Please wait. We Are Processing..

Section 80D Deductions

There are certain deductions permitted under the Indian Income Tax Act of 1961 that helps people to reduce their taxable income amount. These deductions can be availed if people have made certain tax-saving investments or have sustained eligible expenses. Multiple deductions are available under varying sections of the Income Tax Act that can help people lower their taxable income.

Under Chapter VIA of the Indian Income Tax Act, there are some prominent deductions featured under sections 80D, 80E, 80C, and 80G, amongst other  Section 80D of the Indian Income Tax Act, 1961 relates to tax deductions available for medical insurance policy options. Section 80D enables people to receive tax deductions on premiums paid by them for medical insurance to secure themselves and their family members  Section 80D deduction for medical insurance premiums can go up to INR 50, 000, and it can be claimed by self, spouse, children, parents, and Hindu Undivided Families.

Benefits of Section 80D

There are multiple health insurance scheme options provided by diverse insurance companies of the country to help people compact the rising medical and hospitalization expenses. To encourage people to secure themselves appropriately, the Income Tax Act of India has provided multiple tax deductions for a medical insurance plan under Section 80D.

As per the Indian Income Tax Act, Section 80D deductions are those based on the amount of money paid as premiums on health insurance policy schemes. Every individual or Hindu Undivided Family can claim a tax deduction for the medical insurance they have opted for, under Section 80D. This amount is deducted from their total income every year.

With Section 80D, people get to reap the benefits of investing in a health insurance policy scheme not only for themselves but will also for their spouse, dependent children or parents, while also availing good tax deductions.

Features of the Section 80D

  • People as an individual or HUF can claim a deduction of INR 25, 000 under section 80D on insurance for self, spouse, and dependent children as per Section 80 D of the Income Tax Act
  • An additional Section 80D deduction can be availed for the insurance policy scheme of parents up to Rs 25,000 if they are less than 60 years of age
  • If parents are aged above 60, the deduction amount of Section 80D is Rs 50,000, which has been increased in Budget 2018 from Rs 30,000
  • Senior citizen taxpayers can avail a deduction under Section 80D for a maximum amount of INR 50,000 per year
  • If taxpayer and parent(s) are 60 years and above, the maximum Section 80D deduction available is up to INR 1 lakh
  • A deduction (yearly) on health check-up expenses of INR 5, 000 shall be claimed under Section 80D of the Indian income tax act. The limit is inclusive of check-up expenses of members in a family, including spouse, kids, and parents and forms a part of the applicable Section 80 D deduction limit
  • Any contribution to CGHS (Central Government Health Scheme)/notified scheme also comes under Section 80 deduction

Rebate Under Section 80D

According to Section 80D, a taxpayer may claim deductions on health insurance premiums for self/family and parents, as well as deductions on expenses related to health check-ups. The following table underlines the maximum amount of rebate that can be availed under Section 80D.

Persons Covered Exemption Limit Health Check-Up Exemption Total
Self and family INR 25,000 INR 5,000 INR 25,000
Self and family + parents INR (25,000 + 25,000) = INR 50,000 INR 5,000 INR 55,000
Self and family + senior citizen parents INR (25,000 + 50,000) = INR 75,000 INR 5,000 INR 80,000
Self (senior citizen) and family + senior citizen parents INR (50,000 + 50,000) = INR 1,00,000 INR 5,000 INR 1.05 lakh
  1. Deduction on health insurance premium for super senior citizens

    People aged 80 years or more are referred to as super-senior citizens. Super-senior citizens who do not have any insurance policy can claim a deduction up to INR 30,000 every financial year for medical check-ups and treatments. They cannot use this deduction for any other personal expenses.

  2. Deduction u/s 80DDB

    People may get a deduction up to INR  1, 40,000 (INR  60,000 for senior citizens and INR  80,000 for senior citizens) for medical expenses incurred for cancer, chronic renal failure, Parkinson's, etc. under a sub-section of Section 80D. The complete list of such diseases is given in Rule 11DD of the Indian Income Tax Act. To avail such a claim for self, spouse, guardians, children, and/or siblings, the taxpayer should attach the endorsement from a specialist when filing the income tax forms.

  3. Deduction u/s 80DD

    People can claim a benefit of INR 75,000 for expenses incurred for rehabilitation, preservation, medical treatment, training, and nursing of a dependent with disability (INR  1.25 lakh for an extreme and serious disability). Reliant can be any of the parents, children, siblings, as well as the spouse of a person.  People shall be required to show or submit a supporting medical certificate to avail Section 80 D Deduction for such a claim.

  4. Preventive Health Check-up Deductions under Section 80D

    All payments made towards preventive health check-ups shall entitle taxpayers to a deduction of up to INR 5000 as per Section 80D, which is within the overall limit of INR 25,000/INR 30,000 (INR 50,000 w.e.f. 1 April 2018) as the case might be. In addition to self, this section 80 D deduction can also be claimed by people for their spouse, dependent children, or parents. The payment for preventive health check-ups can be made in cash as well.

