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Section 80D: Deduction, Eligibility and Limit (2024)
According to Section 80D, the taxpayer may deduct the cost of a health insurance plan for any family members and themselves.
Any person or Hindu Undivided Families may deduct the cost of medical insurance premiums under “Section 80D: Deduction, Eligibility and Limit” for top-up health plans and critical illness plans (HUF). According to Section 80D, the taxpayer may deduct the cost of a health insurance plan for any family members and themselves.
To identify the best insurance that fits your requirement, speak to our friends at Ditto.
A taxpayer is eligible to make the u/s 80D deductions. The following family members' health insurance premiums are eligible for deductions:
Self
Spouse
Dependent children
Parents
Under this clause, Hindu Undivided Families (HUF) may also make deductions. Any member of a HUF who pays a premium may deduct those payments from their taxes, subject to the act's maximum limit.
To identify the best insurance that fits your requirement, speak to our friends at Ditto.
The mentioned below are the payments on which individuals or HUF can claim deductions under Section 80D:
Premiums for medical insurance coverage for a spouse or dependent parent or children
Preventive health check-up costs
Medical costs on the health of senior citizens (above 60 years) who are not covered under any health insurance scheme
Contribution towards Central Government Health schemes
Note: Claiming deduction on medical insurance premiums will not be applicable if the amount is paid in cash.
To identify the best insurance that fits your requirement, speak to our friends at Ditto.
The following list includes the payments that a person or HUF may deduct under Section 80D:
He or she has paid the monthly premium for their health insurance in cash. So any cash payment made for medical expenditures is also excluded.
He or she has paid for other family members, including grandparents, siblings, and working children.
He or she is covered by the employer's group health insurance on the employee's behalf.
As you can see, senior folks are eligible for significant tax incentives under Section 80D. Therefore you won't have to worry about financial commitments at that age.
The country is experiencing a financial crisis due to the high cost of medical care. The Section 80D deduction limit is currently the most widely used tax-saving tool. To prevent confusion if you want to submit an ITR under this provision, carefully read the above information.
In 2013–14, the GOI instituted a preventative health checkup deduction. This was introduced to motivate people to show proactiveness towards their health. Regular health examinations help individuals to achieve the goal of preventative health check-ups, i.e. to spot any illnesses early on and reduce the risk factors.
A deduction of Rs 5,000 is allowed under Section 80D for any payments made for preventive health checkups. This deduction has an overall upper cap (Rs. 25,000 or Rs. 50,000, as applicable).
The individual may claim this deduction for himself, his spouse, dependent children, or his parents. Any payment, including cash, is accepted for preventive health examinations.
The income tax agency does not require providing any paperwork or receipts to claim the deduction while filing an ITR. But, as a matter of record and proof in the future, it is advisable to maintain the proof of payment/receipt of insurance premium in your tax file.
Many of us purchase health insurance plans to preserve our health and guarantee full coverage against medical costs. But, up to Rs. 55,000 in tax can be saved by purchasing a health insurance policy. This suggests that health insurance policies serve as a key tool for tax reduction. Let's examine Section 80D: Deduction, Eligibility and Limit in more detail.
Persons Covered
Exemption Limit
Health Check-Up Exemption
Total
Self and family
Rs.25,000
Rs.5,000
Rs.25,000
Self and family + parents
Rs. (25,000 + 25,000) = Rs. 50,000
Rs.5,000
Rs.55,000
Self and family + senior citizen parents
Rs. (25,000 + 30,000) = Rs. 55,000
Rs.5,000
Rs.60,000
Self (senior citizen) and family + senior citizen parents
Rs. (30,000 + 30,000) = Rs. 60,000
Rs.5,000
Rs.65,000
The bigger the plan Sum Insured, the higher the premium amount and the more significant tax savings are all made possible by health insurance for the 80D section limit. Elderly and super senior citizens save significantly more on taxes.
Depending on the tax bracket your taxable income falls into, Section 80D can save you a certain amount of income tax. The tax rate is 5% if a person's taxable income, after taking a deduction of Rs 25,000 under Section 80D, is between Rs 2.5 lakh and Rs 5 lakh. In this case, the tax saved is Rs. 1,300. (including cess).
Similarly, the tax saving amount for the deduction of Rs 25,000 is Rs 5,200 if the taxable income is between Rs 5 lakh and Rs 10 lakh (including cess). The amount of tax avoided for the highest rate of 30% is Rs 7,800. (including cess).
Tax savings due Section 80D deduction
Income tax rate
Maximum deduction of Rs 25,000
Maximum deduction of Rs 50,000
Maximum deduction of Rs 75,000
Maximum deduction of Rs 1 lakh
5%
1,300
2,600
3,900
5,200
20%
5,200
10,400
15,600
20,800
30%
7,800
15,600
23,400
31,200
All tax reductions include the 4% cess.
