All about Deductions under Section 80D

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As a taxpayer, Nisha is again looking for more ways to reduce her tax liabilities. In the previous chapter, we looked at section 80C of the Income Tax Act of India. Now what? Are there no more ways? Well, the answer is yes. Section 80D of the Income Tax Act, 1961 is one of the sections that can come to the rescue and reduce the tax liability to a great extent. 

This section is related to the tax deduction related to medical insurance policies. In case you have medical insurance for yourself or members of your family. You are eligible to claim tax deductions under Section 80D for the payments you make for the insurance premiums. The deductions which are made under Section 80D are additional to the tax deductions that are claimed under Section 80C. You can claim deductions under Section 80D as an individual or as a member of the Hindu Undivided Family. 

Let us understand the various deductions that can be claimed under Section 80D and what you should be mindful of before claiming the deduction under Section 80D. 

Deductions under Section 80D

Section 80D provides for several deductions on health insurance premiums. As per the eligibility, you can avail of a maximum deduction of INR 25,000 per annum for premiums on a health insurance policy. Under this section, the premium which you pay for yourself or members of your family is eligible. However, for a senior citizen, the quantum of the deduction is INR 50,000 applicable.

You are also eligible to claim a tax deduction of INR 25,000 per year if you are paying the health insurance premium for a policy for your parents. In the event your parents are senior citizens, the amount of deduction is INR 50,000. You are eligible to claim a deduction of INR 50,000 for yourself under Section 80D if you are above the age of 60 years.

There are some additional deductions also under Section 80D in case you incur expenses for health check-ups for yourself or your parents, or any other members of your family, including your kids. The amount of deduction in such cases will be INR 5000.

The non-residents of India are also eligible to claim deduction under Section 80D. The limit of deduction is INR 25,000 for premiums paid for themselves/members of the family and INR 25,000 for policies for parents.

Limit under Section 80D

The limit of tax deduction under Section 80D is as follows:

An individual taxpayer is eligible to get a deduction of INR 25,000 for premiums paid for self, spouse as well as dependants. In case the individual is also supporting parents and paying premiums for their health insurance policy, he/she will be eligible for an additional deduction of INR 25,000. In case the parents are above 60 years of age, the amount of deduction is INR 50,000. In case the taxpayer himself or herself is also above the age of 60 years, the amount of deduction will be INR 50,000.

Deduction for Mediclaim under Section 80D

Mediclaim or health insurance policies are extremely important as health emergencies can arise at any time. It is essential to have an emergency fund to keep you covered in the case of an emergency. Why does the government provide a deduction to the taxpayers under Section 80D? The government offers this provision so that the taxpayers can keep the policy alive. You can claim the deduction even if you are paying the premiums for your spouse, dependent children, and parents. 

Here are some essential facts to keep in mind before filing a Section 80D deduction claim

Nisha is married. So her husband is also eligible to claim the tax deductions, provided he is an earning member. He can again buy a health insurance policy for his parents and claim the tax benefit from it under Section 80D. So, Nisha and her husband, both can purchase separate health insurance policies for their family members and parents. This will increase the overall amount saved under Section 80D of the Income Tax Act. Even if the parents are financially independent, you can still get a tax deduction for them.

If you have a single parent under Section 80D, you can claim as per the actual amount of premium you pay. So the eligible amount for deduction is the actual premium paid of Rs. 50,000 or Rs. 25,000 whichever is lower.

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Let us look at some scenarios to understand section 80D better.

  • Raju got a health insurance policy. Raju’s wife is employed with a multi-national organization. They have two children, and one of them is financially dependent, and the other one is independent. In this case, is Raju eligible to claim tax deductions under Section 80D of the Income Tax Act, 1961?

Yes, Raju is eligible to claim the tax deductions for the policy premium paid for his wife and child who is dependent on him. However, tax deductions are not applicable to financially independent children.

  • If Raju is paying the premium of his policy in cash, will he be eligible to claim deduction under Section 80D? 

No, if he is paying the premium in cash, then he is not eligible to claim the deduction.

  • Raju takes a health insurance policy for his other family members. His parents are 80 years old. Is Raju entitled to claim any amount as a tax deduction for the health check-up of his family members?

Yes, Raju can claim INR 5000 as a tax deduction. However, this amount is not available for each individual separately. He can claim it as an inclusive amount for all the dependents in his family.

  • Sahil does not get a health insurance policy for himself because he is covered under a group health insurance policy from his company. Can Sahil claim deductions under Section 80D?

No, Sahil cannot claim deductions for the group health insurance policies are. The benefit under Section 80D of the Income Tax Act is only available for individual policies.

  • Sameer is a non-resident. Is he eligible to claim deduction under Section 80D for health insurance premiums?

Yes, Sameer is eligible to claim the benefits.

  • Nisha got a health insurance policy for her aunt and is paying the premiums for it. Is she eligible to claim deduction under Section 80D?

No, Nisha cannot claim tax benefits as the assesses who are paying premium towards a brother, sister, grandparents, aunts, uncles, or any other relative, cannot claim it under a deduction for Section 80D.

Wrapping up

Now that you understand Section 80D in detail, it’s only logical that we move on to the next big topic - Section 80CCC in detail. To discover the answer, head to the next chapter. 

A quick recap

  • Section 80D of the Income Tax of India is related to the tax deduction related to the medical insurance policies.  
  • The deductions which are made under Section 80D are additional to the tax deductions that are claimed under Section 80C. 
  • A claim deduction under Section 80D is applicable for individuals or members of the Hindu Undivided Family. 
  • You can avail of a maximum deduction of INR 25,000 per annum for premiums on a health insurance policy. 
  • For a senior citizen, the quantum of the deduction is INR 50,000 applicable.
  • You cannot claim tax benefits as the assesses who are paying premium towards a brother, sister, grandparents, aunts, uncles, or any other relative, cannot claim it under a deduction for Section 80D.
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