Section 80D of the Income Tax Act is advantageous for those who are looking forward to saving taxes as well as getting their health secured. This is a deduction where taxpayers may claim the exemption on premiums paid for health insurance plans for family, to maintain security both financially and tax-wise. So we’ll look deeper into 80D deduction, when it is applicable, what are its benefits and what are its limitations.
What is Section 80D?
The law in India is that individuals and Hindu Undivided Families (HUF) can claim deductions against premiums paid for health policy premiums under Sec 80D of the Income Tax Act. It includes insurance for oneself, spouse as well as children and parents. This deduction is allowed for policies undertaken by any agency that is recognized as an insurer, whether it be a private or a government company.
Who Can Claim the 80D Deduction?
An individual or the HUF, the liabilities of which could be covered under the health insurance plans for the family, can claim 80D income tax benefits. The deduction applies to:
- Self
- Spouse
- Dependent children
- Parents (dependent or independent)
There are however firms or companies that cannot claim deductions under sec 80D.
80D Maximum Deduction Limit
The total amount of tax benefit under the 80D deduction is calculated with the insured person’s age.
- For Individuals Below 60 Years
- Self, spouse, and children: Up to ₹25,000
- Parents below 60: Additional ₹25,000
- Total deduction: ₹50,000
- For Senior Citizens (Above 60 Years)
- Self, spouse, and children: Up to ₹50,000
- Parents (senior citizens): Additional ₹50,000
- Total deduction: ₹1,00,000
This 80D maximum limit regulates taxpayers’ use of healthcare expenses and keeps it within the taxable income.
What is Covered Under Section 80D?
This means that the 80D medical insurance limit applies to:
- The amount paid for health policy coverage.
- Preventive health check-ups (up to ₹5,000 within the deduction limit)
- Top-up or super top-up plans
- Critical illness policies
What is Not Covered?
Though the 80D deduction provides a tremendous deal, some expenses are not deductible including:
- Group health insurance from the employer
- Cash payments for premiums (except cash payments for preventive check-ups)
- GST and service charges on premiums.
Payment Mode for 80D Deduction
To avail of 80D income tax benefits, premiums have to be paid through:
- Credit card
- Debit card
- Net banking
- Cheque
- UPI
Cash payments for health insurance plans for family do not qualify for deductions, except for preventive health check-ups.
How to Claim the 80D Deduction?
To claim the 80D maximum deduction, taxpayers must:
- Payments of premiums should be made through non-cash modes.
- Retain policy documents and payment receipts.
- The deduction should be declared while filling out Income Tax Returns (ITR)
Summary
Sec 80D offers a nice tax-saving route to health while securing that. Since there is an 80D maximum limit, people can enjoy reduced taxable income as well as benefit from health policy coverage. Keep a record of the eligibility criteria and deductions, so you can make the most savings.
FAQs
1. Can I claim a deduction under 80D for my in-laws’ insurance?
The 80D deduction does not apply to premiums paid for oneself, spouse, children and parents.
2. Is preventive health check-up cost covered under 80D?
However yes within the total 80D medical insurance, yes a maximum of ₹5,000 can be claimed.
3. Can both spouses claim the 80D deduction separately?
If both contribute to the health policy, both can have a maximum deduction of 80D for the lifetime.
4. Does Section 80D cover corporate health insurance?
Sec 80D does not mention employer-group health insurance provided to employees.
5. What if I pay my health insurance premium in cash?
Preventive health check under 80D income tax is the only exception where preventive health check is exempted and other cash payments are not.