    For example, Mohit has paid a health insurance premium of INR 23,000 for the insurance of the health of his wife and dependent children while also getting a health check-up done for himself for INR 5,000.

    In such a scenario, Mohit can claim a maximum deduction of INR 25, 000 under Section 80D of the Indian Income Tax Act. A deduction of INR 23, 000 would be allowed to him towards insurance premium paid, and INR 2, 000 shall be allowed for a health check-up. The deduction towards health check-up for him shall be restricted to INR 2, 000 as overall deduction should not exceed INR  25, 000 as per the section 80D, in such a scenario.

  5. Single-Premium Health Insurance Policies

    A new provision for claiming a tax deduction with regards to single premium health insurance policies was introduced in the Budget of 2018. As per this provision, the taxpayer can claim a deduction equal to the appropriate fraction of the amount under Section 80D if they had made a premium payment in lump-sum in a single year for a medical insurance policy option valid for more than one year.

    The exact fraction is arrived at by dividing the premium that has been paid in lump-sum, by the number of years of medical insurance policy option. This amount shall, however, be subject to the limits of INR 25, 000 of INR 50, 000 as the case might be.

Eligibility Criteria for Tax Benefits under Section 80D

A taxpayer will be eligible to claim deductions under section 80D. The health insurance policy scheme premium paid for the following are eligible for deductions:

  • Self
  • Spouse
  • Dependent Children
  • Parents

Hindu Undivided Families are also eligible to claim deductions under section 80D of the income tax act. The premium payments of any member in a Hindu Undivided Family can be used for tax deductions purposes, which, however, shall be subject to an upper limit as per the act.

NRI’s are also eligible for the Section 80D deduction.

Examples:

Illustration 1:

Mr Mehta is 60 years old and pays of INR 32, 000 yearly premium for himself and his dependants. He also made a health insurance policy renewal for his parents and paid a premium of INR 35, 000 for it. His parents are currently 80 years of age.  In this scenario, he would be eligible for the following according to Section 80D:

  • Tax deduction of INR 32,000 for the health insurance premium paid for himself and his dependants
  • INR 35,000 tax deduction for the medical insurance premium sum paid for his parent’s policy

Hence, he can claim a total of INR 67,000 income tax deduction under Section 80D.

Illustration 2:

Mohan is a 57-year-old taxpayer.  He lives with his wife Malini (55 years old),  his children Mona (15) and Manish (11), as well as his parents. The following table underlines the medical expenses incurred by Mohan in the last financial year.

  Mohan, Malini, Mona, and Manish  Parents
A medical insurance premium paid by cheque 22000 -
Medical Expenditure paid by cheque - 47,000
Medical Expenditure paid by cash 7000 5000
Preventive health-check-up 8000 4000

Hence, based on the expenses mentioned in the table above, the tax exemption availed by him under Section 80D would be INR 74,000. The detailed calculation for this has been done in the table given below:

  Mohan, Malini, Mona, and Manish Parents
A medical insurance premium paid by cheque 22000 -
Medical Expenditure paid by cheque - 47,000
Medical Expenditure paid by cash Not eligible as this benefit is only available for senior citizen, for whom medical insurance plan has not been taken Not allowed cash expenses
Preventive health-check-up 3000 (Maximum limit is 25000. As  22,000  already utilized, only 3000 can be claimed ) 2000   (Maximum limit is 50000. As since 47,000 already utilized, the remaining amount is 3000   However, preventive health check-up has an overall limit of 5000 out of which 3000 has been used for self and family. Hence only 2000 can be claimed now)
Total 80D deduction that can be claimed by Mohan is INR  74,000 25000 49000

 Comparison between sections 80D, 80DD, 80DDB, and 80U

Particulars 80D 80DDB 80DD 80U
Purpose Medical Insurance & Medical expenditure Treatment of Self or Dependent for specific diseases Treatment of a dependent who is disabled Treatment of disabled assesse for the self
Maximum Limit 1,00,000 40,000(age < 60) 1,00,000 (age 60 or above) 75,000(non-severe disability) 1,25,000(severe disability) 75,000(non-severe disability) 1,25,000(severe disability)
Type of assesse Individual/HUF Resident Individual or HUF Resident Individual or HUF Resident Individual

Difference between Section 80D and 80C

A great number of people tend to have confusion between Section 80D and Section 80C of the Indian Income Tax Act 1961. Much like Section 80D, Section 80C also provides taxpayers with the opportunity to save money on taxes. However, the upper limit to save on taxes is much higher in Section 80C in comparison to Section 80D.

