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Section 80D – Deduction In Respect Of Health Insurance Premium

The Income Tax Act has provided for certain deductions while computing the total income of the assessee. Medical Insurance Premium paid under section 80D of the Income Tax Act is one of the many deductions allowed. This deduction plays a dual role. It not only helps assessees to reduce their taxable income but also promotes the idea of investing for unforeseen medical emergencies. In this article, we will briefly cover:

Who Can Claim Deductions Under Section 80D?

Every Individual and Hindu Undivided Family (HUF) can claim a deduction for the Medical Insurance Premium paid under Section 80D. This deduction is over and above the deductions available under sections 80C/80CCC/80CCD. Furthermore, under this section, assessees can claim deduction not only for the medical insurance premium paid to insure themselves but also for the premium paid to cover their spouse, dependent children and parents.

What Is The Quantum Of Deduction Available Under Section 80D?

For Individuals

As mentioned above, an assessee can claim a deduction u/s 80D for an amount paid (insurance premium) to keep in force an insurance contract on the health of the assessee, his/her spouse, dependent children or/and parents. However, there are limits specified for claiming such deduction. The table below summarises these limits:

Category (Premium paid for)Maximum deduction available (INR)
Self (less than 60 years of age) – Including spouse and children25,000
Self (more than 60 years of age) – Including spouse and children50,000
Parents (less than 60 years of age)25,000
Parents (more than 60 years of age)50,000

From the above table it can be understood that, the deduction available for the premium paid for the health insurance contract of the assessee’s spouse and dependent children is clubbed with that of the assessee (self). However, a separate deduction is available for the amount paid on behalf of the parents of the assessee. There can be multiple situations here:

Situation Deduction available (INR)Total deduction available (INR)
Self+Spouse+ChildrenParents
Self and Parents below 60 years of age25,00025,00050,000
Self below 60 years of age and Parents above 60 years of age25,00050,00075,000
Self and Parents above 60 years of age50,00050,0001,00,000

For HUF

A HUF can claim a deduction under section 80D for the amount paid as a premium to keep in force an insurance taken on the health of any member of the Hindu Undivided Family. The total amount of deduction is restricted to:

Category (Premium paid for)Maximum deduction available (INR)
HUF member (less than 60 years of age)25,000
HUF member (more than 60 years of age)50,000

Preventive Health Check-Up

If an assessee has incurred expenses (for self, spouse, dependent children, parents) on account of preventive health check-up, he/she can claim a deduction for such amount as well. The maximum deduction available for such expenses is restricted to INR 5000. This deduction is not over and above the regular deduction amount.

Lump-Sum Medical Insurance Premium

If an assessee has paid Insurance Premium in a lump sum to keep an insurance contract in force for a period of more than a year then, he/she can claim a deduction equal to the appropriate fraction of the amount.

Points To Remember

  • ‘Appropriate fraction’ means the fraction in which the numerator is 1 (one) and the denominator is the total number of relevant years for which the premium is paid in lump-sum or in advance.
  • Preventive health check-up expenses can be paid in cash.
  • Premium payments should be made by any mode other than cash.
  • Deduction under section 80D is allowable only if the payment towards the health insurance contracts, has been made to a scheme as specified by the Central Government, approved by the IRDA.
  • Deduction for insurance premium paid for the health of non-dependent children is not allowable.

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