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All You Need to Know About Section 80D of the Income Tax Act June 28 2020Income Tax Deduction Under Section 80C

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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

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 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

Section 80D is one of the most important deductions that an individual can claim. This is because it not only provides tax benefits but also covers the health of the individual and family members. 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.

 

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