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Deduction under section 80D: The Ultimate guide

Deduction under section 80D is available for mediclaim insurance paid during the previous year. It is covered under chapter VI of income tax act.

Who can use deduction under section 80D?

Only individual and HUF can use section 80D deduction.

 

Whose insurance should be taken to get benefit of deduction of mediclaim insurance?

Individual: individual can take medical insurance for himself, spouse, dependent parents or dependent children.

HUF : HUF can take medical insurance for any member of HUF.

Deduction under section 80D

Maximum limit of deduction u/s section 80D:

Deduction 80D is available over and above the deduction under section 80C of Rs. 1,50,000.

To understand deduction limit we can divide deduction in two parts.

  1. Deduction for medical insurance taken for self, spouse and children.
  2. Deduction for medical insurance taken for parents.

Note: This limit is applicable up to financial year 2014-15. There is new limit of section 80D declared in budget 2015.The limit is given at the end of the post.

Deduction for Rs. 15,000 or medical insurance premium amount whichever is lower is available for each part. If anyone in the part is above 60 years or more , extra deduction limit of Rs. 5,000 is available.

Understand this rule with following table.

ParticularsSelf, spouse, childrenParents (dependent or independent)Total deduction available
No one has attained 60 years age15,00015,00030,000
Parents attained 60 years age15,00020,00035,000
Assessee and his family attained age of 60 years20,00020,00040,000

 

Examples on section 80D:

Case 1:

Mr. Wise pays medical insurance premium.

  1. Rs. 20,000 for himself  (26 years) and his wife ( 24 years).
  2. Rs. 20,000 for his father whose age is 58 years.

Deduction under section 80D available to Mr. wise is Rs. 15,000 (as no one attains age of 60) and Rs. 15,000 (his father does not attain age of 60 ). Total claim is Rs. 30,000.

Case 2:

Mr. kanubhai has paid medical insurance premium during financial year 2014-15 as follows:

  1. Rs. 8,000 for himself ( 62 years) and his wife (59 years) and Rs. 10,000 his son (independent) (30 years).
  2. Rs. 30,000 for his mother ( age: 81 years).

Deduction available:

Rs. 8,000 + Rs. 20,000 = Rs. 28,000.

(then what about deduction for medical insurance taken for son? Ans. It is not available as son is independent and deduction for medical policy taken for children is available only when they are dependent. Remember that, this condition is not applicable for parents and spouse.)

Case 3:

Mrs. Renuka pays medical insurance for her family.

  1. Rs. 10,000 for herself and her husband. ( 23 age and 27 age respectively)
  2. Rs. 2,000 for her daughter jigna ( age : 6 years)
  3. Rs. 16,000 for her father in law. ( age 55 years)

Deduction available:

Rs. 10,000 + Rs. 2,000 = Rs. 12,000.

Remember that deduction is not available for premium paid for medical insurance of laws. so Rs. 16,000 is not taken into consideration.

Section 80D deduction for preventive health check up:

To encourage health consciousness, preventive health check up is necessary. It also saves your tax. Section 80D covers new deduction for preventive health check up. The check up can be for ownself, for spouse, deprendent children and parents.

Limit for deduction for preventive health check up:

Maximum deduction for preventive health check up u/s 80D is Rs. 5,000. This deduction is inclusive of deduction of Rs. 15,000/ Rs. 20,000.

This deduction is applicable from assessment year 2013-14 and onwards.

Read amendment in section 80D.

Example on deduction for preventive health check up:

Mr. Purohit has paid medical insurance and get preventive health check up (blood test/ MRI) during financial year 2014-15:

  1. Rs. 15,000 for medical insurance of himself and his wife. (age less than 60)
  2. Rs. 4,000 preventive health check up of himself.
  3. Rs. 18,000 for medical insurance premium paid for his father. (age 62)
  4. Rs. 3,000 for preventive health check up of his father.

Deduction allowed:

Rs. 15,000 + Rs. 20,000 = Rs. 35,000.

Point 1 and 2:

As maximum deduction available for health check up and medical insurance is Rs. 15,000 for health check up of person and spouse.

Point 3 and 4:

Maximum deduction allowed for senior citizen is Rs. 20,000. Total of medical insurance premium and health check up for father is Rs. 21,000. So he can claim Rs. 20,000.

