Deduction U/S 80D for payment of medical insurance premium

Your health first!

Introduction

“Sharira Madhyam Khalu Dharma Sadhanam” (Physical body is the medium for the righteous action)

This is one of the quotes taken from the Vedic text which elucidates that only if One’s Health is Sound, he/she can engage in their respective work efficiently.

In general predictions about future health – of individuals and populations – can be notoriously uncertain. The role of Government hospitals in Healthcare is pathetic.So; the people usually flock towards the Private healthcare hospitals for treatment during the times of illness . But as the time speeds up, the Cost of Medical treatment & Hospitalization is becoming out of the reach for the “Aam Aadmi”

To secure oneself from the risk of high treatment costs, a product called “Medical Insurance” has taken birth!, which can insure  you ,when you get a Heart attack after  having a glance at the heart breaking costs for your treatment in a well furnished hospital!!

Government of India has come up with various freebies that can minimize the extent of the holes created in your purse because of High Premium costs. One of the scheme brought in is availing tax benefit on Medical insurance payment made through the Section 80D of Income tax Act 1961.

Extract of Section 80D of Income tax act 1961:

80D.    (1) In computing the total income of an Assessee, being an individual or a Hindu undivided family, there shall be deducted such sum, as specified in sub-section (2) or sub-section (3), payment of which is made by any mode, other than cash, in the previous year out of his income chargeable to tax.

(2) Where the Assessee is an individual, the sum referred to in sub-section (1) shall be the aggregate of the following, namely:—

          (a)  the whole of the amount paid to effect or to keep in force an insurance on the health of the Assessee or his family as does not exceed in the aggregate Rs.15,000; and

          (b)  The whole of the amount paid to effect or to keep in force and insurance on the health of the parent or parents of the Assessee as does not exceed in the aggregate Rs.15, 000.

Explanation.—for the purposes of clause (a), “family” means the spouse and dependent children of the Assessee.

(3) Where the Assessee is a Hindu undivided family, the sum referred to in sub-section (1) shall be the whole of the amount paid to effect or to keep in force and insurance on the health of any member of that Hindu undivided family as does not exceed in the aggregate fifteen thousand rupees.

(4) Where the sum specified in clause (a) or clause (b) of sub-section (2) or in sub-section (3) is paid to effect or keep in force an insurance on the health of any person specified therein, and who is a senior citizen, the provisions of this section shall have effect as if for the words “fifteen thousand rupees”, the words “twenty thousand rupees” had been substituted.

Explanation.—for the purposes of this sub-section, “senior citizen” means an individual resident in India who is of the age of 60 years (from Assessment year 2013-14) or more at any time during the relevant previous year.

(5) The insurance referred to in this section shall be in accordance with a scheme made in this behalf by—

          (a)  the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalization) Act, 1972 (57 of 1972) and approved by the Central Government in this behalf; or

          (b)  Any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999).

Analysis of the above provision –

1. Who is eligible for 80D deductions?

Individual: for the health of the individual or the health of the wife or husband, dependent parents or dependent children of the individual.

Hindu Undivided family (HUF): for any member of the family.

2. What is the maximum amount that I can claim as deduction u/s 80D?

In case the payment of medical insurance premium is paid by the Individual Assessee for himself, spouse, dependent children-Rs 15,000.In case, the person insured is a Senior citizen, the deduction allowed shall be Rs.20, 000

In case the payment of medical insurance premium is paid by the Individual Assessee  for Parents, whether dependent or not -Rs 15,000.In case, the Parents of the Assessee  are  Senior citizens, the deduction allowed shall be Rs.20, 000

3. Is Deduction available for Preventive Healthcare check up incurred by the Individual too?

Yes, the deduction has been allowed under this Section for Preventive Health Check Up .A deduction of Rs 5,000 is allowed under Section 80D for the same.

However one should remember that, this deduction is included in Rs15, 000/Rs.20, 000 and it is not additional of this limit. Also Amount of Rs 5000 is the maximum total deduction allowed .This deduction is in total and not per person

4. During the year, I have paid Medical Insurance Premium by Cash. Can I claim tax benefit?

No, the Deduction is allowed only if payment done by any mode of Payment except Cash.

5. Can Salaried Class of Persons claim Medical Allowance & deduction U/s 80D at the same time?

Yes, all salaried employees can claim the above mentioned benefits at same time. Medical Allowance is allowed under Section 10 and Mediclaim allowance U/s 80D.

6. I have already contributed under section 80C, Can i still claim 80D benefit?

Yes, you can claim full benefit of section 80 C (Rs 100,000/-) as well as of section 80D.

7. We have one mediclaim policy and I and my father both are paying 50% payment. Can we both claim 80D benefit?

Part payment of premium is allowed. Both of, you can avail the deduction for the amount contributed by you and your parents too could avail deduction for their contribution.

Your valuable suggestions and queries are always welcome. If you have any queries kindly mail us at admin@simplifiedlaws.com. Written by Shrihari Bhat.

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