Health insurance Plans are important for us which would help to avoid high cost hospitalization expenses. We can claim premium paid for health insurance plan under section 80D. It could for the premiums paid for self or family or for parents, we can claim such amount from income tax deductions. What is Section 80D all about? How to claim Health Insurance under Section 80D of IT Act from Assessment Year 2018-19 onwards? Can we claim 80D after financial year is closed? This article would provide complete guide on Section 80D deductions.
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What is Section 80D all about?
The Central Board of direct taxes (CBDT) has allowed the deduction towards the premium paid for health insurance U/s 80D of the Income Tax Act, 1961. There are few important things to note regarding this matter
1) An individual or HUF can claim the deduction u/s 80D for the premium paid for Health Insurance.
2) Payment should be made out of income chargeable to tax.
3) Payment should be made by any mode other than cash.
An individual can take the deduction of health insurance, preventive Health checkup and medical expenditure fees paid for the following persons: –
3) Dependent Children
4) Own parents (not spouse parents).
How to claim Health Insurance under Section 80D of IT Act from A.Y. 2018-19?
The following tax regime would guide you about the deductions on payment of health insurance premium
If any taxpayer pays the health premium of himself and his family, he can claim the deduction in the following manner:
(Note: – in case of parents, the parents of the spouse are not included)
If an individual pays the premium of health insurance of his parents, then along with his family, he is entitled for additional deduction u/s 80D as described in the above table.
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Deduction on preventive healthcare checkups
Along with aforementioned limit of Rs. 25,000 (or Rs. 30,000 in case of senior citizens), you can also claim expenses incurred for preventive health checkups up to Rs 5,000 every financial year. This deduction can be claimed only for senior citizens. This payment can be made through cash.
One important point to note is that the payment for medical insurance premium should be made through online banking, cheque, debit card, credit card or a draft. The tax deduction is not allowed for payment of cash towards the premium.
Eligibility for normal individuals and Senior Citizens
Under this Section, a taxpayer gets a maximum deduction of Rs. 25,000/- for Health insurance and preventive health check-up paid for himself, spouse and dependent children.
If the taxpayer or any family member is of 60 years or more, then the same deduction will be increased to Rs.30,000/-
If the parents are 80 years or more, then the payment towards the medical expenses is also available as the deduction under this section.
What was eligible in Section 80D till the financial year 2016-17 (Assessment year 2017-18)?
The exemptions u/s 80D for the financial year ending 31/3/2017 is the same as it was in previous years. There is no change in the amount of deduction in this assessment year (i.e. 2018-19) as compared to an assessment year 2017-18. It is worth mentioning here that the Finance Minister has introduced few changes in this budget but they are applicable from next assessment year i.e. 2019-20.
Can we claim 80D after financial year is closed?
If an individual has filed his/ her IT return on time on or before the due date as prescribed u/s 139 and at the time of filing of return, he/she has by mistake forgot to claim the deduction u/s 80D towards the premium paid for health insurance, then he/she can file the revised return and can claim the deduction U/s 80D.
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What are the exclusions in section 80D?
Here are the exclusions.
1) In order to get tax benefits u/s 80D, only the taxpayer must pay the health insurance premiums and not any third party. The payment of premium should not be made through cash except for the preventive health checkups.
2) The taxpayers are not liable to receive any tax benefits on the Service tax and Cess charges levied on the premium paid.
3) Group health Insurance policies are not liable to attract any tax benefits u/s 80D. However, if a taxpayer chooses to make the extra premium payments to enhance the group cover, he can claim a deduction for that extra amount.
4) Such health insurance premiums should be paid before 31st March to claim for that financial yaer.
Conclusion: Understanding 80D deduction would help you plan your income tax better. If you are already spending this money for your health insurance, you should claim such premium and reduce your tax burden.
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How to claim Health Insurance under Section 80D from 2018-19
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Me and my wife want to purchase a family floater health insurance plan. Is it possible to equally pay the premium. Say the premium of the policy is Rs.20,000. Can we both share the premium by paying Rs.10,000 each. If yes then can we each claim Rs.10,000 deduction under 80D.
Hi Amit, For family floater policy, premium certificate is issued to the person who is requesting. In this case if you are requesting, you would get the premium certificate in your name and only you can claim the exemption
Is cost of buying medicine can also be considered under section 80D (medical expenditure)
No Aashish. It is only health insurance premium covered here.
It is stated that the tax payers are not liable to receive any tax benefits for the taxes paid on premium such as GST. Health Insurance comes into force only when the tax payer pays GST along with premium should take a magnanimous view of allowing the whole in stead of a part.
which Ramakrishna you are, accordingly the answer. If you are Indian Bank Ramakrishna, then your GST payment not allowed for sec.80D deduction. Pl see my posting in ibapretirees google group just now with regards