An individual may claim a tax credit of Rs 5,000 for a preventive health checkup under Section 80D. This tax deduction is granted up to a maximum of Rs 25,000 or Rs 50,000, as applicable. Hence, if a person under 60 pays health insurance monthly of Rs. 21,000, they can also claim an additional Rs. 4,000 in benefits for preventive health checkups. Numerous hospitals and diagnostic laboratories provide preventive health check-ups.
Medical bills can be used to claim a deduction under Section 80D if the senior or senior parent is not covered by health insurance coverage.
Since the beginning of FY 2018–19, the Income-tax Act has been changed to permit older persons or people paying medical expenditures for elderly parents to claim a deduction based on those costs.
The following points should be considered before purchasing medical insurance:
If any contribution is made towards Section 80D on behalf of working children, you are ineligible for a tax exemption claim.
If any contribution is made towards Section 80D on behalf of your siblings, grandparents, uncles, aunts, or any other family members, you are ineligible for a tax exemption claim.
You might qualify for tax benefits under Section 80D if both of your parents paid a portion of the cost of your premiums.
You are not permitted to deduct the cost of the group medical insurance your employer provides from your taxes.
You must deduct the premium payment amount without subtracting the service tax and cess portions.
Tax deductions are available for family floater plans and individual health insurance policies. Individuals may deduct health insurance premiums for themselves, their spouse, dependent children, and/or their parents. The cost of siblings' or related family members' health insurance premiums is not eligible for a tax exemption. While making online purchases, debit cards, credit cards, and net banking are valid payment methods.
Before purchasing health insurance, several variables need to be taken into account. Before purchasing any medical insurance, the following issues should be taken into account about claiming deductions under Section 80D and other general clauses:
Contributions for health insurance should go towards the programmes listed by the central government or any other insurer that has been given the IRDA's, or Insurance Regulatory and Development Authority, seal of approval.
Please ensure you pay your insurance premiums in a method other than cash. Also, if the policy provides a cashless claim settlement process and enough network hospitals in your location are insured, it will be pretty convenient. To file cashless claims, one should review the network hospitals with agreements with your insurance company.
Rent for hospital rooms and numerous other expenses are covered up to a certain proportion of the insured amount. So, selecting an adequate insured sum is crucial before getting health insurance.
Please pay close attention to the provision about pre- and post-hospitalization costs. Several insurance plans pay for all costs incurred up to 30 days before and up to 90 days following hospitalisation.
Alternative therapies, including Ayurveda, Yoga, Naturopathy, Unani, Siddha, and Homeopathy, are now being covered by many insurance companies (abbreviated as AYUSH). Many people may find this essential. Therefore, it deserves careful consideration.
Other costs include lab testing, specialised medical visits, etc. Nowadays, many insurance companies offer daily monetary limits as compensation for these extra costs. Examine the specifics of the daily cash cap provided, as this enables you to cover any additional costs for settling the claim that is not otherwise covered.
Annual health examinations are offered as an extra benefit by many insurance carriers. The different tests and health evaluations included in health check-ups are crucial for the early detection of any ailment.
Please take into account the no-claim guaranteed bonus clause each year. Numerous insurance companies provide a no-claim bonus that is applied to your total coverage for all the years the policyholder did not file a claim. This provides more security by increasing the amount that may be claimed. It should be noted that, except for the no-claim incentive, all permitted expenses, such as the choice of hospital room, are tied to the initial sum assured.
Most insurance companies are now providing COVID coverage following the outbreak. When buying the insurance, you should know the specifics, such as COVID coverage, the expense cap, daily cash benefits, and whether or not other costs, such as PPE kits, are covered.
Section 80D allows individuals and Hindu Undivided Families (HUF) to deduct certain expenses from taxable income. A person may deduct the cost of their health insurance premiums and the cost of their own, their spouse's, their dependent children's, and their parents' annual preventative health exams.
Although it is not required by the Income Tax Act Department to keep a record of all expenses made during the year, such as receipts for health insurance premium payments, medical bills, medical expenses, test results, etc., it is advised to do so.
Because the income tax act department does not ask for proof while claiming a deduction under section 80D, it is unnecessary to submit any bills for the same.
You can show extra medical expenses under section 80D. However, it won't lead to additional benefits because the upper cap of deductions and exemptions is already fixed under the Income Tax Act.
No, you cannot claim section 80D and 80DD deductions simultaneously.
If the cost of the health insurance is paid by an electronic or digital method, such as a check, debit card, credit card, UPI, etc., the deduction allowed by Section 80D may be claimed. As a result, if the health insurance premium is paid in cash, a person cannot claim the Section 80D tax benefit. Cash payments are accepted for preventive health exams, nevertheless.
We hope now our readers are totally in line with the various pieces of information around Section 80D: Deduction, Eligibility and Limit. Keep saving!!
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