Tax deduction on health insurance premium – Section 80D

Most individuals know that income tax deductions are all about investing in PPF, mutual fund, LIC or on payment of home loan or tuition fees etc. Whereas, there are other different tax benefits available in the IT act, which many of them are eligible to claim but don’t take that benefit because they are unaware about them.

Today, in this article we will discuss how to get tax deductions on health insurance premium.

Provisions on tax deduction on health insurance or medical insurance as it’s called are in section 80D of IT act.

tax deductions on Health insurance - section 80D

Who is eligible for tax deduction on health insurance – Section 80D

Section 80D allow tax deduction on health insurance to an individual and HUF. To claim this deduction on health insurance premium, the residential status of individual and HUF is irrelevant.

The individual can be a resident or non resident or Indian citizen or foreign citizen. Similarly HUF may be a resident or non resident.

If you are a foreign citizen and have some income in India then benefit of section 80D can be taken for the payment towards health insurance.

This deduction for Individual is allowed for the amount paid towards health insurance premium to cover self, spouses and dependent children and parents.

Please remember it’s not specified whether a parent has to be dependent or not. Even if parents are not dependent, you can still claim tax deductions on amount paid towards their health insurance premium.

HUF will be eligible if it pays to cover any member of HUF.

Limit of tax deduction on health insurance – Section 80D

While determining taxable income, Rs. 15000 per year is allowed as tax deduction under section 80D of IT act on health insurance premium paid during the financial year.

If the person to whom you have covered in health insurance is a senior citizen then additional Rs. 5000 will be allowed as tax deduction i.e. Rs. 20000 per year will be allowed as deduction.

Health insurance premium for parents will be eligible for additional tax deduction in addition to the above deduction limits.

Rs. 20000 will be allowed as tax deduction in case your parents are senior citizen and if they are not senior citizen then Rs. 15000 is allowed instead of Rs. 20000.

If the individual or HUF has paid less than the specified limit of Rs. 15000 or Rs. 20000 towards health insurance premium then such lesser amount will be allowed as tax deduction i.e. amount paid or Rs. 15000 or Rs. 20000 whichever is less.

To have clarity on limit of tax deduction under section 80D please have a look on below table;

  Tax Deduction Limit when medical insurance premium paid for Self, spouse and/or dependent children (Amount in Rs.) Tax deduction limit when medical insurance premium paid for Parents (Amount in Rs.) Total eligible deduction (Amount in Rs.)
Where No one is a senior citizen 15000 15000 30000
Where parents are senior citizen 15000 20000 35000
where parent and either you and/or your spouse is a senior citizen 20000 20000 40000

Note: Payment on account of preventive health check up of self, spouse, dependent children and parents cannot exceed Rs.5000.

Similarly a HUF will be eligible for Rs. 15000 tax deduction and in case any member of HUF is a senior citizen then additional Rs.5000 will be allowed.

From assessment year 2013-2014 onwards payment on account of health check up is also allowed as tax deduction under section 80D of IT act.

If an individual has paid towards preventive health check-up for self, spouse, dependent children and parents then Rs. 5000 can be claimed as tax deduction under section 80D.

In addition to preventive health check up if the individual is also claiming tax deduction for the amount paid towards health insurance premium then total deduction will be restricted to Rs. 15000 or Rs. 20000 as discussed above.

If no tax deduction has been claimed for medical insurance premium then on payment of preventive health check up, the taxpayer will be eligible for deduction of up to Rs.5000 per year.

Tax deduction on preventive health check-up benefit is not available to a HUF.

To have more information on tax provisions for preventive health check up we request you to read our article tax can be saved on your preventive health check up

If employer pays health insurance premiums on your behalf in group insurance scheme of your company then that amount will not be tax deductible under section 80D.

In case, part of the health insurance premium paid by employee and the other part is paid by employer then only the first part that is paid by employee will be eligible for tax deduction i.e. if it covers in your CTC then you are eligible or else you are not eligible.

Note: Please remember that tax deduction under section 80D will be available only if payment towards health insurance premium are paid on any mode other than cash. If its paid in cash then benefit of section 80D will not be available. However, this restriction is not applicable to amount spent for preventive health check-up expenses.

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