Some of the key points of differences the Section 80D and 80C of the Indian Income Tax Law:

  • While Section 80D provides deductions from INR 25,000 to INR 1, 00,000 (subject to certain conditions) Section 80C allows deductions up to INR 1.5 Lakh per annum
  • Another prime aspect of the difference between these two sections is the inclusion of investments in Section 80C. Under Section 80C, people can avail tax deductions on a variety of financial instruments and investment scheme options, like small savings schemes, life insurance premiums, mutual funds, and so on.  While on the other hand, Section 80D provides taxpayers with exceptions only for health insurance premiums of self, parents, and family, as well as for the expenses incurred in preventive health check-ups

Tax Deduction for Medical Insurance: Things to Know

  • People can avail of a tax deduction on the premium paid on medical insurance provided by their employer, as well as on a standalone insurance plan option taken by them. Section 80 D deductions are applied to both individual health insurance and family floater policies
  • People shall be eligible for availing tax deduction under Section 80 D of the income tax act if their premium amount is paid through a payment mode other than cash. People may pay their premium through varying modes, such as Credit card, Debit card, or Internet Banking
  • Medical insurance policy options for dependent children who are below 18 years and unemployed would be eligible for section 80 D deduction. If the male child is unemployed, then he would be covered for up to 25 years. However, an unemployed female child can be covered as long as she is unmarried
  • A contribution made towards health insurance policies has to be made as per a scheme option specified by the Central Govt./approved by IRDA
  • Premium paid towards grandparents, sister, brother, uncles, aunts, or any other relative cannot be claimed as a section 80D deduction
  • Premium paid on behalf of working children cannot be taken for tax benefit
  • In the scenario of part payment made by a person and their parent, both of them can claim a section 80D deduction to the extent paid by each
  • Section 80 D deduction has to be taken without showing the Service Tax and Cess portion from the premium amount
  • Group Health Insurance premium provided by an insurer is not eligible for section 80D deduction

Exclusion under the Section 80D of the Indian Income Tax Act

The following are the exclusions under section 80D of the IT Act, 1961:

  1. Income Tax Act Mode of Premium Payments

    To avail tax benefits under Section 80D of the Indian Income Tax, only the taxpayer should pay the health insurance premiums. Any third party should not pay for this payment.  In the scenario that the premium payments are paid in cash, taxpayers would not be eligible for tax benefits. People, however, would be able to avail Section 80D deduction for making payments for preventive health care check-ups in cash.

  2. Service Tax

    Taxpayers would not be liable to receive benefits on the Service Tax, and Cess charges levied on the payment of premium. The service tax shall be chargeable on payments of the health insurance premiums. The sum of service tax payable on these premiums is 14%.

  3. Group Health Insurance

    Group health insurance plans are not liable to have any kind of tax benefits under Section 80D of the Indian Income Tax act. However, in case taxpayers opt to make extra premium payments to boost their group cover, they may claim Section 80D deduction for that additional sum of money.

How to Claim Deductions under Section 80D while filing ITR1?

Once people have filled all their income details in the ITR-1 form, they would be required to fill in the information related to various tax-saving deductions that are available under Sections 80C to 80U of the Indian Income Tax Act 1961. These deductions can be claimed before the levying of income tax.

It is vital to note that even if people have incurred expenditures (such as medical insurance premiums) that can be claimed as deductions from income under certain sections of the Indian Income Tax Act (Section 80D in this scenario), they still would be required to claim them by entering their details in the ITR1 form. In case they miss out on entering any of the deductions that they are eligible to claim, they would necessarily not be able to get the deduction unless they file a revised return. 

The ITR-1 form typically has a detailed break-up column where taxpayers can enter their relevant details to claim deductions. These deductions come under part C of the third tab of 'Computation of Income and Tax.'

People filing ITR-1 on the official e-filing web portal of the tax department will have details auto-populated under Form 24Q (the TDS return filed by their employer), as well as their previous year ITINR. They must, however, cross-check this information to be assured of their accuracy. 

The section 80D deductions are divided into three parts:

  • Health insurance premium
  • Medical expenditure
  • Preventive Health Check-up

Here is a detailed insight of the elements that people would come across while claiming section 80D deductions in the process of filing ITR-1 online.

  1. Health Insurance Premium

    There are seven options provided in the drop-down menu, and the people can select the one that would be perfectly applicable to them

    These options are:

    • Self and Family
    • Self (senior citizen) and family
    • Parents
    • Parents (senior citizen)
    • Self and family including parents
    • Self and family including senior citizen parents
    • Self (senior citizen) and family including senior citizen parents

    People would have to select any one of these options based on the payment made by them, as well as enter the amount.

  2. Medical Expenditure

    • The second option would only be available to people if they satisfy two conditions. These conditions are:
      • People should incur medical expenses on their senior citizen parents or their selves ( if they are a senior citizen)
      • The individual for who the expenditure has been made should not be covered in other health insurance policy
    • There are three options available in the drop-down menu of this segment; they are:
      • Self and family (senior citizen)
      • Parents (senior citizen)
      • Self and family including parents (Senior Citizen)
    • People should select the appropriate option from above and enter the relevant amount
  3. Preventive Health Check-up

    • This Section 80D deduction can be claimed by entering details in the corresponding row to 'Preventive health check-up’
    • The drop-down menu under this segment provides three options, which are:
      • Self and family
      • Parents
      • Self and family including parents

    Once people have duly filled all the needed cells with the number of deductions under sections 80D, the online form would calculate their total income automatically by deducting the claim sum maid by them. All the tax details of the person, including the amount they have to pay, shall be shown on the screen.

FAQs

Written By: Paisawiki - Updated: 03 December 2020