Other important points regarding Deduction u/s 80D:
  1. Pay mediclaim insurance by mode other than cash to avail deduction u/s 80D:  deduction under section 80D is available only if paid in mode other than cash. So remember this important point while paying for mediclaim policy.
  2. Deduction is allowed for paid basis. So if insurance is due but not paid by you, you cannot get deduction for it.

Update budget 2015:

In budget 2015, limit for deduction for section 80D has been increased.

Here are the details:

  1. Limit for non senior citizen to claim medical insurance expenses and health check up expenses under section 80D has been increased to Rs. 25000 from Rs. 15000.
  2. Limit for senior citizen ( 60 years or more age) for section 80D has been increased from Rs. 30000 from Rs. 20000.
  3. In short, there is Rs. 10000 increase in limit for section 80D.
  4. Additionally, there is some modification in conditions u/s 80D applicable to very senior citizen. Medical expenses made for very senior citizen ( 80 years or more age) shall be allowed as deduction under section 80D. The maximum limit is Rs. 30000 for it. The condition to avail that benefit is that no payment should be made for health insurance policy of very senior citizen.

Summary of new limit of deduction 80D:

[table id=21 /]

 

I have explained main points with regards to deduction under section 80D. If you have any query, ask me through comments. Also give your intelligent views on this article here or social media.

 

 

 

 

 

 

 

 

 

 

9 Comments

  1. By Vikas Gupta

    In my opinion, it is clearly mentioned in the section 80D of IT Act,1961 that to get the exemption under this section, payment should be made by any mode OTHER THAN CASH.

    Thus it clearly states that one can pay mediclaim insurance premium by checque, ECS, payment through Net banking, payment through debit/credit card.

    • By admin

      You are right I am updating..

      • Deduction u/s 80 D in respect of preventive checkup.

        (In the above example point 3 & 4 deduction will be allowed only Rs 18k instead of Rs 20k)

        The extent of the coverage of this benefit in terms of the deduction for preventive check up is restricted to Rs 5,000 in total under both the heads of the individual and family members and the parents of the individual. This benefit is limited to Rs 5,000 for the amount spent and most importantly it is within the overall limit that is present of Rs 15,000 for each + Rs 5000(for extra benefit for senior citizen not for preventive checkup) sub category so this is not an extra benefit but falls within the existing limits.

      • By admin

        I request you to read following given in Income tax site’s link

        http://www.incometaxindia.gov.in/_layouts/15/dit/pages/viewer.aspx?grp=act&cname=cmsid&cval=102120000000037027&opt=&isdlg=1

        It is clearly narrated that for senior citizen, the limit is Rs. 20,000. ( including preventive check up)

        Point 2

        Where the assessee is an individual, the sum referred to in sub-section (1) shall be the aggregate of the following, namely:—
        (a) the whole of the amount paid to effect or to keep in force an insurance on the health of the assessee or his family 75[or any contribution made to the Central Government Health Scheme] 76[or such other scheme as may be notified76a by the Central Government in this behalf] 77[or any payment made on account of preventive health check-up of the assessee or his family] as does not exceed in the aggregate fifteen thousand rupees; and
        (b) the whole of the amount paid to effect or to keep in force an insurance on the health of the parent or parents of the assessee 77[or any payment made on account of preventive health check-up of the parent or parents of the assessee] as does not exceed in the aggregate fifteen thousand rupees.

        Where the sum specified in clause (a) or clause (b) of sub-section (2) or in sub-section (3) is paid to effect or keep in force an insurance on the health of any person specified therein, and who is a senior citizen, the provisions of this section shall have effect as if for the words “fifteen thousand rupees”, the words “twenty thousand rupees” had been substituted.

  2. By Bhupendra Kumar

    what if i dont have any mediclaim insurance policy. but i did preventive health check ups and paid in cash. then can i take the benefit of 80D deduction?

    • By admin

      Yes, if you paid preventive check up fees through cash, the decution under seciton 80D is available.

      • By prashanth

        But in that case also the limit is just Rs 5000, is it ?( That is if we don’t have any Medial Insurance policy, but spend only for Preventive Health Checkups, the Deduction can be taken Only to the extent of Rs 5000 and not Rs 15000(old) or Rs 25000(New). Am I Right ?

      • By admin

        Yes, it will be Rs.5000. It is maximum limit.

  3. By nikhil BAVEJA

    Hi
    Pls advice if I have to claim the tax benefits for parent mediclaim do I need to be subscriber or payment done by me through cheque should make me eligible
    Pls answer
    Nikhil.

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