Claiming Section 80D Deductions for Health Insurance and Its Impact on Your ITR Filing
Rashmita Choudhary- 2 days ago
- 8 min read
Section 80D of the Income Tax Act offers a valuable tax benefit for taxpayers who pay health insurance premiums for themselves, their families, and their parents. It allows individuals and Hindu Undivided Families (HUFs) to reduce their taxable income by the amount of health insurance premiums they have paid during the financial year. This deduction is available under the old tax regime, and understanding how to claim it correctly can significantly lower your tax liability. This section covers various aspects of Section 80D, including eligibility, deduction limits, and the filing process. By making use of this deduction, taxpayers can save more money while ensuring the financial security of their family’s health.
Table of Contents
How to claim section 80D deductions for health insurance?
To claim Section 80D deductions for health insurance, you need to pay premiums for policies covering yourself, your spouse, dependent children, and parents. The deduction is available under the old tax regime and can be claimed by entering the eligible amount under the "Deductions under Chapter VI-A" section while filing your Income Tax Return (ITR). For premiums paid for self, spouse, and children, the maximum deduction is ₹25,000 (or ₹50,000 for senior citizens), and for parents, the deduction is an additional ₹25,000 (or ₹50,000 for senior citizens). Make sure to keep receipts and documentation, though you don’t need to upload them with your ITR.
What is Section 80D?
Section 80D provides taxpayers with a deduction for premiums paid on health insurance policies for themselves, their spouse, dependent children, and parents. The section aims to encourage people to take proactive steps towards securing their health through insurance while also offering a way to save on taxes. The key benefit of this deduction is that it allows taxpayers to reduce their taxable income, which directly lowers their tax liability. However, the deduction is available only under the old tax regime, and taxpayers opting for the new tax regime forgo all deductions, including Section 80D.
Deduction Limits Under Section 80D
Section 80D allows for deductions based on the premiums paid, subject to certain limits. The amount of deduction available depends on the age of the insured and whether the policyholder or the insured is a senior citizen.
Insured Persons | Age Below 60 | Age 60 or Above | Maximum Deduction (per year) |
Self, Spouse, Dependent Children | ₹25,000 | ₹50,000 | ₹25,000 or ₹50,000 |
Parents (if insured by you) | ₹25,000 | ₹50,000 | ₹25,000 or ₹50,000 |
Preventive Health Check-up | Up to ₹5,000 | Up to ₹5,000 | Included in above |
Maximum Total Deduction | - | - | Up to ₹1,00,000 |
Self, Spouse, and Dependent Children: If you, your spouse, or dependent children are under the age of 60, you can claim a maximum deduction of ₹25,000 per annum. If they are senior citizens (aged 60 or above), this limit increases to ₹50,000.
Parents: If you also insure your parents, you can claim an additional deduction. For parents below 60, the limit is ₹25,000, and for senior citizen parents, it is ₹50,000.
Preventive Health Check-ups: Expenses incurred for preventive health check-ups are allowed up to ₹5,000 within the overall limit of Section 80D. These check-ups can be claimed as part of the total premiums paid, and the amount is included in the total deduction limit.
Maximum Deduction: If both you and your parents are senior citizens, the total deduction can go up to ₹1,00,000 in a year.
Eligibility and Key Points for Claiming Section 80D
To claim Section 80D, certain eligibility criteria and important points need to be kept in mind:
Eligibility: The deduction is available only to individuals and Hindu Undivided Families (HUFs). It cannot be claimed by companies, trusts, or partnership firms.
Eligible Premiums: You can claim the deduction for premiums paid on health insurance policies for yourself, your spouse, dependent children, and parents. This includes premiums for critical illness or any other type of health insurance coverage.
Payment Mode: Premiums must be paid by non-cash methods, such as cheque, credit card, or electronic transfer. The only exception is preventive health check-ups, which can be paid in cash.
Senior Citizens: If your parents are senior citizens (60 years or older), you can claim a higher deduction for premiums paid on their behalf. Additionally, if they don’t have health insurance, you can claim medical expenses incurred for them up to ₹50,000.
Tax Regime: Section 80D deductions are only available under the old tax regime. Taxpayers who opt for the new tax regime cannot claim this deduction, as the new tax regime offers lower tax rates but without any exemptions or deductions.
How to Claim Section 80D While Filing ITR
Claiming Section 80D deductions during ITR filing is straightforward. Follow these steps to ensure you claim the correct amount:
Choose the Old Tax Regime: When filing your ITR, ensure that you choose the old tax regime, as the Section 80D deduction is not available under the new tax regime.
Documentation: Keep all relevant documentation, such as receipts for premiums paid, policy documents, and bills for health check-ups. While you don’t need to upload these documents with your ITR, it’s essential to retain them for verification if requested by the Income Tax Department.
Filling Out the ITR Form: When filling out the ITR form, enter the eligible amount under the "Deductions under Chapter VI-A" section. Ensure the deduction is entered for both self and for parents if applicable. This will reduce your taxable income and, consequently, your tax liability.
