Section 80D : Income Tax Deduction For Medical Insurance

Updated: 20-05-2024 09:47:48 AM

The Section 80D contains grants a tax deduction on medical insurance premiums and medical expenditure. It is granted on the premiums paid for a medical insurance policy for the taxpayer himself and/or a close family member. Section 80D of Income Tax offers a deduction over & above to the deductions under Section 80C of Income Tax Act.

Deduction under Section 80D

For Individuals

• The maximum permissible deduction is INR 25,000 every financial year on the premium for health insurance for self & family.
• For senior citizens, the maximum permissible deduction is INR 50,000 per financial year.

Medical Insurance for Parents

• The maximum permissible deduction is INR 25,000 per financial year on the premium paid for health insurance for parents.
• In the case of senior citizen parents, the maximum permissible deduction is INR 50,000 per fiscal year on the premium paid.

Apart from the premium paid, an additional exemption of INR 5,000 can be availed every financial year on the expenses incurred towards health check-ups. This limit covers check-up costs for all family members including kids spouse & parents. The Rs 5,000 is included within the overall deduction limit of Rs 25,000.

For Hindu Undivided Family (HUF)

• For an HUF, the maximum permissible amount of deduction is INR 25,000 as the premium paid on the health insurance scheme of any family member.

The allowed limit of INR 25,000 is further added to INR 50,000 in following cases –

• Premium paid for senior citizen member (i.e., any resident individual aged 60 years or above).
• When medical expenditure is incurred on the health of a very senior citizen person, if no amount is paid in respect of health insurance of such person.

Eligibility under Section 80D

1. A resident individual can avail the deduction, according to section 80D, against the premium paid for health insurance services for below family members

• Self
• Children
• Spouse
• Parents

2. A Hindu Undivided Families can also claim tax deduction under the section 80D. The Premium payments should be towards the medical insurance of an HUF member only and the tax deduction is allowed up to the maximum permitted limit of the act.

Section 80D Exemption Limit

Under the Section 80D, an Individual or HUF, individuals who fall under the taxable bracket can avail tax break on the health insurance premiums & health check-ups expenses for self and family. The maximum permitted limits for Financial Year 2018-19 are as follows:

Medical Insurance Cover	Exemption Limit	Health Check-Up Exemption	Total
For Self and family	Rs.  25,000	Rs.  5,000	Rs.  25,000
For Self and family including parents	(25,000 + 25,000) = Rs. 50,000	Rs. 5,000	Rs. 50,000
For Self and family including senior citizen parents	(25,000 + 50,000) = Rs. 75,000	Rs.  5,000	Rs. 75,000
For Self (senior citizen) and family including senior citizen parents	(50,000 + 50,000) = Rs. 100,000	Rs.  5,000	Rs.  100,000

Let’s suppose Mr. Amit Verma is a salaried individual with an annual income of Rs 8 lakhs per year. Since he falls under the taxable income bracket, Amit is now planning to save on his tax liability. Post availing various other exemptions, Amit now turns to medical insurance premiums he is paying for himself and his family. Amit pays an annual premium of INR 40, 000 for himself and his family members.  Apart from this, he is also paying a premium of INR 40,000 for the health insurance of his mother who is 80 years old. Now, if we calculate the maximum permissible exemption amount under the section 80D, this would come as below.

• Amit can avail tax deduction up to INR 25,000 out of 40,000 premium amount paid towards insurance premium for self and his spouse.
• On the medical insurance premium for his mother, who is a senior citizen he can claim the full amount of Rs 40,000 (since it is below the limit of Rs 50,000)
• The total tax deduction which Amit can avail in a fiscal year is up to INR 65,000 out of the total premium amount of Rs 80,000.

The difference between Section 80C and Section 80D:

Section 80C is more popular and covers a wider range of products wherein the maximum tax deduction can go up to 1.5 lakhs per fiscal year. Section 80D is a particular section that deals with medical insurance payments only.  Under Section 80C a wide gamut of payments such as investments made in various tax savings schemes, tax savings FD, life insurance premium & mutual funds etc. is covered.

Some key provisions under Section 80D are

• Premium paid through cash is not entitled to a deduction.
• Premium paid only for dependent children is included in the exemption limit, whereas premium paid for earning children is excluded in the section.
• In the case of spouse and parents, even though they are not dependent, one can claim benefits under this section.
• The service tax paid on health insurance policy is not eligible for deduction as the same is paid besides the premium amount & collected by insurance agencies.
• Deductions on the health check-up expense includes all the dependents in the family and not individuals (it is an overall limit and not per individual).

Section 80DD

Any resident individual or HUF is eligible for a tax deduction on the expenditure incurred towards the maintenance of dependent disabled relative under Section 80DD of the Income Tax Act, 1961. This deduction cannot be availed by a taxpayer who is himself or herself disabled. The deduction is available for below mentioned expenses:

(a) Expenditure incurred towards medical treatment, training, nursing & rehabilitation of a disabled dependent relative.

(b) Amount paid towards a scheme of LIC/UTI another regulated insurer for maintenance of disabled dependent relative.

