Income Tax Deductions in respect of Health Insurance under Section 80D

Income Tax Deduction under Section 80D in respect of health insurance premium for covering the health of self, spouse, dependent children and parents

Deduction eligibility in respect of Health Insurance Premium and health checkup charges paid from the income of the tax payer under Section 80D has been increased to Rs. 25,000 from the last year eligibility of Rs. 15,000. This deduction cap or Rs. 25,000 will be applicable for Medical Insurance premium paid for the health of self, spouse and dependent children.

As far as Health Insurance Premium paid by the tax payer to cover the medical expenses of his/her parents, yearly premium and health check-up cost paid up to Rs. 25,000 can be deducted from the income. Also in the case of senior parents health insurance premium up to Rs. 30,000 can be deducted.

In the case of sharing of premium payment for covering the health of Parents, the actual premium paid by each person can be deducted from his/her income.

Further, medical expenditure incurred for very Senior Citizen up to Rs. 30,000 can be deducted from the income of the person who has spent the same, provided the said very senior citizen has no insurance coverage.

Deduction in respect of health insurance premia.

80D. (1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted such sum, as specified in sub-section (2) or sub-section (3), payment of which is made by any mode as specified in sub-section (2B), in the previous year out of his income chargeable to tax.

(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 or any contribution made to the Central Government Health Scheme [or such other scheme as may be notified by the Central Government in this behalf] or any payment made on account of preventive health check-up of the assessee or his family as does not exceed in the aggregate [Twenty Five] 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 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 [Twenty five] thousand rupees.

Following clauses (c) and (d) shall be inserted after clause (b) of sub-section (2) of section 80D by the Finance Act, 2015, w.e.f. 1-4-2016 :

(c)  the whole of the amount paid on account of medical expenditure incurred on the health of the assessee or any member of his family as does not exceed in the aggregate thirty thousand rupees; and

(d)  the whole of the amount paid on account of medical expenditure incurred on the health of any parent of the assessee, as does not exceed in the aggregate thirty thousand rupees:

Provided that the amount referred to in clause (c) or clause (d) is paid in respect of a very senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person:

Provided further that the aggregate of the sum specified under clause (a) and clause (c) or the aggregate of the sum specified under clause (b) and clause (d) shall not exceed thirty thousand rupees.

Explanation.—For the purposes of clause (a), “family” means the spouse and dependant children of the assessee.

(2A) Where the amounts referred to in clauses (a) and (b) of sub-section (2) are paid on account of preventive health check-up, the deduction for such amounts shall be allowed to the extent it does not exceed in the aggregate five thousand rupees.

(2B) For the purposes of deduction under sub-section (1), the payment shall be made by—

(i)  any mode, including cash, in respect of any sum paid on account of preventive health check-up;

(ii)  any mode other than cash in all other cases not falling under clause (i).

Following sub-section (3) shall be substituted for the existing sub-section (3) of section 80D by the Finance Act, 2015, w.e.f. 1-4-2016 :

(3) Where the assessee is a Hindu undivided family, the sum referred to in sub-section (1), shall be the aggregate of the following, namely:—

(a)  whole of the amount paid to effect or to keep in force an insurance on the health of any member of that Hindu undivided family as does not exceed in the aggregate twenty-five thousand rupees; and

(b)  the whole of the amount paid on account of medical expenditure incurred on the health of any member of the Hindu undivided family as does not exceed in the aggregate thirty thousand rupees:

Provided that the amount referred to in clause (b) is paid in respect of a very senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person:

Provided further that the aggregate of the sum specified under clause (a) and clause (b) shall not exceed thirty thousand rupees.

(4) 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, [or a very senior citizen], the provisions of this section shall have effect as if for the words” [Twenty Five] thousand rupees”, the words ” [Thirty] thousand rupees” had been substituted.

[Explanation.—For the purposes of this sub-section, “senior citizen” means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.]

(5) The insurance referred to in this section shall be in accordance with a scheme made in this behalf by—

(a)  the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and approved by the Central Government in this behalf; or

(b)  any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999).

Following Explanation shall be inserted to section 80D by the Finance Act, 2015, w.e.f. 1-4-2016 :

Explanation.—For the purposes of this section,—

(i)  “senior citizen” means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year;

(ii)  “very senior citizen” means an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year.
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