Introduction
In today’s time, the cost of healthcare in the country has risen significantly thanks to the ever-growing demand for medical services. Having a health insurance or mediclaim comes handy in times of medical emergencies.
The Income Tax Act, 1961 has given tax benefits of Medical insurance as well as regular medical expenditure. Section 80D of the Income Tax Act provides for deduction w.r.t mediclaim insurance & medical expenditure.
For which medical expenditure in deduction available under Section 80D?
There are three items of medical expenditure on which deductions are permissible:
- Medical Insurance Premium
- Preventive Health Check Up expenses and
- Medical expenses like Purchase of medicines, Doctor consultation fees and hospitalization expenses
Who can avail the benefit of Section 80D?
Every individual or HUF can claim a deduction under Section 80D for their medical insurance which is taken from their total income in any given year. Not only can an individual take benefit by purchasing a health plan for themselves but also one can take advantage of buying the policy to cover their spouse, dependent children or parent.
Hindu Undivided Families are also eligible to claim deductions under this section. The premium payments of any member in a Hindu Undivided Family can be used for tax deductions, which is however, subject to upper limit as per the Act.
What is the quantum of deduction under Section 80D?
| Scenario | Premium paid (Rs) for Self, family, children | Premium paid (Rs) for Parents | Deduction under 80D (Rs) |
| Individual and parents below 60 years | 25,000 | 25,000 | 50,000 |
| Individual and family below 60 years but parents above 60 years | 25,000 | 50,000 | 75,000 |
| Both individual and parents above 60 years | 50,000 | 50,000 | 1,00,000 |
| Members of HUF | 25,000 | 25,000 | 25,000 |
An individual can claim a deduction of up to Rs 25,000 for the insurance of self, spouse, and dependent children. An additional deduction for the insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years of age, or Rs 50,000 if parents are aged above 60. Let us refer to the table given below to understand this better:-
Who is considered as a Senior Citizen in India?
According to the law, a senior citizen is an individual resident who is above 60 years, as on the last day of the previous financial year.
Is any deduction available w.r.t preventive health check up?
Any payments made towards preventive health check-ups will entitle a taxpayer to a deduction of up to Rs 5,000, which is within the overall limit of Rs 25,000/Rs 50,000 as the case may be.
How should the payment of medical expenditure be made to claim deduction under Section 80D?
The payment for the Medical insurance premium as well as medical expenditure should be compulsorily made by any mode other than by way of Cash. (Eg. A/c Payee Crossed Cheque, Demand draft, Credit Cards, Debit Cards, UPI payments, E-wallets etc). Payment for Preventive health checkup (having sub-limit of Rs. 5000) can however be made by way of cash.
Can deduction be claimed for medical expenditure of working children?
To claim deduction for mediclaim for children, dependence is an essential condition. Therefore, premium paid on behalf of working children cannot be taken for tax benefit.
Let us refer to the examples given below to understand Deduction u/s 80D better
- Mr A is 45 years old and is covered by medical insurance for self, spouse and dependent children, paying Rs 18,000 as annual premium. He has also incurred Rs 4,000 for preventive health check-ups towards his family. Tax deduction under Section 80D = Rs 22,000
- Mr B is 35 and is paying Rs 12,000 as medical insurance for self, spouse and their only child. He has also taken health insurance for his parents (aged 56 and 54) for which he pays Rs 22,000 annual premium. He has also incurred Rs 5,000 for preventive health check-ups towards his family. Tax deduction under Section 80D: Rs 47,000 (Rs 12,000 + Rs 22,000 + Rs 5,000)
- Mr C is 47 years old and is covered by medical insurance for self, spouse and dependent children, paying Rs 27,000 as annual premium. He also pays Rs 60,000 towards medical treatment of his parents (aged 72 and 70) who do not have medical insurance. Tax deduction under Section 80D = Rs 75,000 (Rs 25,000 + Rs 50,000) even though his expenses are Rs 87,000.