Making Best Of Health Insurance Deductions Under Section 80D

Key Takeaways: 

• Section 80D allows deductions of up to ₹25,000 for individuals below 60 and up to ₹50,000 for senior citizens, including premiums paid for parents.

• Apart from health insurance, deductions are available for preventive health check-ups (₹5,000) and medical expenses for uninsured senior citizens (up to ₹50,000).

• If you purchase a single-premium health insurance policy, the deduction can be claimed proportionately over the policy term.

• Section 80D deductions are only applicable under the old tax regime; opting for the new tax regime means forfeiting these benefits, so choose wisely.

Navigating the world of tax deductions can feel like a complex puzzle. However, when it comes to Section 80D of the Income Tax Act, it's worth piecing together. Section 80D of the Income Tax Act in India allows deductions for health insurance premiums paid for yourself, your spouse, dependent children, and parents. 

Let's explore how you can maximise your health insurance tax rebate using the provisions under the section.

First things first, Section 80D of the Income Tax Act of 1961 allows individuals and Hindu Undivided Families (referred to as HUFs) to claim a health insurance deduction on the premiums paid for health insurance policies. The government introduced this section to encourage people to invest in health insurance, ensuring better healthcare access and financial security during medical emergencies

Only individuals and HUFs can take advantage of the benefits under Section 80D. This section doesn't apply to a company, firm, LLP, or any other entity. So, you can claim a deduction under Section 80D only for yourself, your dependent children, your spouse, and your parents (dependent or not).

The deduction limits under Section 80D vary depending on the age of the insured and their relationship to the taxpayer. Here's a breakdown of how much health insurance premium is tax deductible:

You can claim up to ₹25,000 for premiums paid for yourself, your spouse and your dependent children. Additionally, you can claim another ₹25,000 for premiums paid for your parents.

In this case, you can claim the same deduction of up to ₹25,000 for premiums for yourself, your spouse and dependent children. However, for your parents who are senior citizens (aged 60 years or above), the deduction limit increases to ₹50,000.

The maximum deduction limit is ₹50,000 for premiums paid for yourself, your spouse, and your dependent children and another ₹50,000 for premiums paid for your parents. 

Check the table below to understand the deductions clearly:

Beyond premium payments, Section 80D offers additional benefits that many people overlook, such as deductions for preventive health check-ups and coverage for senior citizens without insurance. 

Here's a little bonus: You can claim a deduction of up to ₹5,000 for preventive health check-ups. This amount is included within the overall limit of ₹25,000 or ₹50,000, depending on the age of the insured. 

What if your parents are senior citizens but don't have health insurance? No worries! You can still claim a deduction of up to ₹50,000 on medical expenses incurred for them. 

If you're contributing to the Central Government Health Scheme (CGHS) or any other notified scheme, these contributions are also eligible for deductions under Section 80D up to the same limits as health insurance premiums.

Ever thought about buying a single-premium insurance policy? You can claim the deduction proportionately over the policy term. For instance, if you pay a single premium for a policy with a term of 5 years, you can spread the deduction across those 5 years. It's like having your cake and eating it too!

Remember, deductions under Section 80D are only allowed for payments made in any mode other than cash. So, make sure you pay those premiums via cheque, demand draft or online transfer to claim the tax benefits.

HUFs can also claim deductions under Section 80D for health insurance premiums paid for members of the HUF. The deduction limits are the same as for individuals. So, if you're part of a HUF, you can ensure the health and financial security of your family while enjoying tax benefits. The Karta (head of the family) can claim deductions for health insurance premiums paid for family members.

It's key to remember that the Section 80D deduction is only available during the previous tax system. These advantages will be lost if you choose to use the new tax regime. Therefore, carefully consider all your tax-saving possibilities before choosing one.

You can claim a deduction up to ₹25,000. In case you are a senior citizen, you can claim up to ₹50,000.

Yes, you can claim deductions under such circumstances. The amount you can claim will depend on their age. If they are above 60 years of age, then the limit is ₹50,000. If they are below 60 years of age, then the maximum you can claim is ₹25,000. 

Health insurance premium can be eligible for tax deduction under Section 80D.

Yes, there is a tax rebate for senior citizen health insurance.

Yes, you can claim up to ₹5,000 per year.

You will need to submit:

• Receipts of your paid health insurance premiums

• Policy details

• Proof of medical expenses

Yes, Section 80D of the Income Tax Act allows you to claim deductions on multiple insurance policies as long as you meet the eligibility criteria.

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