For the inclusion of dependent disabled relative, here are the important terms & conditions

Disabled Person

• In cases for individual taxpayer: spouse, children, parents, brothers and sisters of the individual, or any of them who is mainly or wholly dependent on such individual
• In the case of HUF: Any member of the HUF, who is mainly or wholly dependent on such HUF. Subject to the condition that the dependent person has not claimed any deduction under section 80U.

Disability

The cases where a person is suffering from disability include low vision syndrome, blindness, leprosy-cured, loco motor’s disability, hearing impairment and any kind of  mental illness or mental retardation including autism.

A person with severe disability means:-

The cases where a person with severe disabled (80%) due to single or multiple disabilities including the cases of autism, cerebral palsy and mental retardation.

Permissible Limits

The maximum permissible deduction under this section is up to INR 75,000 towards the expenditure incurred in the maintenance of dependent disabled relative, irrespective of its amount. In cases of severe disability i.e., disability of 80% or above, then the amount of deduction will be INR 1,25,000.

Other Important terms & conditions in Section 80DD

• The taxpayer should obtain a copy of the certificate issued by the medical authority. A fresh certificate is mandatory post-reassessment of disability after the expiry period mentioned in the initial certificate.
• If the dependent predeceases the taxpayer or the member of HUF referred to above, then the amount paid or deposited in  above, shall be charged to tax in the hands of the taxpayer for the previous year in which such sum is received.
• The certificate can be obtained from a specialist doctor as per the cases applicable.
• Certificate from government hospital is not mandatory, and it can be obtained from a private hospital.
• In case, the patient is being treated in any government hospital, the medical certificate issued by a resident specialist doctor is required. The specialist doctor should hold a post-graduate degree in General/Internal Medicine or an equivalent degree recognized by the Medical Council of India.
• Certificate in Form 10L is no longer mandatory.

The certificate should carry below mentioned points:

1. Name & age of the patient,
2. Nature & name of the ailment,
3. Name, address qualification & registration number of the doctor issuing the prescription.
4. For cases where the treatment is being done in a government hospital, name & address of the Government hospital is required.

Section 80DDB

Under the Section 80DDB of the Income Tax Act, an individual can claim a deduction on the expenditure incurred on medical treatment of serious illnesses. The provisions in this regard is as follows:

• You must be a resident individual or an HUF
• The deduction is applicable on the actual amount paid by the individual/HUF on medical treatment of a specified disease, as prescribed by the Board.
• In cases of the individual taxpayer, the above mentioned expenditure should be on medical treatment of an individual or wholly/mainly dependent, children, spouse, parents or siblings of the individual.
• In the case of an HUF, the expenditure should be for treatment of any family member, who is wholly/mainly dependent on HUF.
• The taxpayer is required to obtain the recommendation for the specified medical treatment from any recognized oncologist, neurologist, urologist, immunologist, hematologist or any other specialist, as may be prescribed.

Diseases covered under Section 80DDB

The nature of diseases and ailments which are included for deduction under Section 80DDB are mentioned in Rule 11DD of Income Tax and the same are as follows :

1. Neurological Diseases as identified by a specialist ,where the level of disability has been certified to be of 40% and above and covers Dementia, Dystonia Musculorum Deformans, Chorea, Motor Neuron Disease, Ataxia, Aphasia, Parkinson’s Disease and Hemiballismus.
2. Malignant Cancer
3. AIDS- Acquired Immuno-Deficiency Syndrome
4. Chronic Renal failure
5. Hematological disorders like Hemophilia or Thalassaemia.

Amount of deduction

Amount actually paid for medical treatment specified above or Rs 40,000 whichever is lower. For senior citizens (aged 60 and above) the deduction would be the expenditure incurred or Rs 100,000, whichever is lower.

Key Terms & Conditions for availing Section 80DDB Tax Benefits

• Below mentioned are few critical points to be followed while availing the deduction under section 80DDB:
  1. The taxpayer needs to obtain a copy of certificate in Form No. 10-I, duly issued & attested by a neurologist/urologist/oncologist/hematologist/immunologist or any such specialist
• The specialist should be working in a Government recognized hospital.
• In case the taxpayer is receiving reimbursement for such expenditure from any other insurer or his employer, the net amount shall be deducted from the total amount of tax exemption computed in an aforesaid manner.
• The taxpayer should obtain a copy of the certificate issued by the medical authority. A fresh certificate is mandatory post-reassessment of disability after the expiry period mentioned in the initial certificate.
• If the dependent predeceases, the taxpayer or the member of HUF referred to above, then the amount paid or deposited, shall be charged to tax in the hands of the taxpayer for the previous year in which such sum is received.
• The certificate can be obtained from a specialist doctor as per the cases applicable. In case the patients are being treated in any private hospital, the certificate from government hospital is not mandatory.
• The specialist should be a post-graduate in General or Internal Medicine or an equivalent degree recognized by the Medical Council of India.

The certificate should carry below mentioned points :

1. Name & age of the patient,
2. Nature & name of the ailment,
3. Name, address qualification & registration number of the specialist issuing the prescription.
4. For cases where the treatment is being done in a government hospital, name and address of the Government hospital are required.