Tax benefits on Medical Insurance Premium – section 80D

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

An individual like a salaried person, or a self-employed person, or any other individual is eligible for income tax deduction under section 80D if he has paid any amount towards medical and health insurance to for the benefit of self or spouse, parents or dependent children’s health.

What is the maximum tax deduction limit under section 80D

As per section 80D of the Income tax act, 1961, the tax deduction allowed shall be the aggregate of the following, namely:-

• The whole of the amount paid to effect or to keep in force an insurance on the health of the assessee or his spouse and dependent children or any contribution made to the central government health scheme, as does not exceed in aggregate Rs 25,000; and
• The whole of the amount paid to effect or to keep in force an insurance on the health of the parent or parents (whether dependent or not) of the assessee as does not exceed in aggregate Rs 25,000.

However, for preventive health check-up of the assessee, his family or his parent or parents, the maximum amount allowed shall be limited to Rs 5,000 and such amount subject to maximum limit of Rs 5,000 shall be within the overall ceiling of Rs 25,000 given above.

If any one of your family members is a senior citizen and medical insurance premium has been paid to ensure his life then additional deduction of Rs 25,000 is available under section 80D of income tax Act, 1961. This means, if you or your spouse is a senior citizen and you are spending money for medical insurance, then Rs 25,000 has to be added in all of the above cases as an additional deduction under section 80D. In other words, the tax deduction limit in this case shall be Rs 50,000 instead of Rs. 25,000.

Table showing tax deductions in different cases provided to the assessee under section 80D of the Income tax act, 1961, 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	self or spouse or dependent children not being a senior citizen of India	Rs. 25, 000 or amount paid, whichever is less
2	parents not being a senior citizen of India	Rs. 25, 000 or amount paid, whichever is less
3	parents being a senior citizen of India (additional benefit of Rs. 25,000 is available for senior citizen)	Rs. 50, 000 or amount paid, whichever is less
4	self or spouse or dependent children and parents not being a senior citizen of India	Rs. 50, 000 (Rs. 25, 000 + Rs. 25, 000) or amount paid, whichever is less
5	self or spouse or dependent children and parents  being a senior citizen of India	Rs 75, 000 (Rs. 25, 000 + Rs. 50, 000) or amount paid, whichever is less
6	If you have paid for health insurance premium on the health of yourself or spouse, who are senior citizens and for parents, who are also senior citizens	Rs. 1,00,000 (Rs. 50,000 + Rs. 50,000) or amount paid, whichever is lower

Parents include both father and mother (dependent or otherwise).

Father-in-law and mother-in-law are not included.

The tax deduction limit specified in the above table is applicable to financial year 2022-23 (assessment year 2023-2024) and financial year 2023-24 (assessment year 2024-25).

Relevant points 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 tax deduction.
• If you are not an Indian citizen (i.e. a foreign citizen), then you can claim tax deduction 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.
• Senior citizen means one who is a resident in India and who is at least 60 years of age at any time during the previous year.

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

Tax deduction for preventive health check up

Tax deduction under section 80D can also be claimed for the 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. It is 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 25,000 as the case may be

Tax Deduction for medical expenditure incurred in case of a senior citizen – Section 80D

Section 80D also introduced tax deduction for medical expenditure paid for senior citizens. 

As per this provision, a maximum tax deduction of Rs 50,000 is allowed on account of medical expenditure incurred on the health of the assessee, spouse and dependent children if such amount is paid or incurred in respect of a senior citizen and no amount has been paid to effect of keep in force an insurance on the health of such person.

However, the aggregate of maximum tax deduction limit for medical expenditure and amount paid for medical insurance of self, spouse and dependent children being a senior citizen should not exceed Rs 50,000.

Section 80D tax deduction is allowed for any contribution made to the central government health scheme or such other scheme as may be notified by the central government on this behalf.

Tax deduction under section 80D is also applicable to a Hindu undivided family (HUF), however, we have not included those provisions in our above article.

If an individual or hindu undivided family opts for the alternative tax regime under section 115BAC, tax deduction under section 80D is not available from the financial year 2020-21 (assessment year 2021-2022) onwards. This means, for the financial year 2022-23 and financial year 2023-24, if you have decided to opt for the new tax regime under section 115BAC, then tax benefits of section 80D can’t be availed.