Call NowSection 80 D Deduction
Sec 80D of Income Tax Act
What is section 80 D of income tax act?
The Income Tax Act, 1961, consists of various tax-saving sections that allow you to reduce your taxable income. Section 80D is one such section that includes the rules and provisions of tax deductions on medical insurance. The section offers tax deductions on the premium paid towards a health insurance plan for self, dependent parents, spouse, and dependent children in a financial year. The section includes individual taxpayers as well as Hindu Undivided Families (HUFs).
In addition to the health insurance premium, taxpayers can also claim a tax deduction on the premium paid for a top-up plan for an existing policy. The section further covers critical illness plans either bought individually or as part of a life insurance plan.
80 D and Health insurance?
Health insurance is a significant part of a financial plan. It helps avoid unexpected financial crises due to a medical emergency. Additionally, the right insurance plan can help counter medical inflation with a high cover and affordable premium rates.
Health insurance is also a reliable financial tool for its tax saving components. It can help you save a minimum of Rs 25,000 and a maximum of Rs 1 lakh in a financial year. Moreover, the tax deduction can be claimed for policies for self, a spouse, dependent parents, and dependent children, making the deduction more accessible. Even Non-Resident Indians (NRIs) can claim these tax deductions on a health policy bought in India.
Health insurance offers many benefits. While tax savings may not be the primary reason for getting a plan, the high tax deduction is a significant advantage that can relieve taxpayers by lowering their taxable income.
Deductions available under Section 80 D
Section 80D offers a tax deduction for policies bought for self, a spouse, dependent parents, and dependent children. However, the value of tax deductions can differ for each category and varies based on the policyholder's age and the type of taxpayer.
| Taxpayer and age | Premium for health insurance plan | Tax deduction allowed under Section 80D of the Income Tax Act, 1961 | |
| Type of taxpayer | Self, family, and children | Parents | |
| Individual and dependent parents below the age of 60 years | Rs. 25,000 | Rs. 25,000 | Rs. 50,000 |
| Individuals and family below the age of 60 years and dependent parents above the age of 60 years | Rs. 25,000 | Rs. 50,000 | Rs. 75,000 |
| Individuals, family, and dependent parents above the age of 60 years | Rs. 50,000 | Rs. 50,000 | Rs. 1,00,000 |
| Members of HUF | Rs. 25,000 | Rs. 25,000 | Rs. 25,000 |
| Non-resident Indians (NRIs) | Rs. 25,000 | Rs. 25,000 | Rs. 25,000 |
Points to Remember for Claiming 80D Benefit/Deduction
Here are a few things to keep in mind when claiming a tax deduction under Section 80D:
- The tax deduction cannot be claimed on a group health insurance plan provided by a company to its employees
- The tax deduction cannot be claimed for the health insurance of other family members, including siblings, grandparents, aunts and uncles, parents-in-law, and other relatives
- If the child is working and not dependent on the parent taxpayer, the parent cannot claim a tax benefit on behalf of the child’s policy
- The deduction does not include the service tax and cess paid on top of the basic premium
- If the taxpayer and parent/ spouse are paying the premium partly, both parties can claim a deduction on the amount paid by each
- Cash premium payments do not qualify for a tax deduction. All other modes, including cheques, debit or credit cards, net banking, UPI, etc., can be used to claim a tax deduction
Document Required to Claim 80D Deductions
Claiming tax deductions under Section 80D is easy. The income tax department does not require any document or premium payment receipt for claiming the deduction. All you need to do is file the Income Tax Return (ITR) annually, wherein you can enter the payment details in the ITR form. The rest of the information on the transaction can be drawn or verified from your bank account.
What is the Difference Between Section 80D and Section 80C?
Details:
Section 80C includes several investments and savings, including life insurance. Section 80D includes health insurance and critical illness insurance only.
Maximum Tax Deduction Limit:
Section 80C offers a tax deduction of up to Rs 1.5 lakh. The maximum tax deduction under Section 80D is Rs 1 lakh.
Scope of Tax Benefits:
Section 80C can offer a higher tax deduction than Section 80D. Moreover, it also includes other investments like some mutual funds, Public Provident Fund (PPF), etc. Section 80D includes only medical insurance, including the critical illness riders offered with life insurance.
Exclusions under Section 80D
Here are some exclusions under Section 80D:
Exclusions under Section 80D
Here are some exclusions under Section 80D:
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