After the COVID-19 outbreak, the importance of having medical insurance is evident as unexpected medical emergencies can result in financial upheaval. Since healthcare costs and instances of ailments are increasing constantly, health insurance has become a necessity today. As per the latest data, in India still, 30% of the population does not have medical insurance. Apart from providing much-needed financial backup, investing in health insurance also helps in reducing tax liability. The government is promoting such investment by providing a deduction under section 80D up to INR 1,00,000/-.
- What is Deduction under section 80D?
- Who is Eligible to Claim a Deduction from Insurance Premium Under Section 80D?
- Payments eligible for deduction under Section 80D
- What is the insurance premium deduction limit under section 80D?
- Single-premium health insurance policies
- General points to be noted for claiming deduction under section 80D
- ITR Form Applicable for Section 80D
- FAQs
What is Deduction under section 80D?
Section 80D of Income Tax Act allows a deduction to an Individual (including non-resident individuals) or HUF for the amount paid towards medical insurance premium, medical expenditure, and preventive health checkup in a financial year. Top-up health plans and critical illness plans are also eligible for 80D deduction.
Note: Deduction under section 80D is not allowed from Financial Year 2020-21 onwards if the taxpayer opts for the new tax regime.
Who is Eligible to Claim a Deduction from Insurance Premium Under Section 80D?
In the case of an individual, medical insurance premium, medical expenditure, and preventive health checkup expenses are eligible for a deduction if paid for:
- Self
- Spouse
- Dependant Children
- Parents
In the case of the Hindu Undivided Family (HUF), a deduction is allowed for the health insurance premium paid for any member of the HUF. You can claim this deduction at the time of filing your ITR.
Payments eligible for deduction under Section 80D
- Medical insurance premium paid for self and family by any mode other than cash.
- Payment made with regards to preventive health check-up by any mode.
- Payment made with regards to medical expenditure for senior citizen individuals or senior citizen parents which are not covered under any health insurance scheme.
- A contribution made to CG health scheme or any other scheme as notified by the government.
What is the insurance premium deduction limit under section 80D?
In budget 2018, the finance minister increased the limit of deduction available to senior citizens from INR 30,000 to 50,000. And within the overall limit, medical expenditures are allowed only to senior citizens. The following table shows the overall 80D deduction limit for individuals:
| Particulars | Self, spouse, dependent children and parents are Not senior citizen | Self, spouse and dependent children are Not senior citizen, Parents are Senior citizen | Self, spouse, dependent children and parents are Senior citizen |
| (a) Medical insurance premium (including preventive health check-up limit of INR 5,000) of self, spouse and dependent children | INR 25,000 | INR 25,000 | INR 50,000 |
| (b) Medical insurance premium (including preventive health check-up limit of INR 5,000) for parents | INR 25,000 | INR 50,000 | INR 50,000 |
| (c) Medical expenditure incurred for self, spouse, dependent children and parents (only eligible for senior citizens) | Not Applicable | INR 50,000 (Covered within the limit of INR 50,000 in (b)) | INR 50,000 (Covered within the limit of INR 50,000 in (a)) INR 50,000 (Covered within the limit of INR 50,000 in (b)) |
| Overall 80D Deduction Limit | INR 50,000 | INR 75,000 | INR 1,00,000 |
The following table shows the overall limit for 80D deduction for HUF:
| Particulars | Premium paid for Self, spouse, children | Premium paid for Parents | Overall limit for 80D Deduction |
| Members of HUF | INR 25,000 | INR 25,000 | INR 25,000 |
Let’s understand with an example
Dev, a non-senior citizen has taken medical cover for his family and his senior citizen parents. He pays INR 32,000 for his medical coverage, and has paid INR 37,000 for medical premium and INR 15,000 for medical expenditure for his parents respectively.
Solution
Dev is eligible for a deduction of INR 75,000, that is, INR 25,000 maximum for his family and INR 50,000 for his senior citizen parents. Here Dev can claim the medical premium paid and medical expenditure both in his parent’s case.
Single-premium health insurance policies
In Budget 2018, a new provision for claiming a deduction for single premium health insurance policies was introduced. As per this provision, if a taxpayer makes a lump sum premium payment in a single year for a policy that is valid for more than one year, he can claim a Section 80D deduction equivalent to the appropriate fraction of the amount.
The appropriate fraction is calculated by dividing the lump sum premium paid by the number of policy years. However, this would be subject to the same limits of INR 25,000 or INR 50,000 as before.
