What is Section 80D of Income Tax Act 1961?
Section 80D of the Income Tax Act, 1961 offers deduction for money spent on health insurance and maintaining your health, and is significant for your Tax planning, and personal finance.
Deduction Limits
For individuals under 60, the maximum deduction is ₹25,000 for health insurance premiums for themselves, their spouse, and children.
An additional deduction of ₹50,000 is available if premiums are paid for senior citizen parents.
|
Insured |
Deduction Amt |
Deduction Amt |
|
Age < 60 yrs |
Age > 60 yrs | |
|
Self, Spouse and Children |
25,000 |
50,000 |
|
Parents |
25,000 |
50,000 |
|
Opt: Preventive Healthcare |
5,000 |
5,000 |
|
Max Deduction |
50,000 |
1,00,000 |
Medical Expenses for Senior Citizens
If senior citizens do not have health insurance, medical expenses up to ₹50,000 can be claimed as a deduction under Section 80D.
- The incurred expenses should only be for the person who is 60 years of age and above.
- The person need not be covered under any other health insurance plan.
Preventive Health Check-ups
Taxpayers can claim a deduction of up to ₹5,000 for preventive health check-ups. This amount is included within the overall limit of ₹25,000/₹50,000 respectively. While filing Income tax returns
Multi-Year Health Insurance Premiums
If health insurance premiums are paid for multiple years in one go, the deduction must be claimed proportionately over the policy years, subject to the annual deduction limits.
Advantages of buying multi-year health insurance policies:
These policies have several advantages associated with them. In a yearly policy, you face the hassle of renewing every year, which can be inconvenient. If you fail to renew the policy on time, you may lose out on the benefits. On the contrary, multi-year health insurance policies, which can be bought for up to 3 years, can save you from those troubles by securing your coverage in one go for a specific number of years. To be clear, there is no need to renew a multi-year health insurance policy every year.
Critical Illness Coverage Under Section 80D
Medical emergencies are always uncertain and the financial burden of a critical illness is too much for most people. Even if you are diagnosed with dengue, a few days of hospitalisation can cost a significant amount. Now imagine a condition like cancer, stroke, or cardiac arrest.
It provides this relief to senior citizens who do not have any health insurance policy but incur a significant amount of medical expenditure. The reason behind not having health insurance must be the inability to afford high insurance premiums or due to any pre-existing health insurance premium.
What are the Documents Required to Claim Tax Benefits?
The Income Tax Act does not specify what documents that need to keep handy to claim such a deduction. However, it is of extreme importance to keep documentary proof such as the medicine invoice, medical bills, doctors’ prescriptions, diagnostic tests, etc. You should be well-prepared with substantial evidence in case the income tax department asks to prove the claim of the deduction.
What is TaxLane corporate services Advice?
- To claim Properly this section Insurance has to be paid in rules prescribed by Income tax department such as bank/cheque/digital mode of payments only.
- Preventive Health check ups can be paid in cash
- Payment has to exclusively on self, spouse, children and parents not included any relatives, grand children
- Group health insurance premium made by the company on behalf of the employee cannot be claimed