children Parents
Assessee, spouse, parents and dependent children has not attended the age of 60 years during the financial year Rs 15000 Rs 15000 Rs 30000
Assessee, spouse and dependent children has not attended the age of 60 years but parent are senior citizen during the financial year Rs 15000 Rs 20000 Rs 35000
Assessee, spouse and parents are senior citizen during the financial year Rs 20000 Rs 20000 Rs 40000

Table showing maximum tax deduction limit for financial year 2015-2016 – Section 80D

Particulars Medical insurance premium paid in respect of and Maximum deduction allowed under section 80D Total Deduction Under section 80D
Self, spouse and dependent children Parents
Assessee, spouse, parents and dependent children has not attended the age of 60 years during the financial year Rs 25000 Rs 25000 Rs 50000
Assessee, spouse and dependent children has not attended the age of 60 years but parent are senior citizen Rs 25000 Rs 30000 Rs 55000
Assessee, spouse and parents are senior citizen Rs 30000 Rs 30000 Rs 60000

Tax Deduction for preventive health Check-up – Section 80D

Rs 5000 is allowed as tax deduction under section 80D for payment of preventive health check-up of assessee, spouse, parents and dependent children.

Rs 5000 is included in the maximum tax deduction limit of section 80D that we discussed above. If you have paid for medical insurance premium and preventive health check up then your limit will not cross the maximum limit that we specified in the table above.

Tax deduction for medical expenditure incurred for very senior citizen – From assessment year 2016-2017

Financial act 2015 has introduced maximum limit of tax deduction for medical expenditure on very senior citizen who is of the age of 80 years or more at any time during the relevant previous year.

As per the changes to section 80D, 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 who is of the age of 80 years or more at any time during the relevant previous year 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.

Deduction under Section 80D For Hindu Undivided Family

For a HUF, if amount paid towards health insurance premium for a family members and such member is a senior citizen then HUF will be eligible for a deduction under section 80D for Rs. 20,000 per year. In other cases, where family member is not a senior citizen then deduction will be restricted to Rs. 15, 000 i.e. 100% of premium paid or Rs. 15, 000 which ever is lower will be allowed as deduction.

In budget 2015, tax deduction under section 80D has been increased for a HUF. Earlier tax deduction of Rs 15000 has now been increased to Rs 25000 and Rs 20000 has been increased to Rs 30000.

This means, from assessment year 2016-2017 i.e. financial year 2015-2016 onwards, tax deduction under section 80D will be Rs 30000 for a HUF, if amount is paid towards health insurance premium of a family members and such member is a senior citizen.

If such member for whom health insurance paid is not a senior citizen then tax deduction available under section 80D for a HUF will be Rs 25000 from assessment year 2016-2017 onwards.

Note: Payment on account of preventive health check-up applicable from assessment year 2013 – 2014 is not applicable to a HUF

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