Section 80D- Tax benefits on taking a Health Insurance Plan

cut-medical-expensesSection 80D offers one of the best tax saving benefits in India. Health Insurance premium paid towards purchasing a health insurance plan(also known as mediclaim) is allowed as a tax deduction under section 80D.

Not only can you take benefit by purchasing health plan for yourself but also you can take the benefit by purchasing the policy to insure your spouse, or your dependent children or parent. And the best part is, that it is over & above the deductions claimed under section 80C/CCC/CCD

Eligibility for claiming the tax benefit for AY 2017-18?

Deduction can be claimed by Individual for self, wife, dependent children or parents in aggregate of whole of amount paid as does not exceed Rs. 25,000/Rs.30,000.

In case you are an HUF, it can be claimed by any member of that Hindu Undivided Family.

Essential conditions for claiming deduction?

Eligible Person Payment Quantum of deduction Maximum Exemption
Individual(resident) (a.)In case payment is paid for self, spouse or children Rs. 25,000 Rs.25,000
(b.)In case payment is paid for persons in (a.) + Parents Rs.25,000+Rs.25,000 Rs.50,000
(c.) In case payment is paid for person in (a.)+Senior(Sr.)* citizen Parent Rs.25,000+Rs.30,000 Rs.55,000
(d.)In case payment is paid for Senior citizen self/spouse +Sr. citizen parents Rs.30,000+Rs.30,000 Rs.60,000
HUF (d.)In case payment made for any member Rs. 25,000 Rs.25,000
(e.)In case payment made for any member who is a Sr. citizen Rs.30,000 Rs.30,000
Non-Resident Individual In case payment made for self & parent* Rs.25,000+Rs.25,000 Rs.50,000

*Sr. Citizen includes very Sr. Citizen also & for NRI deduction is limited to Rs.25,000

Things to keep in mind before investing?

  1. Contribution towards health insurance plan has to made to a scheme as specified by the Central Govt./ approved by IRDA.
  2. Payment should be made by any mode other than cash.
  3. Meaning of Senior citizen- Sr. Citizen means an individual resident in India who is of the age of 60 yrs or more during the relevant financial year.
  4. Meaning of Very Senior Citizen: Very Sr. citizen means an individual resident who is of the age of 80 yrs or more during the relevant financial year.
  5. In case of an individual who is of the age of 60/80 yrs or more but is a NRI in India, the deduction would be limited to Rs.25,000(instead of Rs.30,000).
  6. Premium paid towards brother,sister,grandparents,aunts,uncles or any other relative cannot be claimed as deduction for taking tax benefit.
  7. Premium paid on behalf of working children cannot be taken for tax benefit.
  8. In the case of part payment by you and a parent, both of you can claim deduction to the extent paid by each.
  9. Deduction has to be taken without showing the Service Tax and Cess portion from the premium amount.
  10. Group Health Insurance premium provided by the company is not eligible for deduction.

Incentive for preventive Health check-up

From the AY 2016-17, Government has given an incentive for payment made towards preventive health check-up payment made in cash to the extent it does not exceed in the aggregate of Rs. 5,000.

This deduction can also be claimed either by individual himself,spouse, dependent children or parents. Please keep in mind that this incentive is within the exemption limit of Rs.25,000/30,000.

For example: If you pay premium of Rs 20,000 towards Mediclaim/Health insurance plan and undergo a health check-up costing Rs 5,000, the total of Rs 25,000 can be availed under section 80D.

Now a days,most of the hospitals offer preventive health check-up packages. With the current stressful lifestyle diseases are on the rise, hence it’s advisable to use the benefit from taking a health insurance plan since besides the tax benefit, it also means that you have healthy future ahead. The benefit from Section 80D can be as high as Rs. 60,000 in a financial year based on the coverage of the health insurance plan you buy.

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