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Section 80D of Income Tax Act of 1961

Section 80D of Income Tax Act of 1961

The Income Tax Act, 1961 allows income tax deductions for individuals, which reduces the amount of tax payable. In order to make the most of these deductions, it is important to be aware of the relevant sections.

What is Section 80D?

Section 80D of the Income Tax Act provides income tax deductionsrelated to the medical insurance premium paid for you and your family members. You can claim a tax deduction for the health insurance premium paid for self, parents, children, and spouse. Moreover, this section also allows Hindu Undivided Families (HUFs) to claim a deduction. If you wish to know how you will benefit from this section, read on to know what is Section 80D along with the tax deductions offered in it.

Deductions as per Section 80D: (Medical Expenditure Deduction)

80D deductions are only connected with medical insurance policies. These deductions are mentioned as follows:

  • Individual and family
  • If you pay insurance premiums for yourself, your spouse, and your kids, you can claim are eligible to claim a maximum tax deduction of INR 25,000 per annum. In the case of senior citizens, the limit is INR 50,000 a year

  • Parents
  • If you pay health insurance premiums for your parents, you can claim a maximum tax benefit of INR 25,000 per year if your parents are less than the age of 60. However, if your parents are senior citizens, you can claim a tax benefit up to INR 50,000 per year.

Additional 80D deduction

You are eligible to claim an additional 80D income tax deduction of INR 5,000 for the expenses associated with health check-ups. This includes complete expenses for a check-up of the entire family.

Union Budget 2018: Increase in tax deduction limit according to Section 80D

As per the Union Budget announced in 2018, the maximum amount of deduction in health premium was raised from INR 30,000 to INR 50,000 under Section 80D. Senior citizens can avail of this benefit. One of the core objectives of the Union Budget 2018 was to take care of the senior citizens in India. Moreover, it is also modifications related to the medical expenditure incurred by individuals aged above 60 and below 80.

This rise in the tax deduction amount is a welcome change for senior citizens and for those who pay health insurance premiums for senior citizens.

Who is eligible for tax deductions under Section 80D?

You are eligible to claim a tax deduction under Section 80D for yourself, spouse, kids, and parents. In addition, as mentioned above even HUFs are eligible to claim a deduction in this section. Any member of a HUF can claim a tax deduction on the amount paid towards the health insurance premium. This deduction is subject to the upper limit according to Section 80D of the Income Tax Act.

Section 80D Limit

You can claim a tax deduction on the premium paid for yourself, your family (spouse and kids), and your parents. Explained below is the 80D limit applicable to different categories of people across various age groups.

  • For self and family - INR 25,000 tax deduction + INR 5,000 health check-up, which sums up to INR 30,000
  • For self, family, and parents INR 50,000 tax deduction + INR 5,000 health check-up exemption, which sums up to INR 55,000
  • For self, family, and senior citizen parents - INR 75,000 tax deduction + INR5,000 health check-up exemption, which takes the total tax deduction to INR 80,000
  • For self (senior citizen), family, and senior citizen parents - INR 1 lakh tax deduction +INR 5,000 health check-up exemption, which increases the deduction amount to INR 1.05 lakh

The reason behind deduction according to Section 80D

The mediclaim deduction under Section 80D happens so that the medical insurance policy remains active. The insurance policy can be in either your name or your spouse’s name. You must note that apart from saving tax a health insurance plan plays a pivotal role in taking care of your medical expenses if you fall sick and need medical assistance.

FAQs on Section 80 D

1. Can you make a cash payment for the premium paid for deductions?

It is not possible to claim a deduction on the premium amount paid in cash.

2. Is it possible to claim deduction on the premium paid for your independent children?

No, deductions can only be claimed if you pay the premium for dependent children.

3. Can you claim a deduction if your spouse and parents are not dependent on you?

Yes, you can claim deductions even when your parents and spouse are independent.

4. Can you claim a deduction on the service tax paid on the insurance premium?

You cannot claim a deduction on the service tax amount because it is paid in addition to the premium and it is collected by agencies.

5. Is it possible to claim deductions for health check-up of dependents in your family?

Yes, you can claim a health check-up deduction up to INR 5,000 inclusive of all the dependents in your family.However, this facility is not available separately for every individual family member.

Now that you have a clear idea of what is 80D in income tax, you must ensure that you avail of the tax deduction in this section if you are paying health insurance premiums for yourself, your spouse, dependent children, and parents.

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