Is Medical Insurance Tax Deductible?
Section 80D: Tax Benefits of Medical Insurance in India
Medical insurance acts as a financial safety net, covering unexpected healthcare expenses and hospitalization costs when you need it most. It helps manage potential financial crises related to medical expenses. Now, most people in India rely on credit options or personal savings when it comes to handling healthcare emergencies.
Thus, the government is offering tax benefits on medical insurance premiums to encourage citizens to secure health-specific insurance coverage. However, as per the Income Tax Act, only eligible policyholders can get tax benefits against medical insurance under Section 80D. Read on to learn more about it!
Who Can Claim a Tax Deduction?
Section 80D of the Income Tax Act allows members of HUF (Hindu Undivided Family) and individual taxpayers to claim tax deductions. However, the claim for tax deductions can be made only against the health insurance premium, medical expenses for senior citizens and preventive health checkups.
This tax benefit is solely allotted for the mentioned categories. Companies, partnership firms, and trusts are not eligible for medical insurance tax deductions.
What is the IT Act’s Section 80D?
The IT Act’s Section 80D allows a deduction of up to ₹25,000 for individuals and HUFs from their taxable income for medical insurance premiums. For senior citizens (60 years and above), the maximum tax benefit amount is ₹50,000 per financial year.
Taxpayers can potentially claim a total deduction of up to ₹1 lakh under Section 80D, combining benefits for themselves, spouses, dependent children, and parents. This provision aims to incentivize the purchase of health insurance by reducing the overall tax burden.
What Claims are Included Under Section 80D of the Income Tax Act?
Inclusions of deductions under section 80D are as follows:
●Preventive health check-up-related expenses
●Any contributions towards government-aided medical or health insurance scheme
●The cost of health insurance premiums for oneself, one's spouse, parents, and kids
●Expenses incurred for senior citizen's medical reasons, even if they do not have a medical insurance policy
What Claims are Excluded from Section 80D of the Income Tax Act?
Certain types of payments do not qualify for deductions under Section 80D:
●Cash payments are not accepted for tax deductions under section 80D; only cheques and digital payments are eligible.
●No deduction is permitted for the year if health insurance premiums are not paid during the fiscal year.
●Employees cannot avail of tax benefits if the group health insurance policy premium is paid by their employer.
●If an individual pays medical insurance premiums for their working children or any other family member other than the eligible members, it is not included in tax deductions.
How Much Tax Deduction Does Section 80D Allow?
Here is a detailed tabular interpretation of the tax deduction amount eligible under Section 80D:
| Insured | Claim for Self & Family (in ₹) | Claim for Parents (in ₹) | Preventive Health checkup (in ₹) | Maximum Tax Deduction (in ₹) |
| Individual Policyholders & Families below 60 years | 25,000 | -- | 5,000 | 25,000 |
| Individual Policyholder & Family + Parents all below 60 years | 25,000 | 25,000 | 5,000 | 50,000 |
| Individual Policyholder & Family below 60 years + Parents above 60 years | 25,000 | 50,000 | 5,000 | 75,000 |
| Individual Policyholder & Family + Parents above 60 years | 50,000 | 50,000 | 5,000 | 1,00,000 |
| Members of HUF below 60 years | 25,000 | 25,000 | 5,000 | 25,000 |
| Members of HUF above 60 years | 50,000 | 50,000 | 5,000 | 50,000 |
Understanding the nuances of Section 80D can help you make informed decisions about medical insurance and tax planning. When considering a health insurance policy, choose Star Health for comprehensive coverage at the most affordable premiums.
By doing so, you save on both premiums and taxes, resulting in more savings, which you can utilize for other aspects of your life.
Secure your health and finances with Star Health today!
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This FAQ page contains information for general purpose only and has no medical or legal advice. For any personalized advice, do refer company's policy documents or consult a licensed health insurance agent. T & C apply.