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.

Particulars Self, spouse, children Parents (dependent or independent) Total deduction available
No one has attained 60 years age 15,000 15,000 30,000
Parents attained 60 years age 15,000 20,000 35,000
Assessee and his family attained age of 60 years 20,000 20,000 40,000

 

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:

Age limitSelf, spouse, childrenparents ( dependent or not)Total deduction u/s 80D
No one has attained 60 years250002500050000
Parents has attained age 60 years 250003000055000
Assessee and his family has attained age 60 years300003000060000

 

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.