What Is Section 80D And How Can You Save Taxes With It? EXPLAINED

Section 80D of the Income Tax Act allows taxpayers to claim deductions from their taxable income on expenses related to healthcare made in the fiscal year

As you start planning your financial goals for the new fiscal year, you must be researching on how to better categorise your income and save on your tax liabilities. The income tax laws in India not only encourage individuals to save on taxes but also promote healthcare and preventive medical checkups in the public. One such provision under the Income Tax Act is Section 80D, which pushes taxpayers to prioritise their health, go for regular checkups, and save tax liabilities on their income at the same time. 

Section 80D

Section 80D of the Income Tax Act allows taxpayers to claim deductions from their taxable income on medical insurance premiums paid in the fiscal year. The deduction is also valid for purchases made on top-up health plans and critical illness plans. 

The deductions include any premiums paid on insurance policies for self, spouse, dependent children, and parents. Preventive health check-ups for self and dependents can also be claimed for deduction under this section. 

Eligibility

To be eligible to file deductions under this section, the taxpayer needs to be either an individual or a Hindu Undivided Family (HUF). A company cannot file for deductions under Section 80D.

Important Points To Note 

• The claims filed under Section 80D are over and above the Rs 1.5 lakh ceiling on deductions under Section 80C.
• These deductions can only be filed if the taxpayer opts for the old tax regime.
• Preventive health check-ups have a ceiling of Rs 5,000 for deductions and this is included in the overall limit of Rs 25,000 or Rs 50,000 depending on your age.
• If you have a disabled dependent, you can claim deductions for their medical expenses under Section 80DD as it allows you a higher ceiling for your claims. 
• Any claims made for medical expenses apart from health insurance premiums need to be backed by valid receipts and prescriptions from registered medical practitioner.
• Any contributions made to the Central Government Health Scheme (CGHS) or any such notified scheme can be filed as a tax deduction claim, with a limit of Rs 25,000. These contributions cannot be made on behalf of parents. 
• Individuals aged 60 years and above can claim a deduction of upto Rs 50,000 on medical expenses incurred even if they don’t have any health insurance. 
• Cash payment is allowed only for preventive health check-ups. All other premiums and other medical expenses covered under the section need to be paid originally in any mode other than cash.

Claim Limit

The maximum deduction that can be claimed under Section 80D annually depends on the age of the individual. For people under 60 years of age, a deduction of up to Rs 25,000 per fiscal year can be filed, while the upper limit for individuals aged 60 years and above stands at Rs 50,000 per financial year. To better understand exactly how much you can claim under the section for self and other dependents, let’s take a look at this table.

Covered In Policy	Deductions For Self And Family	Deductions For Parents	Preventive Health Checkups	Overall Deduction
Self & Family ( Under 60 Years)	Rs 25,000	-	Rs 5,000	Rs 25,000
Self, Family & Parents (Under 60 Years)	Rs 25,000	Rs 25,000	Rs 5,000	Rs 50,000
Self, Family (Under 60 Years) & Parents (Above 60 Years)	Rs 25,000	Rs 50,000	Rs 5,000	Rs 75,000
Self, Family & Parents (All Above 60 Years)	Rs 50,000	Rs 50,000	Rs 5,000	Rs 1,00,000

Advantages Of Section 80D

• By filing claims under this section, you can lower your tax liability and increase your savings. 
• The provision promotes healthcare and encourages individuals to go for preventive health checkups. 
• Senior citizens get help in managing their medical expenses, irrelevant of whether they have an insurance scheme or not.