Under the Indian Income Tax Act, section 80D provides tax benefits for individuals who have purchased health insurance policies or have paid for medical expenses for themselves or their family members.
The following deductions are available under section 80D:
Deduction for Health Insurance Premiums i.e.Mediclaim:
An individual can claim a deduction for the premium paid towards a health insurance policy for himself, spouse, dependent children and parents up to a maximum of Rs. 25,000.
However, If the policyholder or any of the insured person is a senior citizen (aged 60 years or above), the deduction limit is increased to Rs. 50,000.
Deduction for Preventive Health Check-ups:
An individual can claim a deduction for the expenses incurred on preventive health check-ups up to a maximum of Rs. 5,000 per year. This deduction is within the overall limit of Rs. 25,000 or Rs. 50,000, as the case may be.
In order to claim the deduction under section 80D, the payment should be made in any mode other than cash.
Additionally, the health insurance policy should be in the name of the individual or his/her spouse, children or parents.
Let us understand the above with the help of an Example :
Mr. Suresh (aged 45 years) has made the following payments during the financial year 2022- 23:
1) Payment of medical insurance premium on his policy of Rs. 16000.
2) Payment of medical insurance premium on policy of his spouse Rs. 5,000.
3) Payment of medical insurance premium on policy of his younger son who is dependent on him Rs. 4000.
4) Payment of medical insurance premium on policy of his elder son who is self employed and not dependent on him Rs. 5,000.
5) Payment of medical insurance premium on policy of his parents (resident and aged 75 years), Rs. 35000.
6) Payment of Rs. 4000 towards expenditure on preventive health check-up (for his own check-up and check-up of his wife).
Advice Mr. Suresh regarding the admissible deduction under section 80D for the year 2022-23:
Considering the provisions under Section 80D, the deduction in case of Mr. Suresh will be as follows:
1) Medical insurance premium on his policy of Rs. 16,000 will qualify for deduction.
2) Medical insurance premium on policy of his spouse of Rs. 5,000 will qualify for deduction.
3) Medical insurance premium on policy of Rs. 4000 of his younger son who is dependent on him will qualify for deduction. However, premium of Rs. 5,000 on policy of elder son who is not dependent on him will not qualify for deduction.
4) Medical insurance premium on policy of his parents of Rs. 35,000 will qualify for deduction (being Senior Citizens).
5) Expenditure on preventive health check-up will also qualify for deduction, but, it will be restricted to Rs. 0 only (as the overall limit of deduction under section 80D in respect of assessee and his family cannot exceed Rs. 25,000).
Thus, total deduction under section 80D will amount to Rs. 25,000 on account of expenditure on premium paid in respect of his own health, health of his spouse and dependent son and Rs. 35,000 in respect of premium paid on policy of his parents.
Deduction on account of expenditure on preventive health check-up will be Rs. 0 as the overall limit of Rs.25000 has already been achieved. Total deduction under section 80D will amount to Rs. 60,000 (Rs. 25000 + 35000)
Need a Tax Expert for your Tax Needs? Connect with one here for FREE!