The increasing cost of availing medical and healthcare services is a matter of concern for all. Having Health Insurance coverage helps in reducing the out-of-pocket expenditure that would otherwise be more than what one could afford. By paying a small amount of money as a premium one need not worry about unprecedented medical emergencies. A primary health insurance plan generally covers costs such as hospitalization, surgical expenses, and medical check-ups. To promote the importance of health insurance, the government has provided certain tax benefits on Health Insurance. This article will help you understand the various aspects related to relief in taxation that is available on Health Insurance.
Exemption on Health Insurance Premium
An individual or HUF can avail of a deduction u/s 80D on the premium they pay towards their health insurance. Here deduction is available if the policy is taken for self, spouse, dependent children, and dependent parents. Additionally, the deduction limit will also vary on the basis of the person who is paying the premium.
| Premium Paid For | Deduction Amount (INR) |
| Self, Spouse, and children (All members < 60 years) | 25,000 |
| Self, Spouse and Children + Parents (All members < 60 years) | 50,000 (25,000 + 25,000) |
| Self, Spouse and Children + Parents (Others < 60 years and Parents > 60 years) | 75,000 (25,000 + 50,000) |
| Self, Spouse and Children + Parents (All eldest members > 60 years) | 1,00,000 (50,000 + 50,000) |
Exemption on Preventive Health Checkups
Deductions are also available under section 80D for preventive health checkups. The maximum benefit that is available for preventive health check-ups is INR 5,000. Additionally, if the expenses are paid in cash then also they will be eligible to claim a deduction. This expense is, however, included within the limits applicable for Health Insurance Premium deduction. Hence, it can not be available over and above the limits of premium amounts.
Exemption for Individuals with Disability
Individuals with a disability can claim a deduction under section 80U. A person is considered disabled when he is suffering from more than 40% and less than 80% disability. A severely disabled individual is someone who is suffering from more than 80% disability. Under this section, a person with a disability will be able to claim INR 75,000 and a person with a severe disability person will be able to claim INR 1,25,000 as a deduction.
Exemption on Treatment of Critical Illness
Under section 80DDB, any resident individual or HUF can claim deductions on the expenses that are incurred on the treatment of specified diseases. If the deduction is claimed for an individual/HUF member who is below 60 years then INR 40,000 is the exemption amount. However, if this deduction is for an individual/HUF member who is above 60 years then the exemption amount is INR 1,00,000.
Exemption on Maturity Amount received from LIC
If the premium paid is less than 10% of the sum assured for policies issued after 1st April 2012 and 20% of the sum assured for policies issued before 1st April 2012, then the maturity amount received or any bonus amount received will be tax-exempt under Section 10(10D).
This section also covers policies taken after 1st April 2013. But it applies only to those individuals who have a disability or a disease specified under Sections 80U and 80DDB respectively. And in this case, the premium paid should be less than 15% of the total sum assured.
TDS on Life Insurance Policy
If an individual or HUF receives more than INR 1 lakh from a life insurance policy that is not covered under an exemption under Section 10(10D), then TDS @ 5% under section 194DA shall be deducted by the insurer before making this payment. The same goes for the bonus payment. However, if the amount is less than INR 1 lakh, no TDS will be deducted, although the amount will be taxable.
FAQs
Yes, under section 80DDB, you can avail deductions on the expenses incurred for the treatment of specific diseases like malignant cancer, AIDS, dementia, neurological disorder, chronic kidney failure, hemophilia, and thalassemia.
Yes, you can avail of tax benefits up to INR 5000 for preventive health checkups under section 80D every year.
No, an individual cannot avail of tax benefit u/s 80D if they have made a cash payment for their health insurance premium.
Both individual and family floater plans are eligible for claiming deduction u/s 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.