Deduction of Medical Insurance Section 80D

Deduction of Medical Insurance Section 80D | Examples, Difference and How To Calculate

Deduction of Medical Insurance Section 80D: Medical Emergencies mostly take us by surprise; hence it is always better to be equipped to battle them. Section 80D allows every Individual or HUF to claim a deduction from their total income. The deduction is available for both health insurances and purchase a policy covering a spouse or children of the deceased assessee.

Conditions for Claiming Deduction

  • Whether a resident or non-resident, the assessee should be an individual or HUF.
  • Payments are made for the assessee, their spouse, parents or any dependent children of their own in the case of an individual.
  • For any member in HUF, the payment made is out of the income chargeable to tax.
  • If no amount was paid for the health insurance of a very senior citizen, medical expense induced on their health is allowed only then.
  • Payment is allowed for
  • Medi-claim insurance premium
  • Contribution(s) made to the CGHS or other schemes that the Central government notifies.
  • For preventive health check-ups
  • Medical expenditure for very senior citizens

Calculating Deduction for Individual

Ø Payments for assessee or their family

  1. Medical Insurance
  2. Contributions to Health Scheme
  3. Preventive Health Check-up- Rs. 5,000
  4. Expenses for Very Senior Citizens- Rs. 30,000

Note: The aggregate of points (a), (b) and point (c) cannot exceed Rs. 25,000. An additional deduction of Rs. 5,000 is allowed for Medical Insurance Premium paid in the case of senior or very senior citizens. The total deduction cannot be more than Rs. 30,000 for (a) and (d).

Ø Payments for Parents

  1. Medical Insurance
  2. Preventive Health Check-up- Rs. 5,000
  3. Expenses for Very Senior Citizens- Rs. 30,000

Note: The aggregate of points (a) and point (b) cannot exceed Rs. 25,000. An additional deduction of Rs. 5,000 is allowed for Medical Insurance Premium paid in the case of senior or very senior citizens. The total deduction cannot be more than Rs. 30,000 for (a) and (c).

Calculating Deduction for HUF

  1. In case of Medical Insurance Premium- The maximum amount: Rs. 25,000.
  2. In case of Medical Expense for senior citizens- The maximum amount: Rs. 30,000.

Note: The aggregate of both (a) and (b) cannot exceed Rs. 30,000. An additional deduction of Rs. 5,000 is permitted for option (b).

Points To Remember

  • An assessee can take a medical insurance policy on behalf of their dependent children and make claims for tax deductions. If they are above 18 years and employed, then they cannot be covered.
  • Male children, if unemployed, can be covered up to the age of 25. But female children, if not employed, can be covered right up to her marriage.
  • If an assessee is paying any medical insurance premiums on behalf of their sister or brother, they are ineligible to claim tax deductions.
  • Kindly note that the premium amount can be claimed as a tax deduction only. This process should not include GST.
  • Senior citizen is an individual resident at the age of 60 or more during the previous year of their claim.
  • Very Senior Citizens are also individual residents living in India who are aged 80 years or above at any time through the relevant preceding year.

Examples

Suppose an individual of age 35 has paid their medical insurance premium of Rs. 27,000 for themself and also made medical expenses of Rs. 4,000 for their father of Age 81, because the maximum limit of deduction in the case of the medical insurance is Rs. 25,000, they will get a total deduction of Rs. 25,000 plus Rs. 4,000 that comes to Rs. 30,000.

Suppose an individual of age 35 has paid their medical insurance premium of Rs. 27,000 for themself and have also made medical expenses on Preventive Health Check-up of Rs. 3,000 for their wife, in cash. Since paying in cash is prohibited for deduction under 80D, the amount of Rs. 27,000 will not be allowed; however, in the case of Preventive health check-ups, Rs. 4,000 will be allowed.

A Stepwise guide on Filling the Deduction Amount in Income Tax Returns (ITR) for Section 80D

  • For Online Utility for ITR-1 or ITR-4: The first step is to go to the Tab Income Details and click on point B4 and then select the option and enter the amount eligible to be paid by you. Note that the maximum amount allowed will automatically be calculated.
  • For Offline Utility for ITR-1 or ITR-4: You will find in the sheet Income details on point 5(g), then select the option. After that, enter the eligible amount.
  • For Offline Utilities for ITR-2 and ITR: First, you need to open the sheet for VIA and fill in the deduction amount mentioned in 1(g), and you can do the same for ITR utilities.

Specifics in Form 12BB to Employer

The employee should produce Form 12BB to his employer(s). Based on this form, the employer will record deductions, and thus the TDS amount deducted will be lower.

Difference Between Medical Allowance of Section 10 and Medical Insurance of Section 80D

Any Medical insurance paid to any insurance company is permitted under section 80D. When medical allowance received is exempted up to Rs. 15,000, only then the amount is suffered as a medical expenditure. Such an allowance is exempted under section 10. Therefore, it cannot be claimed as a deduction if a person has medical insurance and has received compensation for medical expenses.

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