How to save Income Tax through Section 80D?

Taxpayers are always looking for ways to legitimately reduce their tax liability. One of the sections of the Income Tax Act that help you reduce your tax liability is section 80D. This section related to medical insurance policies. If you have medical insurance for yourself or members of your family, you are entitled to tax deductions under section 80D for the payment of insurance premiums. Deductions under Section 80D can be claimed by both individuals and members of the undivided Hindu family.

Why Government given this deduction:

One question that comes to your mind is the reason for the section 80D deduction. Health insurance policies are extremely important to tackle any health emergencies. It is important to have an emergency fund to draw from. The reason for providing the Section 80D deduction to taxpayers is to help them keep the policy alive. Taxpayers are drawn to Mediclaim policies because they can claim tax benefits instead. Since the tax deduction can be claimed even though the premiums are paid for the spouse, dependent children and parents, taxpayers are eligible for the same tax benefit.

Let’s take a look at the different deductions that can be claimed under section 80D, what you need to watch out for before claiming the deduction under section 80D, and how you can claim the deduction.

 Self, Spouse, &dependent ChildrenYour parents less than 60 ageYour Parents above 60 age
Payment for medical insurance premium (mode other than cash) /contribution to CGHS in Rs.             25000         25000       50000
Payment made for preventive health checkup in Rs. 5000

For yourself and your family:

• Maximum deduction of Rs.25,000 per year on the health insurance premium for self and family.

• Maximum deduction of Rs.50,000 per year if you are an elderly person.

For the parents:

• Maximum deduction of Rs.25,000 per year on health insurance premium paid for age less than 60 year.

• Maximum deduction of 50,000 rupees per year on premium payment for elderly parents.

Additional deduction:

• A deduction of Rs.5,000 can be claimed each year on expenses related to health checks. This limit includes the expenses of controlling all members of a family, including spouse, children and parents.

Section 80DD – Disabled Dependent

Deduction for Rehabilitation of Handicapped Dependent Relative

The section 80DD deduction is available for a resident individual or HUF and is available at:

a. Expenses incurred for medical treatment (including nursing care), training and rehabilitation of a disabled dependent relative

b. Payment or deposit to the specified scheme for the maintenance of a dependent disabled parent.

I. When the disability is 40% or more but less than 80% – fixed deduction of Rs 75,000.

ii. In the event of severe disability (disability is 80% or more) – lump sum deduction of Rs 1,25,000.

To benefit from this deduction, a disability certificate is required from the prescribed medical authority.

Section 80DDB – Medical Expenditure

Deduction for Medical Expenditure on Self or Dependent Relative

a. For individuals and HUFs below age 60

A deduction up to Rs.40,000 is available to an individual or a Hindu undivided family. It deduction is available to any expense incurred towards treatment of specified medical diseases for himself or any of his dependents.

b. For senior citizens and super senior citizens

In case of senior citizen, the individual or HUF taxpayer can claim a deduction up to Rs 1 lakh.

c. For reimbursement claims

Any reimbursement of medical expenses by an insurer or employer shall be reduced from the quantum of deduction the taxpayer can claim under this section.

Note: Also remember that you need to get a prescription for medical treatment from the concerned specialist only in order to claim such deduction.

Reference:

https://www.incometaxindia.gov.in/Pages/tools/deduction-under-section-80d.aspx

https://insurance.kotak.com/insurance-guide/savingstax/section-80-d-deduction-of-income-tax-act

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