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Claiming Deduction for Medical Insurance under Section 80D in India

Section 80D of the Income Tax Act, 1961 deals with the deductions on Medical Insurance. This section allows individuals to claim a deduction for the premiums made for the various medical insurance policies for themselves or for the family on their behalves.

Deduction Limit before Budget 2015

Earlier deduction which can be claimed by individuals under section 80D was lesser in comparison to the revised deduction amount. The existing provisions in section 80D allow a deduction of Rs. 15,000 to an individual assessee with respect to Health Insurance Premium payable through any mode other than cash. An additional deduction of Rs. 5,000 can also be claimed by an individual assesse as a health insurance for the parents of the assessee.

Deduction Limit after Budget 2015

There were changes made in the amount of deductions in the budget of 2015.

These changes are as follows:

  • If the medical premium is made for self, spouse or dependent children, then the maximum deduction allowed is Rs. 25,000. Maximum deduction allowed in case of a senior citizen (more than 60 years but less than 80) is Rs. 30,000.
  • An additional deduction for insurance of parents of both mother and father is available to the extent of Rs. 25,000, if they both are less than 60 years old. In case, the parents are above 60 years then the maximum deduction allowed is Rs. 30,000.
  • For super senior citizens (more than 80 years old) maximum deduction allowed is Rs. 30,000 under section 80D.
  • A deduction of Rs. 5,000 can be claimed every year on the expenses related to health check-ups. This includes the medical check-up expenses of all members in a family including spouse, children, and parents.
  • Deduction under section 80D can be claimed by members of the Hindu Undivided Family (HUF). The maximum deduction allowed under this section is Rs. 25,000 and in case any member of the HUF covered by the medical policy is a senior citizen then the deduction allowed under section 80D is increased to Rs. 30,000.
Categories Exemption limit Health check-up exemption Total deduction
Self and Family Rs. 25,000 Rs. 5,000 Rs. 30,000
Self, Family, and Parents Rs. (25,000 + 25,000) = Rs. 50,000. Rs. 5,000 Rs. 55,000
Self, Family and Rs. (25,000 + 30,000) Rs. 5,000 Rs. 60,000
Senior Citizen Parents. Rs. = Rs. 55,000
Self (Senior Citizen), Family and Senior Citizen Parents. Rs. (30,000 + 30,000) = Rs. 60,000 Rs. 5,000 Rs. 65,000

Example: During a financial year, an individual assessee pays medical premium insurance from his taxable income as under:

  • Rs.13,000 as insurance policy premium on his own health.
  • Rs. 32,000 as insurance policy premium on the health of his parents.

As per the above-mentioned example, the maximum deduction allowed will be Rs. 38,000 (13,000 + 25,000) if neither of the parent is a senior citizen.

In case, any of the parents is a senior citizen, then the deduction allowed will be Rs. 43, 000 (13,000 + 30,000). The dependency of the parents is not put into consideration to decide for availing the benefits under the new provisions.

Further, if as per the above example, Rs. 18,000 is paid by non-cash mode by the assessee and the remaining Rs. 14,000 is paid by the father who is a senior citizen then out of their respective taxable income the son will get a deduction of Rs. 18,000 in addition to the deduction of Rs. 18,000 for medical insurance on self and family. And father will get a deduction of Rs. 14,000.

Difference between section 80D and section 80C

Basis Section 80D Section 80C
Introduction Section 80D was introduced under Income Tax Act, 1961. Section 80C was introduced under Finance Act, 2005
Maximum Deduction Maximum deduction allowed under section 80D is Rs. 60,000 Maximum deduction allowed under Section 80C is Rs. 1,50,000
Instruments used An instrument that gives section 80D benefits is Mediclaim Policy. Instruments that gives Section 80C benefits are Life Insurance Premium, Employees Provident Fund (EPF), Deferred Annuity/ Pension Plan etc.

Under section 80C, deduction can be claimed on various sources like Employees Provident Fund (EPF), Life Insurance premium etc. However, under section 80D deduction can be claimed only for medical Insurance and health checkup.