Income Tax Benefits under Section 80D

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Here is Complete information on income tax deductions under sections 80D which relate to medical expenses and health insurance / mediclaim. Good understanding will help you in substantial tax savings.

Every family has regular medical expenses. This may be towards a health insurance premium, or expenditure related to a family member's disability/critical illness. The Income Tax Act of 1961 has made provisions to reduce this burden through tax deductions under Income Tax section 80D, section 80DD, section 80DDB. Read on to understand how to use these sections to your benefit.

Section 80D in Respect to Health Insurance Premiums

Investments made towards payment of health insurance premiums, qualify for a tax deduction under section 80D.

Available Deduction - For individuals less than 65 years of age, amount of health insurance premium paid or Rs. 15,000, whichever is lesser. For senior citizens above 65 years, amount of health insurance premium paid or Rs. 20,000, whichever is lesser.

A further deduction of Rs 15,000 could be claimed, for buying health insurance policy for your parents (Rs 20,000 if either of your parents is a senior citizen). This is irrespective of whether they're dependent on you or not. No deductions can be claimed for in-laws.

Scope of Deduction - Individual assesses can claim deduction for premiums paid towards health insurance of self, spouse, parents and children.

For HUF assesses, premium paid for insuring the health of any member of the HUF, can be used for deduction.

Key Factors to keep in mind

1. The premium may be paid by any mode of payment, other than cash.
2. The health insurance premium that you pay must be from the taxable income applicable for the year you claim. Premiums should not be from gifts received by you.
3. Part payment of premium is allowed. For example, suppose your parents contribute 50% of their health insurance premium and you pay the balance 50% of their premium. In such a case, you could avail the deduction for the amount contributed by you and your parents too could avail deduction for their contribution. 

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