General points to be noted for claiming deduction under section 80D
- If the health insurance premium is paid for the taxpayer’s brother, sister or any other family member apart from those listed above then a deduction under this section can not be claimed.
- Senior citizen includes very senior citizen above the age of 60 years. Even if one of the parents is a Senior citizen then also additional deduction can be claimed.
- A health insurance premium paid on behalf of independent children can not be claimed.
- In case an individual and their parent split the payment, then they can each claim a deduction for the amount paid by them.
- Group health insurance premium paid by the employer can not be claimed as a deduction under this section.
- The amount of premium added for deduction shall be taken after adding the GST portion paid.
ITR Form Applicable for Section 80D
The taxpayer can claim deductions u/s 80D while filing ITR if all the above-mentioned conditions are fulfilled. Individuals/HUFs can claim deduction under 80D in any of the ITR forms, i.e, ITR 1, ITR 2, ITR 3, and ITR 4 depending upon their income sources.
Supporting Documents
Along with the common documents required to pay income tax like Form 16, PAN, etc, the taxpayers can provide documents of medical expenditures such as Medical Insurance Premium Receipts or Preventive Health Check-Up.
FAQs
No, as per the income tax act, deduction u/s 80D is allowed for any insurance premium paid for self, spouse, dependent children and parents. So if children are independent then any medical insurance premium paid for them will not be allowed deduction u/s 80D
Yes, deduction under section 80D can be claimed while filing a belated, revised or updated ITR.
No, any mode other than cash will make you eligible to claim a deduction of medical insurance paid during the year. However, you can claim a deduction for any expense incurred for preventive health checkup whether paid in cash or in any other mode.
You should keep medical insurance premium receipts as supporting documents while claiming deduction u/s 80D. In the case where medical expenditures are incurred, the medical bill is sufficient.
The goal of preventive health checkups is to detect any illness and mitigate risk factors as early as possible through regular health check-ups. Any expenditure incurred in this respect can be claimed as a deduction under section 80D.
Hey @sushil_verma
There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.
Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA), conveyance, transport allowance, medical reimbursement, etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.
For eg,
Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.
The benefit Section 80EEB can be claimed by individuals only. An individual taxpayer can claim interest on loan of an electric vehicle of up to INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. (We have updated the article with the changes).
Thus, if you have a proprietorship business, you should claim interest amount as a business expense only if the vehicle is used for business purpose. However, if it is used for personal purpose, you can claim deduction of interest u/s 80EEB in your ITR since you would be reporting both personal and business income in the ITR (under your PAN).
As per the Income Tax Act, the deduction under Section 80EEB is applicable from 1st April 2020 i.e. FY 2020-21.
Hey @Sharath_thomas , we have updated the content according to the appropriate assessment year. Thanks for the feedback.
No issues. You’re welcome!
Hey @shindeonkar95
In case of capital gain income (LTCG/STCG), transfer expenses are allowed as deduction, except STT.
However, in case of business income (F&O, intraday), all expenses incurred for the business (including STT) are eligible to claim deduction in ITR.
Hope, it helps!
Hello,
Is it possible to claim deductions under S. 80CCF for Infra bonds bought in the secondary market and held to maturity?
There were a number of 10 year infra bonds issued in the 2010- 2013 period, which will start maturing soon. These are all listed on the exchanges (although hardly any liquidity or transactions in them). If I were to buy some of these bonds in the open markets and hold them in my demat to maturity (<3 years), is it possible to claim tax deductions (upto 20k per year) under 80CCF for buying?
I couldn’t find anything on this. Any help is appreciated.
Hello @Veejayy,
Yes you can claim deduction under 80CCF for investment made in specified infrastructure and other tax saving bonds bought in the secondary market and held to maturity.
Deduction under Section 80CCF can be availed only through investment in certain tax saving bonds, issued by banks or corporations after gaining permission from the government which shall be restricted upto 10,000 per year.
These bonds are generally long term bonds, having tenure of more than 5 years with a lock in period of 5 years in most of the cases. These bonds can be sold after the lock in period!
Also, interest earned on these bonds will be taxable.
Hope this helps!
Hi, I need to file my income tax for FY21, I am using Quicko platform for filing, I wanted to confirm if the ELSS investment amount for the FY21 is to be added in the section 80C, since I already the amount of Rs30,072 , should I add my ELSS amount to this existing amount and submit the total
Hey @Sheirsh_Saxena, yes, the investment amount needs to be added under 80C.