What is Section 80D? Eligibility, Deduction & Calculation

Section 80D is part of a provision made under the Income Tax Act 1961. The section allows people with a health insurance plan to claim a tax deduction on the premium paid by them towards the health insurance. Section 80D applies to all types of health insurances, like top-up plans or critical illness plans. You can avail the benefits of Section 80D Income Tax on the health insurance for yourself, your spouse, dependent children and your parents. 

The main purpose of this tax deduction is to encourage more individuals to opt for health insurance policies and to promote healthcare in the country. The health insurance tax benefit from this section can be claimed considering various factors like — the insured’s age, type of policy opted for, category of the taxpayer and more. But before dwelling on these factors, we must understand the eligibility criteria to claim the provisions under Section 80D.

What is the Eligibility to Claim a Section 80D Deduction?

The deduction for premiums on health care insurance is allowed for the following individuals:

• Self
• Spouse
• Parents
• Dependent children 

However, it is important to note that Section 80D of the Income Tax Act will not be applicable for tax deductions if you pay the premium in cash. In cases like these, you must issue a cheque for the payment of the premium to utilise all the perks of the deductions.

Total Amount to be Deducted under 80D

As stated above, you must pay the premium amount in any payment mode except cash to claim the tax deduction benefits. The deduction perks are categorised by the age limit of the insured as stated below:

*Note- The Preventive healthcare expenses mentioned in the table are usually opted by the insured when the total amount of premium paid by them is less than the maximum limit allowed (for both categories). In such a case, a sum of INR 5000 can be claimed by the insured for a preventive health check-up of the self and family under the said limit. 

What is the Maximum Deduction Limit under Section 80D?

The eligible deductions mentioned in the table above give an idea of how tax deductions are scheduled per age. The maximum 80D deduction limit is different and depends on various scenarios, as given below:

• The amount paid for the insurance premium for self, spouse, children, etc., will have a maximum limit of INR 25,000.
• For the 80D limit for tax deductions, the amount can go up to INR 50,000 for dependable parents under 60 years of age, while the limit can go up to INR 75,000 for parents above 60 years.
• If you are a taxpayer above 60 years of age paying the premium expenses, then you are eligible for a deduction claim of up to one lakh. 

How to Calculate the 80D Medical Expense Deduction?

The calculations for the Section 80D medical expenditure can be best understood with the help of the table below:

The above table can be summarised with an assumption stated below:

Suppose you are a 60-year-old individual paying INR 32,000 premium annually for yourself and your family’s health insurance. Besides, you are also paying a premium of INR 35,000 for your parents (above 80) for their health insurance. In this case, you will be entitled to the following deduction amounts: 

• You (senior citizen) and your dependents will be entitled to receive a tax deduction of the sum premium amount paid by you  — INR 32,000. While for your senior citizen parents, you will be eligible for a tax deduction of INR 35,000. 
• If both amounts are summed up, it stands out as INR 67,000, which you can claim as a Section 80D medical expenditure. 

Factors Excluded from Section 80D of the Income Tax Act

Section 80D excludes various factors while determining the deduction amount to pay to the insured. Here are all the exclusions under Section 80D of the Income Tax Act-

• The insured has made payment of the health insurance premium and medical expenses in cash. 
• The insured has made payment for the premium of undependable relatives like siblings, grandparents, working offspring and other relatives.
• If the person taking up the health insurance is already insured under the group health insurance, which is provided by the company. 

Conclusion 

The nation is struggling with severe health conditions that are difficult to finance for treatment whether you have insurance or not! With Section 80D of the Income Tax Act, however, the Indian Government guarantees that problems are concluded. The law allows taxpayers to claim a tax deduction on the premium tax amount paid by them. The provision of Section 80D witnessed many people taking up health insurance and benefiting from the deduction limits it offers. If you also wish to avail the benefits of Section 80D of the Income Tax Act, then make sure to have a health insurance policy.

FAQs

What should be my income to qualify for the Section 80D tax benefits?

The Income Tax Department specifies no income limit to be eligible for the 80D benefits. Thus, any income level that can cover the premium amount is eligible.

Can I claim the deduction under Section 80D without proof?

The Income Tax Department hasn’t mandated the submission of documented proof to seek the tax deduction claim. However, it is advised that you keep a record of all your premium receipts and insurance filings for future reference.

What are some of the major diseases covered under Section 80D?

Dementia, dystonia musculorum deformans, motor neuron disease, ataxia, chorea, hemiballismus and aphasia are some of the significant diseases covered under Section 80D.

Can the deduction for 80D be claimed for siblings?

No, the taxpayer cannot claim the tax deduction for any siblings or relatives independent of the insured taxpayer.

Sonakshi Patel