How To Claim Dental And Medical Expense Tax Deductions Effectively

Medical emergencies come without warning and the mental stress during this time is often increased by the bills that accompany treatment. One way to cover unforeseen medical costs is by getting health insurance.

The government of India has also introduced medical expense tax deductions to encourage people to purchase health insurance policies. Tax deductions for healthcare costs fall under Section 80D, and you can reduce your liability by taking full advantage.

You can save tax on the money you spend on health insurance with deductions available under Section 80D. Medical expense tax deductions are applicable for both top-up health plans and critical illness plans.

Every individual and Hindu Undivided Family (HUF) can claim this deduction. This tax benefit is available over and above the deductions available under Section 80C. Note that you can claim this benefit only under the old tax regime.

According to the Income Tax Act 1961

• Only individuals and HUF are eligible for the deduction can claim under Section 80D

• A Non-Resident Indian (NRI) who pays taxes in India can also claim this deduction However, firms and organisations or any other entity can’t claim a deduction on medical insurance premiums paid. 

• You can claim a deduction for medical insurance premiums paid for yourself, your spouse, dependent children, and parents

• Medical expenses for senior citizens are also eligible for deduction

Under Section 80D, you can claim a deduction of ₹25,000 in a financial year for medical insurance premiums. For senior citizens, this limit increases to ₹50,000. The table below summarises the deduction amounts available under different scenarios:

There are some specified modes to make payments under section 80D:

• For preventive health check-ups, you can use any mode

• For medical insurance premiums, you can use any mode other than cash

• Cash payments are not allowed as deductions for medical expenses either 

• Individuals and Hindu Undivided Families (HUFs) can claim deductions on health insurance premiums and medical expenses under the old tax regime.

• Maximum deductions range from ₹25,000 to ₹1 lakh, depending on age and whether the insurance is for self, family, or senior citizen parents.

• Cash payments are not eligible for deductions, except for preventive health check-ups. Premiums must be paid via non-cash modes.

1. What is the maximum deduction under section 80D?

The amount depends on the type of insurance you have:

• Self, spouse, and children: ₹25,000

• Including parents (below 60): ₹50,000

• Including parents (above 60): ₹75,000

• If self/spouse are senior citizens: ₹1 lakh

• Bonus: Senior citizen medical expenses: up to ₹50,000 (conditions apply)

2. How to Claim a Deduction Under Section 80D?

Salaried individuals can claim the 80D deduction by submitting insurance premium receipts or medical bills to their employer. Alternatively, you can claim it while filing the income tax return (ITR).

3. What are the documents needed for claiming medical expenses on taxes?

• Salaried: Submit the health check-up invoice to your employer during the investment declaration

Self-employed: You don’t need to submit any document while filing ITR, but keeping payment proof for records is advisable

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