What is the maximum amount of deduction under section 80D?
Medical
coverage is one important thing that every individual must take. If you are not
able to bear the cost of the medical insurance premium than you must give a
thought that how would you be able to bear the cost of medical treatment if
such a situation arises. To encourage
the individuals to take medical insurance the government tries to reduce the burden of taxes on your pocket and give tax benefit on taking medical insurance under Section 80D of the
Income Tax Act, 1961.
Let
us learn about the applicability of Section 80D.
Applicability of Section 80D
An individual or HUF can claim deduction
under Section 80D of the Income Tax Act for the premium paid on taking their medical insurance. The deduction is
available on the total income and it can be availed by taking medical insurance
not only for yourself but also for the spouse,
children, dependent children and parents. What makes Section 80D even more
attractive is the fact that this deduction is available over and above the deduction that you can claim under Section 80C/CCC/CCD.
Deduction Under Section 80D
What is the limit on 80D?
An
individual can claim a deduction for medical insurance premium paid or the
insurance of self, spouse, and dependent children up to Rs. 25,000 every year. If the insurance premium is paid for the
insurance of parents than an additional
deduction up to Rs. 25,000 is available if the parents are less than 60 years
of age. However, if the parents are aged
above 60 years, an additional deduction is available is up to Rs. 50,000.
If
the taxpayer and parents, both are more than 60 years old, the maximum
deduction that can be claimed under Section 80D is Rs. 1 lakh. With effect from 1st April 2018, you can
also claim the expenses that are incurred for your preventive health check-ups
up to Rs. 5,000 per year.
The
table below represents the Deduction available under Section 80D to individuals under different
categories.
|
Scenario
|
Premium
paid for health cover (Rs)
|
Deduction
available under 80D (Rs)
|
|
Self,
family, children
|
Parents
|
|
Individual
and parents (below 60 years)
|
25,000
|
25,000
|
50,000
|
|
Individual/family
and parents. Parents are above 60 years
|
25,000
|
50,000
|
75,000
|
|
Individual,
family and parents all above 60 years
|
50,000
|
50,000
|
1,00,000
|
|
HUF
Members
|
25,000
|
25,000
|
25,000
|
|
Non-resident
individual
|
25,000
|
25,000
|
25,000
|
Let
us take an example to understand it better.
Example
Suresh
is aged 50 years and his father is 78 years old. Suresh takes health cover for
himself and his father by paying an insurance premium of Rs 30,000 and Rs
35,000. Calculate how much deduction can be claimed under Section 80D?
Suresh
here can claim up to Rs. 25,000 on
his health cover. For the policy taken for his father who is aged above 60
years, he can claim a deduction of Rs. 35,000. Therefore, the total deduction
available under Section 80D is Rs. 60,000.
The Bottom Line
To encourage more people to take health
insurance, the government provides tax benefits on such policies. If you also
want to avail tax benefits under Section 80D or do financial
planning, you may get in contact with Indira Securities.