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Section 80D Of Income Tax Act FY 2019-20

It is advisable for all individuals to save their income as soon as they start earning it. Saving money is equivalent to earning money as it is a corpus you collect over time to fulfill your dreams or unaccomplished goals. To introduce this healthy exercise in our lives as well, it is important for us to know about all the instruments that can help us save our hard-earned money.

Tax planning is an efficient instrument to save your earnings that can be further used for any personal purpose. There are a lot of deductions that are offered by the Income Tax Department of India and in order to claim these in the right way you need to be fully aware of the sections under which they are offered.

What is Section 80D?

Section 80D of the Income Tax Act AY 2019-20 offers tax deductions on the health maintenance of the individual and his family. Under this section, an individual can claim tax deductions for health insurance premium that is paid for self, spouse, dependent children, and parents. Moreover, under section 80D, you can avail many more additional benefits like deductions for health checkups, etc.

What are the investment options available under Section 80D?

Section 80D of the Income Tax Act AY 2019-20 offers deductions on the following investments:

  • Investments made towards Health insurance policy premiums for self, spouse, children, and parents can be claimed up to INR 1 Lakh.
  • Investments made towards preventive health checkups for the entire family can be claimed up to INR 5000
  • An investment made towards additional health-based riders taken along with the life insurance plans is also eligible for tax deductions under section 80C.

 

Eligibility and other details to be taken care of:

  • Any individual who has invested in medical insurance policies and is paying the premiums for himself, spouse, children, and parents can claim tax deductions under section 80D.
  • Any member of the Hindu Undivided Family (HUF) can claim tax deductions from his taxable income under section 80 D.
  • Payments that are made towards the health checkup of the taxpayer’s parents who are above the age of 80 years are eligible for tax exemption under section 80D of the Income Tax Act.

 

What are the limits of deductions available under Section 80D?

  Case 1:  Self and parents both are below 60years of age Case 2: Self below the age of 60 years but parents are above the age of 60 years

         

Case 3: Self and parents both are above the age of 60 years
Tax deductions for Self, spouse, and dependent children INR 25,000 INR 25,000 INR 50,000
Tax deductions for parents INR 25,000 INR 50,000 INR 50,000
Maximum deductions claimable INR 50,000 INR 75,000 INR 1 lakh

 Let us see this example, Mr. Siddesh Tilekar is a businessman who has bought a health insurance policy for his whole family, including himself, his spouse, his two children, and his parents who are more than 60 years of age. He pays an annual premium of INR 36,000 for his insurance while INR 45,000 for his parents’ health insurance policy. Calculate the total tax deductions he can claim under section 80D.

As Mr. Siddesh is below the age mark of 60 years, he can only claim for a deduction up to INR 25,000 whereas for his parents the amount can exceed up to INR 50,000. So, he can claim INR 25,000 for his insurance premium and INR 45,000 for that of his parents. Therefore, the total claimable amount for Siddesh becomes INR 70,000.

NOTE: Section 80D of Income Tax Act AY 2019-20 welcomed the raised amount of deduction for senior citizens from INR 30,000 to INR 50,000 which was announced in the Union Budget of 2018.

Explanation and calculation of Preventive Health Checkup under Section 80D

The provision of preventive health checkup deductions was introduced by the government of India under the Union budget of 2013-14. This was done keeping in mind the importance of regular health checkups for all to detect diseases at the earliest stages possible.

Under this provision an individual can claim for deductions of the expenses incurred towards health checkups either for himself, spouse, children, or parents and the limit decided is INR 5000 that remains included in the maximum limit (INR 25,000/ INR 50,000)

Let us understand this with the help of an example: Rohan has recently purchased a health insurance policy for his mother who is 59 years old. His mother underwent a full-body check-up that cost Rohan INR 6,000 and he had also paid the annual premium of INR 24,000 for her insurance policy. How much tax deduction can he claim for?

Under section 80D of Income Tax Act AY 2019-20, Rohan can claim for a maximum deduction of INR 25,000. So, INR 24,000 is allowed for the premium paid towards the medical insurance and INR 1000 will be allowed for the medical check-up expenses. Therefore, out of his total expenses of INR 30,000, Rohan can claim an amount of INR 25,000 through tax deductions.

Are there any exclusions under Section 80D?

Yes, here is a list of exclusions under section 80D of the income tax act.

  • No tax deductions can be claimed if the health insurance premiums are paid by the mode of cash.
  • No tax deductions can be claimed if the health insurance premiums are paid for siblings, grandparents, aunt-uncle, or any other related family members.
  • No tax deductions can be claimed for the health insurance premiums paid on behalf of the working children.
  • Group health insurance premiums are not eligible for a deduction under this section.

 

Other deductions available under the Income Tax Act other than Section 80D

Sections Eligible investments
80C Tax deductions under this section can be claimed on investing into PPF, EPF, ELSS, Sukanya Samridhi Yojana, National Savings Certificate (NCS), Senior Citizen Savings Scheme (SCSS), ULIPs, and 5-year tax Fixed Deposits.
80CCC Deductions for annuity pension plans
80CCD Deductions for National Pension Scheme
80TTA Deductions on the interest income from a savings account
80GG Deductions on the payments made towards house rent when HRA is not received
80E Deductions for interest on education loans taken for higher studies
80EE Deductions on the interest for home loans
80U Deductions for individuals who are suffering from physical disability or mental disorders.
80G Deductions for donations made towards social causes.

Conclusion

Financial experts state that it is extremely important to invest in a good health insurance plan right after you get employed. Moreover, these pandemic times have shown us the importance of health over everything else. Health insurance policies and mediclaims play a pivotal role in an individual’s life when he or his loved ones are stuck in a medical emergency.

Apart from the financial coverage and other benefits health insurance policies offer, you even become eligible for tax deductions under section 80D of Income Tax Act AY 2019-20. So whether you want to plan for saving your taxes and claim all the possible deductions offered, or insure the lives of your loved ones or both, medical insurance policies will always keep you in a win-win situation.

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