Impact of Section 80D Deduction on Your ITR Filing
The Section 80D deduction directly impacts your ITR filing by reducing your taxable income. By claiming health insurance premiums under Section 80D, your taxable income will be reduced, which in turn lowers your overall tax liability. This ensures you pay the least amount of tax due based on your income. It also guarantees that you are in compliance with tax regulations, as the proper deduction reduces the chance of scrutiny by the Income Tax Department. However, it is crucial to remember that the deduction is only available under the old tax regime, so those opting for the new regime forgo this benefit.
TaxBuddy’s Role in Simplifying Section 80D Deductions
TaxBuddy makes the process of claiming Section 80D deductions simple and efficient by offering:
Automatic Deduction Calculations: TaxBuddy helps you calculate the maximum possible deduction you are eligible for based on your premiums and other factors.
Document Management: Keep your health insurance documents organized with TaxBuddy’s easy-to-use platform, ensuring that you have them readily available for ITR filing and any future verification.
Expert Assistance: If you are unsure about the process or need help with filing your return, TaxBuddy’s expert-assisted plans can guide you through the entire filing process, ensuring that you claim all eligible deductions, including Section 80D.
Conclusion
Section 80D deductions provide a great opportunity to save on taxes while securing the health of yourself and your loved ones. By understanding the limits, eligibility, and the filing process, you can ensure you maximize your benefits. Whether you are claiming deductions for premiums paid for yourself, your spouse, children, or parents, TaxBuddy can simplify the process and guide you through every step. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1: Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
Yes, TaxBuddy offers both self-filing and expert-assisted plans. You can choose the self-filing option if you prefer to file your taxes on your own with guidance from TaxBuddy's tools. Alternatively, the expert-assisted plan provides personalized assistance from a qualified tax expert to ensure your ITR is filed correctly, with all applicable deductions like Section 80D fully utilized.
Q2: Which is the best site to file ITR?
TaxBuddy is one of the best platforms to file your ITR, thanks to its AI-driven tools, easy-to-use interface, and expert support. The platform guides you step-by-step, ensuring all deductions are claimed accurately, reducing the chance of errors. It also allows you to file directly with the Income Tax Department, ensuring your filing is timely and accurate.
Q3: Where to file an income tax return?
You can file your income tax return either directly on the official Income Tax Department portal (incometax.gov.in) or use a third-party platform like TaxBuddy for a more streamlined and guided experience. TaxBuddy helps with automatic deductions, document management, and offers expert assistance, making the filing process much more convenient and accurate.
Q4: Can I claim Section 80D for health insurance premiums paid for my in-laws?
No, Section 80D deductions are only available for premiums paid on policies for yourself, your spouse, dependent children, and parents. Premiums paid for in-laws do not qualify for this deduction under the Income Tax Act.
Q5: Can I claim both Section 80C and Section 80D deductions?
Yes, you can claim both Section 80C and Section 80D deductions. The limit under Section 80C is ₹1.5 lakh for investments in specified instruments like PPF, EPF, and life insurance premiums, while Section 80D allows separate deductions for health insurance premiums. These two deductions are independent of each other, and you can claim both.
Q6: What if I pay for my parents’ health insurance and they are senior citizens?
If your parents are senior citizens (aged 60 years or older), you can claim an additional deduction of up to ₹50,000 for health insurance premiums paid for them. This is in addition to the deduction available for yourself, your spouse, and children.
Q7: Is preventive health check-up included in Section 80D?
Yes, preventive health check-ups are included under Section 80D, but the expenses are subject to a ₹5,000 limit. This amount is part of the overall deduction limit for yourself, your family, and parents. It's important to note that preventive health check-ups can be paid in cash, unlike other premiums which must be paid through non-cash modes.
Q8: Can I claim Section 80D if I pay premiums in cash?
No, premiums for health insurance (except for preventive health check-ups) must be paid through non-cash modes such as cheque, credit card, or bank transfer to qualify for the deduction under Section 80D. However, preventive health check-ups can be paid in cash and still be eligible for deduction.
Q9: How does TaxBuddy help with Section 80D deductions?
TaxBuddy helps by automating the calculation of Section 80D deductions, ensuring you claim the maximum eligible amount for premiums paid on health insurance for yourself, your family, and parents. It also provides reminders for submitting relevant documents, helps manage your health insurance receipts, and guides you through the filing process, making it easier to claim your deductions accurately.
Q10: Can I claim Section 80D deductions under the new tax regime?
No, Section 80D deductions are only available under the old tax regime. If you opt for the new tax regime, you will forgo this deduction, as the new regime offers reduced tax rates but no exemptions or deductions.
Q11: What documents are required to claim Section 80D deduction?
To claim Section 80D, you need to keep the receipts for premiums paid on health insurance policies, along with any medical check-up bills. While these documents do not need to be submitted with your ITR, they should be retained for future reference in case the Income Tax Department requests them for verification.
Q12: How much deduction can I claim under Section 80D for my health insurance premiums?
Under Section 80D, the deduction you can claim depends on the age of the insured person. For health insurance premiums for yourself, your spouse, and dependent children, you can claim up to ₹25,000 (₹50,000 for senior citizens). If you also insure your parents, you can claim an additional ₹25,000 (₹50,000 for senior citizen parents). This brings the total possible deduction to ₹1,00,000 if both you and your parents are senior citizens.
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