Tax Savings Under Section 80D - Health Insurance
Section 80D of the Income Tax Act provides deductions for premiums paid towards "Health Insurance policies" and preventive health check-ups. This deduction is available to individuals and Hindu Undivided Families (HUFs).
Eligibility Criteria:
- The taxpayer can claim a deduction for the premium paid for self, spouse, children, and parents.
- Parents can be dependent or independent, but children must be dependent to claim the deduction.
Deduction Limits:
- For Self (Less than 60 years of age), Spouse, and Dependent Children: Up to ₹25,000 per year.
- For Self (60 years or older), Spouse, and Dependent Children: Up to ₹50,000 per year.
- For Parents (Less than 60 years of age): Up to ₹25,000 per year.
- For Parents (60 years or older): Up to ₹50,000 per year.
- If both taxpayer and parents are of 60 years or above: Maximum deduction can be up to ₹1,00,000 per year.
- You can take the policy from these "Health Insurance Companies"
Preventive Health Check-up:
- Deduction of up to ₹5,000 for preventive health check-ups is allowed within the overall limit of ₹25,000 or ₹50,000(For Senior Citizen) in 80D.
- This health check-Up can be used either for self+spouce+dependant_child or for Parents.
Conditions:
- Payment should be made by any mode other than cash to claim the deduction for health insurance premium.
- Payment for preventive health check-ups can be made in cash.
Health Expenses / Medical-Expenses:
- Payment should be made by any mode other than cash to claim the deduction for health expenses.
- Health Expenses for Self+spouse+Dependant_children and for Parents
- It includes your Physician Consultation Fees, medicines purchased, hospital Bill including room rent. Payment receipt is must for all
- This also comes in 80D only for which Maximum deduction can be up to ₹1,00,000 per year
as seen above.
- Condition: If you have not claimed these expenses from your "Health Insurance Company" then only you can take this "Tax Exemption".
Example Calculation:
Mr. Sharma, aged 45, pays ₹18,000 as health insurance premium for himself, ₹12,000 for his wife, and ₹20,000 for his parents (both above 60 years).
He also spends ₹4,000 on preventive health check-ups for Parents. The total deduction he can claim under Section 80D is calculated as follows:
- Self and Spouse: ₹18,000 + ₹12,000 = ₹30,000 (limited to ₹25,000)
- Parents: ₹20,000 (limited to ₹50,000 as they are senior citizens)
- Preventive Health Check-up: ₹4,000 (within the limit of ₹50,000 for Parents)
Total Deduction: ₹25,000 (self and spouse) + ₹20,000 (parents) + ₹4,000 (preventive check-up) = ₹49,000
Other Exemptions for health is in Section 80 DDB and section 80 DD
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