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Preventive Health Check-Up Income Tax Benefit

It is a good practice to go for yearly health checkups after the age of 40. This helps detect major health conditions like diabetes, hypertension, obesity, etc. at the right time. When such medical conditions are detected at an early stage, it is possible to obtain better treatments for such issues.

Preventive health checkups are like a win-win situation for an individual as they not only help detect medical issues at the right time but also help obtain tax benefits. These preventive health checkups can help save tax under section 80D of the Income Tax Act. One must know about preventive health checkup income tax benefits while claiming tax benefits.

Understanding income tax and its liability

An earning individual needs to pay an income tax. This is a tax imposed by the government on the income generated by an individual in a financial year. This can be income from varied sources including salary, business profits, or sale of land. The fund, thus, collected is used by the government for meeting the obligations and for the benefit of society.

The Income Tax Act, 1961 helps maintain a fair system of income tax in India. The act includes sections and subsections that entail the descriptions of tax exemptions that help in deductions of the total tax liability.

By spending on specific investment options or by purchasing health insurance, it is possible to claim for deduction on tax liability. An individual can also obtain a deduction in tax liability by spending on preventive health checkups under section 80D of the Income Tax Act.

What is a preventive health check-up?

It is always said that prevention is better than cure. Rather than spending high on the treatment of serious illnesses, it is always better to find it at the right time. This is possible only with preventive health check-ups. Further preventive health checkups also help in obtaining tax benefits.  Preventive health check up income tax benefit is included in section 80D.

What is Section 80D?

Section 80D is an important section of the Income Tax Act that specifies the tax deductions. A taxpayer can claim deductions on a premium paid for medical insurance and other health insurance policies. It can further help claim deductions for preventive health checkups obtained by an individual, spouse, or parents.

What is section 80D preventive health check-up?

Section 80D specifies preventive health check up income tax benefits for taxpayers. According to this section, the taxpayer can claim deductions on preventive health checkups. With this, an individual can claim a tax deduction of INR 25,000 on expenses made to health checkups. These checkups can be for an individual, his spouse, or his dependent children.

One can further claim an additional deduction of INR 25,000 for insurance obtained for dependent parents below the age of 60 years.

Let us see this example, Karan Sharma is an HR executive in an MNC. Being the primary earning member in the family, he has invested in a health insurance policy for his wife and his children. He paid a premium of INR 23,000 for the same. In the same financial year, he also paid for his health checkup and the amount was INR 5,000.

In such a case, Karan can claim for deduction under section 80D of the Income Tax Act. He can claim a total of INR 25,000 deduction, which includes INR 23,000 for insurance premium and INR 2,000 for a health checkup. An individual can obtain only INR 2,000 for a health check-up, and the total deduction, in this case, can not exceed INR 25,000.

How can you save tax with preventive health check-ups?

As per section 80D of the Income Tax Act, the amount spent on preventive health checkups is liable to receive a tax deduction. One can enjoy preventive health check up income tax benefits even when an individual does not have any health or medical insurance in his name.

A minimum of INR 5,000 spent on such health check-ups helps claim a tax deduction. In order to claim deductions, it is important to ensure that preventive medical checkups are done in the same financial year for which you are paying the taxes.

Who can claim Section 80D preventive health checkups deduction?

Any individual or a member of HUF can claim preventive health checkups deductions. The health checkups can be of any family member including:

  • Self
  • Spouse
  • Dependent children
  • Dependent parents

 

Payment eligible for deduction under section 80D

An individual or a member of HUF can claim for deduction under section 80D for the following payments:

  • Premium paid for medical insurance policies for self, wife, children, and dependent parents.
  • Expenses of preventive health checkups.
  • Medical expenses on the health of parents above 60 years of age who are not covered under health policies.
  • Contribution to central government health schemes.

 

What are the rules for claiming deductions for section 80D preventive health checkups?

Section 80D of the Income Tax Act allows only a maximum deduction of INR 5,000 for preventive health checkups. In a financial year, an individual who is below 60 years of age can claim the deduction of INR 25,000 for health insurance premiums and health checkups expenses made on self, dependent children, and spouse. The one who is above the age of 60 years can expect a deduction of INR 50,000.

The payment done in cash for preventive health checkups can be counted for deduction under Section 80D which is not the case with premium paid for health insurance. One can claim for deduction for health insurance premiums only when the premium is paid through banking channels.

The deduction on preventive health checkups under section 80D can be better understood by the table below:

A health insurance premium paid (INR.) Preventive Health Check-up deduction available (INR) Preventive Health Check-up deduction allowed (INR) Maximum deduction under Section 80D  (INR)
20,000 5,000 5,000 25,000
23,000 5,000 2,000 25,000
25,000 5,000 25,000


How much tax can you save under preventive health check up income tax benefits?

Even when one claims only a total deduction of INR 5,000 for preventive health checkups, the total amount of the saving on your income after deducting the actual deduction depends on the tax rate applicable at the time.

The below table can explain this in a better way:

Income tax rates Tax-savings (INR)
5% tax rates 250
20% tax rates 1000
30% tax rates 1500


What documents are essential for claiming deduction with preventive health checkups?

While claiming for tax deduction with preventive health checkup 80D, no document needs to be submitted, but it is always important to keep a copy of all documents with you in case of need.

An individual must keep the original receipts, doctor’s prescription, and other documents of the medical test. This acts as a document of evidence in case of income tax proof.

What can not be claimed for deduction under section 80D?

  1. Premium paid for medical insurance of brother, sister or grandparents can not be claimed for deductions.
  2. Premium paid for checkups of working children can not be claimed for deductions.
  3. Health checkups provided by the company are not eligible for claiming tax deductions.

 

Conclusion

Health is important for everyone, and it is thus necessary to go for regular preventive health checkups. This helps an individual to identify critical medical conditions at the right time so that treatments can be obtained at the initial stages.

Preventive health check up income tax benefits is just one of the multiple benefits that come with regular check-ups. A taxpayer can claim tax deductions on the expenses made to preventive health checkups. Section 80D of the Income Tax Act states the details about deduction one can claim on preventive health checkups made on self, spouse, or children.

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