What is Section 80-D

Updated on : Aug. 25, 2022 - 6 p.m. 17 min read.

Section 80D of the Income Tax Act, 1961 that allows individuals to claim tax deductions for the premium paid towards medical insurance. This section encourages individuals to purchase health insurance and provides tax benefits to reduce the financial burden of medical expenses.

Every individual or HUF can claim a deduction from their total income for medical insurance premiums paid in any given year in health plans and critical illness plans.

For individual or HUF taxpayers, insurance can be availed for:

Self
Spouse
Dependent children
Parents

Any other entity cannot claim this deduction. For example, a company or a firm cannot claim a deduction under this section.

What deductions are allowed under section 80-D:

The deduction allowed under Section 80D is Rs. 25,000 in a financial year. In the case of senior citizens, the deduction limit allowed is Rs.50,000.

The table below captures the amount of deduction currently available to an individual taxpayer under various scenarios:

Individual:

An individual can claim a deduction of up to Rs 25,000 for the insurance of self, spouse, and dependent children.
An additional/separate deduction for parents’ insurance is available to the extent of Rs 25,000 if they are less than 60 years of age, or Rs 50,000 if your parents are aged above 60.

HUF:

HUF can claim a deduction under Section 80D for a medical claim taken for any of the members of the HUF.
This deduction will be Rs 25,000 if the member insured is less than 60 years, and will be Rs 50,000 if the insured is 60 years of age or more.

Eligibility Criteria:

Section 80 D deduction can be claimed by:

Individual Indian/foreign citizen) for self, spouse, dependent children and parents whether dependent or not).
HUF for any of the members.
NRI’s are also eligible for this deduction.

Exclusions under section 80-D:

No deduction on the following amounts shall be allowed under section 80D
Premiums are paid in cash (except for preventive health check-ups)
Premiums and expenses paid by a person other than the taxpayer.

Difference between sections 80-C and section 80-D:

Section 80C includes investments made in a wide range of financial instruments such as small savings schemes, Life insurance premiums, mutual funds, etc., while Section 80D is meant exclusively for deductions on health insurance premiums paid.

By Kratika Muramkar

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