Claiming 80D Deduction: A Step-by-Step Guide for Taxpayers

Financial security is the top priority of individuals looking for a health insurance plan. In addition, they also prefer a policy that provides tax benefits. Section 80D of the Income Tax Act offers a considerable deduction for premiums being paid on insurance policies. The section encourages individuals to safeguard their health by offering tax benefits on health insurance premiums.

The deduction is applicable for policies bought for oneself, parents, spouse, and children. What makes this section appealing in terms of health insurance tax benefit is that it provides considerable tax deductions for senior citizens. Specifically, senior citizens without health insurance can claim ₹50,000 for medical expenditures. The following guide helps taxpayers with knowledge on the section 80D deductions, eligibility, steps to claim deductions, and more.

Understanding the Eligibility

Before going deep into the details of claiming tax benefits, you should first know who can claim the deduction under this section.

Deductions can be claimed on the premiums paid by the policyholder, parents, spouse, and children.

HUFs (Hindu Undivided Families) can also claim the deduction, and the condition is that the premium paid should be for any of their members who qualify for the deduction.

Limits of Section 80D

The applicable limits vary depending on the insured person’s age and the relationship between him/her and the taxpayer. Let’s understand all the aspects influencing the limits under Section 80D:

The deduction limits differ based on the following aspects:

• For individuals below 60 years, the premiums paid for oneself, children, and spouse are eligible for claim, with a limit of up to ₹25,000.
• For parents aged below 60 years, you can claim an extra deduction, amounting to ₹25,000 (for premiums paid on insurance policies you purchase for your parents).
• The deduction limit increases up to ₹50,000 for senior citizens aged 60 years and above.
• For preventive health check-ups, tax deduction up to ₹5,000 is provided.

Note: A deduction up to ₹1,00,000 can be claimed under section 80D, but the condition is that both you and your parents must be senior citizens.

Tax Deductions for HUFs

The medical claim is valid for any member of HUF under section 80D. The maximum value of deduction is ₹25,000. If the HUF member is a senior citizen, then the maximum deduction value increases to ₹50,000. Remember, HUF is not qualified to claim a deduction for a preventive health check-up.

Contribution to CGHS/Notified Scheme

Contribution made to Central Government Health Scheme (CGHS) or any other reported scheme is allowed to individuals for ₹25,000.

Steps to Claim Deduction

It becomes straightforward to claim the 80D deduction and get the health insurance tax benefit with the following steps.

• Purchase an insurance policy that qualifies for the Section 80D deduction. It must cover you, your spouse, parents, and children.
• Maintain proof of premium payments done via non-cash methods (like net banking or credit card/debit card).
• Check the eligibility, the insured’s age, and the relationship with the taxpayer.
• You need to input the eligible deduction under section 80D while filing your ITR (Income Tax Return).
• Keep all documents handy, including statements and payment receipts.
• Present the proof of the payment for the premium amount being paid or the amount paid for the preventive health checkups. Presenting the proof helps decrease the overall taxable income for individuals, families, and HUFs.
• You can add up to ₹5000 for preventive check-ups to your claim (if applicable).

Exclusions Under Section 80D

Getting familiar with what’s not included in section 80D will keep you away from confusion.

• Any premiums paid in cash for a health insurance policy are not eligible for deduction. Note that the deduction only qualifies if it is paid via cheque or digital payment methods.
• If there is a default while paying the premium during a financial year, then you can’t get any deduction for that year, under section 80D.
• If your employer funds the premium for a group health insurance policy (that covers you and your family), then you can’t claim a deduction for the particular amount paid. Remember, the tax benefit is provided only for the premium that you pay.
• You are eligible for a deduction for premiums paid for yourself, your spouse, your parents, and your children. If the premiums are paid for employed children, grandparents, siblings, uncles, aunts, or other relatives, then they are not eligible for tax benefits under section 80D.

Conclusion

Using the section 80D tax benefit can help you make a significant change in your financial planning. It encourages individuals to purchase health insurance and also provides considerable savings. It is essential to be familiar with how to be eligible for it, the maximum eligible amount, and the process of claiming a deduction. The knowledge of these aspects will then help you maximise tax benefits.