Deduction under Section 80D: Medical Insurance Premium
Deduction shall be allowed only to an Individual assessee or Hindu Undivided Family (HUF) if the payment has been made towards the following:
- Medical Insurance (for both- new policies purchased and existing policies renewed)
- Central Government Health Scheme (CGHS) or such other scheme as may be notified by Central Government in this behalf
- Preventive health check-up
It should be noted that assessee like companies and firms are outside the purview of this section.
The deduction is allowed for Spouse, Dependent Children and Parents subject to following:
An individual is eligible to claim a deduction under this section for self and family (spouse and dependent children) up-to a maximum of Rs. 25,000. In case, individual is a senior citizen or a very senior citizen, the maximum limit shall be Rs. 30,000.
An individual is eligible to claim a deduction under this section for parents (dependent or independent) up to maximum of Rs. 25,000. In case parents are senior citizens, the individual can claim deduction up-to Rs. 30,000. This shall be allowed over and above the deduction claimed for insurance of self and family.
Generally, in case of very senior citizens, insurance policies are not issued. So here, deduction against expenditure incurred towards their treatment can be claimed up-to a maximum of Rs. 30,000.
Expenses incurred for preventive health check up shall be allowed in aggregation for self, family and parents to a maximum of Rs. 5,000 with effect from Assessment Year 2016-17.
Hindu Undivided Family (HUF) can claim deduction in the same manner. HUF can take the policy in the name of any of its members.
Deduction is allowed only if payment has been made otherwise than in cash, i.e. through normal banking channels or debit/ credit card. Although there is no such restriction for payment made for preventive health check-up.
So, the maximum amount of deduction that can be claimed under this section is Rs. 65,000
[Rs. 30,000 for self and family (in case of senior citizens); Rs. 30,000 for senior citizen parents and Rs. 5,000 for Preventive health check up]
For example, Mr X, aged 50 years makes the following payments:
|Policy in name of||Age (in years)||Type of policy||Mode of Payment||Amount (Rs.)||Deduction under Section 80D (Rs.)|
|Mr X||50||Renewal of existing policy||Bank transfer||20,000||20,000|
|Independent Son, Mr Y||24||New policy taken||Debit Card||12,000||Not allowed for independent children|
|Mother, Mrs Z||72||Renewal of existing policy||Cash||28,000||Not allowed because of cash payment|
|Wife, Mrs X||47||Preventive health check up||Bank Transfer||2,000||4,000|
|Father, Mr Z||77||Cash||2,000|
- Senior citizen means Resident Individuals aged above 60 years but less than 80 years. Very senior citizen means Resident Individuals above the age of 80 years.
- The insurance policy covered under this section shall be in accordance with the scheme by:
- the General Insurance Corporation of India and approved by Central Government in this behalf
- any other established insurer and approved by Insurance Regulatory and Development Authority (IRDA)
- This is valid only till Assessment Year 2018-19. The limits have been changed from Assessment Year 2019-20.