Business

Section 80D – Tax Deduction For Your Health Insurance Premiums

Medical insurance is a necessity for your investment portfolio. You must figure out which is the best medical insurance, and the government urges everyone to buy it by offering Section 80D tax benefits. **

Describe Section 80D

Medical coverage premiums paid in any given year are deductible from the total income for any person or HUF under Section 80D. Moreover, top-up health plans and critical sickness insurance are eligible for this deduction. The deduction benefit is available for premiums paid for policies covering a spouse, dependent children, or parents, as well as for health insurance plans for oneself. **

The following payments are eligible for a deduction under Section 80D for an individual or HUF:

  • A non-cash payment made towards medical insurance for oneself, one’s spouse, one’s dependant children, or one’s parents.
  • The cost of incurring preventative medical examinations.
  • Seniors (60 years of age or over) without health insurance must pay for medical expenses related to their well-being.
  • The amount is given to the central government’s health programme or any other programme the government has announced.

Deduction permitted by Section 80D

A financial year is granted a deduction of Rs 25,000 under Section 80D. The maximum deduction permitted for senior citizens is Rs 50,000. **

The part of deduction that an individual taxpayer is eligible for under various circumstances is shown in the table below:

  • Individual:

A person can deduct up to Rs 25,000 for the premium they paid for themselves, their spouse, and any dependant children.

If your parents are less than 60 years old or older than 60, you may be eligible for an additional/separate deduction for the insurance premiums they paid in the amount of Rs. 25,000 or Rs. 50,000, respectively.

If you incur medical costs for elderly people (taxpayer/family/parents) that are not covered by health insurance, you may deduct those costs up to a maximum of Rs 5,000 under the Rs 50,000 mentioned above.

The maximum deduction available under this clause is Rs 1,000,000 if the person, spouse, or parents who have medical insurance are older than 60 years old.

  • HUF

For insurance premiums paid for a policy taken for the members of the HUF, the HUF may deduct them under Section 80D.

If none of the insured persons is 60 years of age or over, the deduction would be Rs 50,000; otherwise, it will be Rs 25,000.

Example:

While his father is 75 years old, Rohit is 45. The insurance premiums Rohit pays for his father’s and his own medical coverage are Rs 30,000 and Rs 35,000, respectively. What is the highest amount he might deduct in accordance with Section 80D?

Ans: Rohit is eligible to get up to Rs 25,000 for the insurance premiums he paid. Regarding the policy bought for his elderly father, Rohit is eligible to receive up to Rs 50,000. The permitted deductions in the example situation are Rs 25,000 and Rs 35,000. Thus, he can deduct a total of Rs 60,000 for the entire year.

** Currently, there are 2 tax regimes in India – new and old. To get the tax benefit you desire, choose the correct one after consulting an expert. You can opt for a regime change during the next financial year.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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