Deduction under Section 80D

Taxes are a crucial component in the country, as it forms a major portion of the income for the government. Such an amount is utilized for social projects for benefitting the citizens. When an individual earns more than a certain amount, he shall pay a specified percentage as taxes to the government.

While the payment of taxes can be a little harsh for the taxpayer, the government has made various provisions that allow the taxpayer to claim deductions that eventually reduce taxable income.

The deductions provide different limits based on various factors to the taxpayer. This article will study the deduction under section 80D of the Income Tax Act.

What is Section 80D Deduction?

Section 80D deduction is allowed for payment in regards to health insurance premiums. The section states that:

• While computing the total income of an assessee [Individual/ Hindu Undivided Family(HUF)],
• The sum specified in sub-section (2) or (3) shall be deducted,
• Payment of which is made (as specified in sub-section (2B)) by any mode,
• In the previous year (P/Y) out of chargeable income.

In simple terms, every individual or HUF can claim a deduction under Section 80D for medical insurance premiums paid.

What is the 80D Deduction Limit?

For individuals aged below 60 years of age:

• The limit for deduction is up to rupees 25,000.

If the insured individual is above 60 years of age:

• The limit for deduction increases up to rupees 50,000.

For HUF

• The deduction available is up to rupees 25,000 if the insured member is less than 60 years of age, and rupees 50,000 if the insured is 60 years of age or more.
• The aggregate of the sum shall not exceed rupees fifty thousand.

Who is permitted to claim Deduction under Section 80D?

Deduction for medical insurance premiums and medical expenses for senior citizens is allowed to the following taxpayers only:

• Individual taxpayers or
• HUF taxpayers

Any other entity cannot claim deduction under this section.

The insurance can be availed for self, spouse, dependent children, and parents.

Which payments are eligible under 80D Deduction?

Under this section, an individual or HUF can claim a deduction for the below-mentioned payments:

• Expense in regards to preventive health check-ups.
• Premium amount paid for self/ spouse/ children/ dependent parents (in any mode other than cash).
• Medical expenses for senior citizens (aged 60 years or above) are not covered under any health insurance scheme.
• The contribution made to the Central Government health scheme/any scheme notified by the government.

The premiums paid through cash are not eligible for deduction under Section 80D. Also, premiums paid on behalf of working children are not covered under this section. These deductions can be significant in tax planning and managing personal finance.