Save Tax on Health Insurance Premium with Increase in Tax Deduction under Section 80D
Are you planning to take a health insurance policy for yourself and your family? Section 80D provides a tax deduction for the health insurance premium paid by you. This article contains all that you need to know about Section 80D.
The Income Tax Act was amended in 2018 to increase the tax deduction limit of health insurance premiums from Rs. 30,000 to Rs. 50,000 under Section 80D for senior citizen.
Subsequently, with the onset of the pandemic, people have started seeing health insurance in a new light. Even newly employed youth is showing interest in buying health insurance policies. So, let’s look at Section 80D deductions one by one to understand the benefits of these provisions.
Which Expenses Are Allowed as a Deduction?
Health Insurance Premium: The premium paid for a health insurance policy renewal is allowed as a deduction under this section.
1. This limit is subject to a maximum individual deduction of Rs. 25,000 in every financial year.
2. If the taxpayer is a Senior Citizen, then the upper limit allowed is Rs. 50,000.
Expenses for Medical Check-up: The amount spent on medical check-ups for those covered in the medical insurance policy is also deductible, subject to a maximum of Rs. 5,000 in every financial year.
Who is Eligible for Section 80D Deduction?
Any individual or an HUF paying taxes is eligible for deduction under this section. Though, the expenses are allowed if they are incurred for any of the following:
1. For Individual Taxpayers:
Self
Spouse of the taxpayer
Dependent children of the taxpayer
Dependent Parents of the taxpayer
2. For HUF: All the members of an HUF
How Much Amount Can You Claim as Deduction?
You are allowed to claim deductions under Section 80D subject to maximum limits. For the sake of this,
Family refers to the spouse, and dependent children of the taxpayer – Total deduction for this group is Rs. 25,000.
An additional limit of Rs. 25,000 is allowed if a health insurance premium is paid for the dependent parents.
To sum up, let’s look at the following cases.
Case 1: Taxpayer, family, and parents, all are below the age of 60 years
| Premium Paid For |
Medical Check-up |
Total Deductions |
|
| Self, Family & Children | Parents | ||
| Rs. 25,000 | Rs. 25,000 | Rs. 5,000 | Rs. 55,000 |
Case 2: Taxpayer and family is below 60 years, and parents are above 60 years
| Premium Paid For |
Medical Check-up |
Total Deductions |
|
| Self, Family & Children | Parents | ||
| Rs. 25,000 | Rs. 50,000 | Rs. 5,000 | Rs. 80,000 |
Case 3: Taxpayer, family, and parents, all are above the age of 60 years
| Premium Paid For |
Medical Check-up |
Total Deductions |
|
| Self, Family & Children | Parents | ||
| Rs. 50,000 | Rs. 50,000 | Rs. 5,000 | Rs. 1,05,000 |
Case 4: In the case of a HUF, the aggregate deductions are Rs. 25,000 only.
With the changing health scenario in the world, it is important to understand the need for health insurance. So, compare the premiums online and take the first step to purchase a health policy. To calculate your tax liability and all the applicable deductions, check this income tax calculator.
