How Much Tax Benefit Can Be Claimed Under Section 80D? (Rules + Limits)

We cannot expect what will happen in the future. To help normal people to face problems, many companies, banks, and governments have taken many steps. Health insurance policies are part of it. Every individual can claim benefits from these health insurance policies. To support this, the government has decided to give you tax benefits since 2018. According to section 80D of the Income Tax Act, a person can claim a tax deduction on medical expenditures in the same year. But what is a Section 80D? Who are eligible, and how to claim it? Let us check in this article!

How Much Tax Benefit Can Be Claimed Under Section 80D?

In 2018’s budget government has added a section named 80D in the Income Tax Act. It is almost similar to section 80C but with little variations. This difference will be discussed later in this same article. According to this section, a person can claim a tax deduction for medical expenditures in a health insurance policy.

In detail, when a person pays a premium for his health insurance policy for himself, for his spouse and dependent children, and his parents, then he can claim for some amount of his premium from the income tax. Even a senior citizen can claim for deduction in income tax for his medical expenses.

An additional amount of Rs.25,000 can be claimed as a tax deduction on medical expenditures by a taxpayer. This money can vary when a taxpayer’s age is more than 60 years. It goes up to Rs.30,000 when his age is more than 60 years. But when a taxpayer is looking care of his/her parents whose age is less than 60 years, then the money claimed as a tax deduction is Rs.25,000 and goes up to Rs.30,000 when they are above 60 years old. When a person pays money for his/for his parent’s preventive health check-ups, this money can also be claimed back. But the money in this preventive health check-up section is to be within Rs25,000 or Rs.30,000. To understand this better, look at the table given below:

So from this, we can say how much money we can claim back with this section 80D.

Benefits Of Section 80D

1. We can’t predict what is going to happen in the future. So it is always better to take a step forward in ensuring your life. With this reduction in premiums of health insurance policy, one can financially be safe.

2. Any individual who is paying premiums for the health insurance policy for his spouse, himself, and his children can claim this deduction in tax. When paying for his monthly check-up payment or preventive check-up, the money can also be claimed. The money that can be claimed has a maximum limit of up to Rs.25,000. So whatever the amount that you have paid for a monthly check-up, this can’t exceed Rs.25,000.

3. Any individual who is paying premiums of health insurance policy for himself, spouse, children, and his parents can claim additionally Rs.25,000 along with income tax deduction in his insurance policy. This can go up to Rs.30,000 when his parent’s age is more than 60 years

Some Examples

Example 1:

Ravi, whose age is 35 years, has taken a health insurance policy with a monthly premium of Rs.14,000. But because of the medical issue, he had a check-up worth of Rs.10,000. Then according to section 80D, he can claim for Rs.14,000+Rs.5,000. Even though the value doesn’t reach the maximum limit, the amount deducted in prevented monthly check-up is Rs.5,000 only.

Example 2:

Same Ravi has taken a loan for his parents (their age is less than 60 years) and for his family with premiums of Rs.30,000 and Rs.40,000, respectively. He used to pay premiums correctly, but because of some medical issues, he has a medical expense of Rs.10,000. According to this section, he can claim Rs.25,000 for his parent’s policy and Rs.25,000 to his family’s insurance. Besides, he can also claim Rs.5,000 for his medical check-up. So, in total, he can claim Rs.55,000.

Example 3:

Now Ravi has aged more than 60 years, and now he chose a loan with a premium of Rs.25,000. But he has an expense of over Rs.15,000 for his preventive health check-up. Then the total money he can claim a tax deduction is Rs.25,000+Rs.5,000. Because the limit is only up to Rs.30,000 and also the money that can be claimed on preventive health check-up is restricted to only Rs.5,000.

Example 4:

Ravi has decided to take a loan for his very senior citizen’s parents along with his loan. He pays a premium of Rs.30,000 for both the insurances. For preventive health check-ups for his parents and himself, it costs Rs.20,000 (10,000 for each). According to this section, he can claim Rs.60,000 and get back only the premium money he paid and not money on preventive health check-up. According to the section, the money that can be claimed back is only Rs.60,000. As the maximum amount is reached only with the premium money, he can’t claim a preventive health check-up.

• Any individual who is a part of the Hindustan Undivided Family (HUF) can also claim medical expenses for any individual part of his family. HUF can claim up to Rs.25,000 to Rs.30,000 (now it is made to Rs.50,000) for any member of his family.
• Even if you have a medical treatment in a foreign country, you can claim tax deduction under this section if you have registered for policy under the Insurance Regulatory Authority of India.
• In case of part payment by you and your parent can claim for deduction in tax. The money that can be claimed in this scenario will depend upon the amount you paid.
• There is no need to submit any document to the income tax department for claiming the money. But keep receipts safe because sometimes you may need them.
• There is no need to provide service tax charges and cess portion payment for approval of money deduction.
• According to the government’s rules in this section 80D, a male child whose age is less than 25 years is treated as a dependent child, and his parent can claim for a tax deduction on his behalf.
• Unmarried girls are treated to be dependent regardless of age, and parents can claim a tax deduction on their names.
• If the taxpayer and his parents both age more than 60 years can claim money up to ₹ 1 lakh with this section 80D.
• According to this section, money can be claimed by himself, spouse, and dependent children or by parents.

Who Is Eligible To Claim Tax Deduction Under Section 80D?

• A person who pays premiums for the health insurance policy taken for himself, spouse, children, and his parents can claim for tax deduction according to this section 80D. The money that he can claim is already discussed above. The premiums have to be paid either online or through a cheque, draft, debit, or credit card are eligible for a tax deduction.
• Premiums paid for his/her brother, sister, aunt, or uncle, grandparents are not eligible for a tax deduction, and also on working children, this section is not suitable.
• Group health insurance taken by an individual is not eligible to claim a tax deduction. You should check out the concept of RD taxes And FD taxes.

Points To Be Noted

• When you have paid premium in a lump sum all at once for a health insurance policy, which is more than a year, he can claim a fraction of the amount he paid.
• One can get tax benefits when preventive health check-ups are in cash.
• Taxpayers are not eligible to claim on service tax because service tax on a health insurance policy is 14%.
• All the premiums that are eligible for tax deduction should be paid within the same year itself.

Difference Between 80D And 80C?

They both look similar to the rules in both of them are to save tax. But in section 80C, the upper limit of a tax deduction is more than section 80D. In section 80C, you can save up to ₹1.5 lakhs, whereas in section 80D, you can save up to ₹ 1 lakhs only.

Also, saving, but Section 80C, which is implemented in 1961, is for all investments. At the same time, section 80D is only for the health insurance policy for self, spouse, children, and parents. You can avail a rebate too.

FAQs

Tip

Don’t always chase for the upper limit. Choose a plan that suits you and your family well to be financially safe. Read carefully about the tax slabs also.