Section 80D of Income Tax Act, 1961

 

 Medical emergencies always take us by surprise. It is always better to be safe than sorry, and it is no different when it comes to medical insurance. A must in your investment portfolio, the government encourages everyone to buy medical insurance and allows you to avail tax deductions on it under Section 80D.

Income tax department and does not require submitting of any document/receipt for claiming the deduction while filing ITR. However, as a matter of record and proof at a later date, it is advisable to retain the receipt of the payment in your tax file. A proof of payment/ receipt of insurance premium along with a policy document mentioning the name of policy holders.

 

Applicability  :

Individual and HUF including Non Resident Individuals (“NRI“)

Definitions :

Family – means Spouse and Dependent Children

Senior Citizen – means an individual resident in India who is of the age of 60 years or more at any time during the relevant previous year;

Investment or Expenditure covered under this deduction:

Health Insurance Policy or Central Government Heath Scheme

Preventive Health Check-up (“PHC“)

Medical Expenditure – Only for Senior Citizen and where health insurance is not taken.

 

INDIVIDUAL

1.      Deduction is available for two category:

Assessee and Family

Parents

2.      Maximum amount of deduction under this section for both category is INR 1 lakh

3.      Maximum amount of deduction for each category is INR 50,000

4.      Mode of Payment – Payment shall be made in any mode other than Cash (For PHC, cash payment is allowed)

5.      The deduction for Health Insurance including PHC is INR 25,000 for each category. This would be increased to INR 50,000 in each category in case of Senior Citizen.

6.      The deduction for PHC cannot exceed INR 5,000 in aggregate.

7.      In case Health Insurance is not taken for Senior Citizen, deduction for Medical Expenditure is allowed upto INR 50,000 for senior citizen in each category subject to upper limit in point 2 and 3.

HINDU UNDIVIDED FAMILY

1.      Maximum amount of deduction is INR 50,000.

2.      The deduction for Health Insurance  is INR 25,000 for any member of HUF. This would be increased to INR 50,000 in case such member is Senior Citizen.

3.      No Deduction for PHC for HUF

4.      In case Health Insurance is not taken for Senior Citizen, deduction for Medical Expenditure is allowed upto INR 50,000 for senior citizen subject upper limit in point 1.

5.      Mode of Payment – Payment shall be made in any mode other than Cash.

6.      In case a lump sum amount (single premium) is paid for Health insurance, covering more than a year, deduction shall be provided proportionately over the years for which the benefit of health insurance is available for both Individual and HUF.

Single Premium Health Insurance Policies

Budget 2018 has introduced a new provision for claiming a deduction with regards to single premium health insurance policies. Under the new provision, where a taxpayer has made a lumpsum premium payment in a single year for a policy valid for more than one year, he can claim a deduction equal to the appropriate fraction of the amount, under Section 80D. The appropriate fraction is arrived at, by dividing the lump sum premium paid, by the number of years of the policy. However, this would again be subject to the limits of Rs 25,000 of Rs 50,000 as the case may be.

Illustration for F.Y.2021-22/A.Y.2022-23

Case I – You are below 60 Years – Max Rs.25,000 and Your parents are also below 60 years –  Max Rs. 25,000 then aggregate Max  Rs. 50,000/-

Case II – You are below 60 Years –  Max Rs.25,000 But Your parents are above 60 years –  Max Rs. 50,000 then aggregate Max Rs. 75,000/-

Case III – You are above 60 Years – Max Rs. 50,000 and Your parents are also above 60 years – Max Rs. 50,000 then aggregate Max  Rs. 1,00,000/-

Notes: You can also get deduction under section 80D even if you have not any medical policy under following conditions.

1. For medical treatment expenditure of self, spouse and depended children (being senior citizen not having medical insurance cover – Maximum Rs.50,000/-
2. For medical treatment expenditure of any parent(s) (being senior citizen) not having medical insurance cover – Maximum Rs.50,000/-

 

For More Information

Please Contact :

Ranjeet Kumar Mundhra

9331618264