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Section 80D : Deduction For Medical Insurance/Expenses & Mediclaim

Section 80D : Deduction For Medical Insurance/Expenses & Mediclaim. In the previous article, we have given How to Check Income Tax Refund Status Online and How to Calculate Advance Tax, Due Dates and Payment. Today we are providing the complete details of deduction under section 80D for Medical Insurance/Expenses & Mediclaim (From Assessment year 2016-17). Mediclaim insurance is a must-have for all. It safeguards you and your family from a financial crisis during critical illnesses or accidents. Apart from covering medical expenses, health insurance also offers you access to tax saving schemes. The absence of Medical insurance can wipe out your savings.

Section 80D : Deduction For Medical Insurance/Expenses & Mediclaim

Section 80D : Deduction For Medical Insurance

Applicable to :

  • In the case of INDIVIDUAL: in the name of an individual, his spouse, parents and dependent children.
  • In the case of HUF: in the name of any MEMBER.

To Whom it is Available:

1. Individual (resident or non-resident, Indian Citizen or foreign citizen) : In case an individual is taking the deduction, the medical insurance policy can be taken in the name of any of the following or jointly in the name of following:

  • the taxpayer
  • spouse of the taxpayer
  • parents:  Parents need not be dependent on the Assessee and parents of a spouse are also covered.
  • Dependent children (i.e. legitimate or legally adopted children) of the taxpayer: – Children above 18 years, if employed, can not be covered. Male children, if not employed, but a bonafide student can be covered up to age of 25 years. Female children, if not employed, can be covered until the time she is married.

2. HUF(Hindu undivided Family may be resident or non-resident) : In case a HUF is taking the deduction, the medical insurance policy can be taken in the name of any member of the family.

Deduction on account of medical expenditure shall be allowed only when it is incurred on the health of the aforementioned persons who are very senior citizens.

Very senior citizen’ means an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year.

In addition to deduction u/s, 80C, 80CC and 80CCD,: – This is an additional deduction available which do not include deduction u/s 80C, 80CCC and 80CCD for which overall limit is Rs. 1,50,000

Mode of payment: The premium may be paid by any mode of payment other than cash. Please note, prior to 1st April 2009, premium payment was required to be done only by cheque. Credit card or other online payment mechanism were not allowed. Now all payment modes except cash payment are accepted. However w.e.f from A.Y. 2013-14 it is provided that expenses on preventive checkups can be incurred in cash too

Please note that with effect from Y. 2016-17 deduction under section 80D is eligible on Medical expenditure incurred by assessee, being individual/HUF on the health of a very senior citizen person provided that no amount has been paid to effect or to keep in force an insurance on the health of such person which is subject to overall limit of deduction under section 80D

Partly contribution: If part payment is done by you and part payment by the parent, both can claim deduction to the extent of their contribution subject to maximum allowed but amount should be paid directly to insurance company and paid through mode other than by cash.  However w.e.f from A.Y. 2013-14 it is provided that expenses on preventive checkups incurred in cash also eligible for deduction.

Sum Insured: Minimum sum insured shall be Rs 50,000/- and can be increased in multiples of Rs 25,000/-upto Rs 5 lacs.  The sum insured must be identical for primary insured and the dependents. However, the children may be covered for 50% Sum Insured as per 4 above.

Description Eligible Expense or Medical Insurance Premium paid in respect of Total Deduction under Sec. 80D
Self, Spouse & Dependent Children Parents (whether dependent or not)
No-one has attained the age of 60 years
A.Y. 2016-17 Rs. 25,000 Rs. 25,000 Rs. 50,000
A.Y. 2015-16 Rs. 15,000 Rs. 15,000 Rs. 30,000
Assessee and his family is less than 60 years & parents are above 60 years of age
A.Y. 2016-17 Rs. 25,000 Rs. 30,000 Rs. 55,000
A.Y. 2015-16 Rs. 15,000 Rs. 20,000 Rs. 35,000
Assessee and his parents have attained the age of 60 years and above
A.Y. 2016-17 Rs. 30,0000 Rs. 30,0000 Rs. 60,000/-
A.Y. 2015-16 Rs. 20,000 Rs. 20,000 Rs. 40,000

For HUF Limits

Eligible Expense or Medical Insurance Premium paid in respect of Total Deduction under Sec. 80D
A.Y. 2016-17 A.Y. 2015-16
Any one or more of The Member of HUF is senior Citizen Rs. 30,000 Rs. 20,000
None of The Member of HUF is senior Citizen Rs. 25,000 Rs. 15,000

Senior Citizen : Means who is at least of 60 year of age or more at any time during the previous year.

Conditions to be Satisfied:

  • Payment shall be made out of income chargeable to tax.
  • The maximum deduction allowable in respect of expenditure on preventive health check-up of self, spouse, dependent children and payments would be Rs 5,000/-(This amount can be paid in cash).
  • Payment should be done in any mode other than cash.
  • Payment shall be as per GIC scheme approved by Central Government or any Other Insurer as approved by IRDA.

Example

1. An individual assessee pays (through any mode other than cash) during the previous year medical insurance premia, out of his taxable income, as under:

(i) Rs 19,000/- to keep in force an insurance policy on his health and on the health of his wife and dependent children;

(ii) Rs 33,000/- to keep in force an insurance policy on the health of his parents.

He will be allowed a deduction of Rs 39,000/- (Rs. 19,000/- + Rs. 20,000/-) if neither of his parents is a senior citizen. However, if any of his parents is a senior citizen, he will be allowed a deduction of Rs 49,000/- (Rs.19,000/- + Rs.30,000/). Whether the parents are dependent or not, is not a consideration for deciding the deduction under the new provisions.

Further, in the above example, if cost of insurance on the health of the parents is Rs 33,000/-, out of which Rs 18,000/- is paid (by any non-cash mode) by the son and Rs 15,000/- by the father ( who is a senior citizen), out of their respective taxable income, the son will get a deduction of Rs 18,000/- ( in addition to the deduction of Rs 19,000/- for the medical insurance on self and family) and the father will get a deduction of Rs 15,000/-.

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