TAX BENEFITS ON HEALTH INSURANCE POLICIES UNDER SECTION 80D By: Manjiri S. Gupta

TAX BENEFITS ON HEALTH INSURANCE POLICIES UNDER SECTION 80D By: Manjiri S. Gupta

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TAX BENEFITS ON HEALTH INSURANCE POLICIES UNDER SECTION 80D By: Manjiri S. Gupta

 

(The author is an Article Assistant at SSRPN & CO. Nagpur. She can be approached at cassrpn@gmail.com)
The Section 80D of the Income Tax Act, 1961 allows eligible taxpayers to avail tax deductions on the total premium paid towards health insurance, top-up health plans or even critical illness insurance plans. You can avail this deduction on premium paid towards health insurance for self, spouse, dependent children and parents.
 The Union Budget 2018 was announced by Former Finance Minister ArunJaitleywhich especially focused on taking care of senior citizens, women, and farmers of the country.He proposed a rise in the limit of tax deduction on health insurance premium from Rs.30,000 to Rs.50,000 under Section 80D of the Income Tax Act, 1961, for all senior citizens.
Only Individual and HUF are eligible to claim deduction under section 80D.
In case of HUF:
  • HUF can claim deduction under section 80D for a mediclaim taken for any of the members of HUF.
  • The deduction will be Rs. 25,000 if the member insured is less than 60 years and will be Rs. 50,000 if insured is 60 years of age or more.
In case of Non-Residents:
NRIs are allowed to claim deduction for the premium paid for health insurance. This deduction is available upto Rs. 25,000 in case of self, spouse and dependent children and upto Rs. 50,000 for senior citizen. They can also claim deduction for parentsupto Rs. 25,000 and upto Rs. 50,000 if they are senior citizens. Within the existing limits allowed, a deduction upto Rs. 5000 is also available for preventive health check-ups.
Deduction allowed under 80D:-
Party
Premium paid for self, family, children(in Rs.)
Premium paid for parents(in Rs.)
Preventive health check-up(in Rs.)
Total deduction under 80D(in Rs.)
Self and family
25,000
5000
30,000
Self and family + Parents
25,000
25,000
5000
55,000
Self and family + Senior citizen parents
25,000
50,000
5000
80,000
Self & family including parents (all above 60 years of age)
50,000
50,000
5000
1,05,000
Important points to be remembered at the time of purchase of medical insurance:
  • You cannot claim tax exemption under section 80D if premium paid on behalf of working children.
  • If premium paid on behalf of siblings, grandparents, uncle, aunt or any other relative then deduction under section 80D cannot be claimed.
  • If the premium is partly paid by you and your parents then both of you can claim tax benefits under section 80D.
  • Tax deduction cannot be claimed for the premium paid for group medical health insurance provided to you by your employer.
  • Senior citizen includes senior and very senior citizen above 60 years of age.
It must be noted that Section 80D deduction is not allowed on cash payment of premium. However, you can avail tax deduction in case of preventive health check-ups even if payment is made in cash.

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