Maximizing Tax Deductions for Health Insurance and Education Loans in Your ITR Filing

Deductions under Section 80D and Section 80E of the Income Tax Act offer powerful ways to reduce taxable income. Section 80D supports taxpayers who invest in health insurance for themselves and their families, while Section 80E eases the financial burden of interest payments on education loans. Together, these provisions reward individuals who prioritize health and education. However, these deductions are available only under the old tax regime. Understanding their limits, applicability, and documentation can help you make the most of them during your ITR filing for FY 2024–25.

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Table of Contents

• Tax Deductions for Health Insurance under Section 80D

• Is Section 80D Deduction Allowed in New Tax Regime?

• How Section 80D Works in the Old Tax Regime

• Tax Deductions for Education Loan Interest under Section 80E

• Is Section 80E Deduction Available in New Tax Regime?

• How Section 80E Works in the Old Tax Regime

• Documentation Required to Claim Section 80D and 80E Deductions

• Tips to Maximize Benefits Under Section 80D and 80E

• Recent Policy Updates on Health and Education Tax Benefits

• Conclusion

• Frequently Asked Questions

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Tax Deductions for Health Insurance under Section 80D

Section 80D of the Income Tax Act allows taxpayers to claim deductions on premiums paid for health insurance policies, which is an excellent way to reduce taxable income while securing health coverage. Here’s a breakdown of the different categories under Section 80D:

1. Self, Spouse, and Dependent Children (Under 60 Years):Taxpayers can claim a deduction of up to ₹25,000 for premiums paid on health insurance policies covering themselves, their spouse, and dependent children. This deduction helps individuals and families secure affordable health coverage.

2. Parents (Under 60 Years):In addition to the ₹25,000 claim for self and family, taxpayers can also claim another ₹25,000 if premiums are paid for their parents, provided the parents are under 60 years of age.

3. Senior Citizens (Above 60 Years):If either the taxpayer or the parents are senior citizens, the deduction limit increases to ₹50,000 each for self/family and parents. This provision recognizes the increased healthcare needs and higher insurance premiums for senior citizens.

4. Maximum Deduction for Senior Citizens:If both the taxpayer and their parents are senior citizens (above 60 years), the maximum deductible amount goes up to ₹1,00,000. This deduction can be split between the individual’s health insurance and their parents’ insurance premiums.

5. Preventive Health Check-ups:Taxpayers can also claim up to ₹5,000 for preventive health check-ups within the overall limit of ₹25,000/₹50,000. Preventive health check-ups play a vital role in detecting diseases early and reducing long-term healthcare costs.

6. Medical Expenses for Senior Citizens:In cases where no health insurance is available for senior citizens, taxpayers can claim actual medical expenses up to ₹50,000 for treating senior citizen parents. This allows individuals to benefit from tax deductions even without having a health insurance policy for their senior parents.

7. Mode of Payment:The premiums must be paid via non-cash methods, such as credit/debit card or bank transfer. However, for preventive health check-ups, the payment can be made in cash.

This section significantly reduces the financial burden on individuals and families while ensuring that they are covered for unexpected health-related expenses.

Is Section 80D Deduction Allowed in New Tax Regime?

No, Section 80D deductions are not available for individuals opting for the new tax regime. The new tax regime, introduced in the Union Budget, offers lower tax rates but removes most exemptions and deductions, including the health insurance deduction under Section 80D. If you want to benefit from deductions under Section 80D, you must continue filing under the old tax regime.

How Section 80D Works in the Old Tax Regime

The old tax regime, with its numerous exemptions and deductions, provides an opportunity for taxpayers to reduce their taxable income significantly. Under Section 80D in the old tax regime, you can claim the following deductions:

1. Self + Family (Below 60): ₹25,000This covers health insurance premiums paid for yourself and your immediate family (spouse and children).

2. Parents (Below 60): ₹25,000This is applicable if premiums are paid for the health insurance of your parents, provided they are under 60 years of age.

3. Self + Family (60+): ₹50,000If the taxpayer or their family members are senior citizens, the allowable deduction is ₹50,000.

4. Preventive Health Check-up: ₹5,000The deduction of ₹5,000 for preventive health check-ups is included within the overall limit.

When you pay premiums for both your family and parents, you can claim the maximum allowable deduction of ₹1,00,000 under Section 80D.

Tax Deductions for Education Loan Interest under Section 80E

Section 80E provides a valuable deduction for individuals who have taken a loan for higher education. Unlike other sections where only principal repayments are eligible for deductions, Section 80E focuses on interest paid on the loan.

Here are the key features of Section 80E:

1. Deduction on Interest Only: Under Section 80E, only the interest paid on the education loan is eligible for deduction. The principal amount does not qualify for deductions.

2. Eligible Borrowers: The loan must be taken for higher education of the taxpayer, their spouse, children, or a legally dependent ward. The loan can be used for studies in India or abroad, and there is no restriction on the type of course pursued (vocational courses, degree programs, etc.).

3. Financial Institution Requirement: The loan must be obtained from a recognized financial institution or an approved charitable institution, ensuring that the loan is legitimate and traceable.

4. Deduction Period: The deduction is available for up to 8 years from the year of the start of the repayment. For instance, if you begin repaying your loan in the year 2023, the deduction can continue until 2031.

5. No Cap on Deduction: There is no upper limit on the amount of interest that can be deducted. The entire interest paid in a given financial year can be claimed as a deduction under Section 80E.

This section is beneficial for individuals pursuing higher education or those supporting their children’s or spouse’s education. It offers significant relief for taxpayers dealing with long-term loan repayments.

Is Section 80E Deduction Available in New Tax Regime?

Similar to Section 80D, Section 80E deductions are also unavailable under the new tax regime. To avail the benefits of Section 80E, taxpayers must opt for the old tax regime while filing their returns.

How Section 80E Works in the Old Tax Regime

Under the old tax regime, Section 80E allows an unlimited deduction for interest paid on an eligible education loan. The deduction period is limited to 8 years from the beginning of the repayment. The primary advantage of this section is that there is no cap on the amount of interest that can be claimed, making it an attractive option for individuals who have substantial education loans.

For example, if a taxpayer pays ₹80,000 annually in education loan interest for 6 years, the entire ₹4.8 lakh will be deductible across those 6 years, reducing their taxable income and resulting in lower tax liability.

Documentation Required to Claim Section 80D and 80E Deductions

To claim deductions under Section 80D and 80E, you will need to maintain the following documentation:

1. For Section 80D (Health Insurance Premiums):

2. Premium payment receipts

3. Health insurance policy copy

4. For senior citizens without health insurance, medical bills showing the expenses incurred on their treatment

5. For Section 80E (Education Loan Interest):

6. Loan interest certificate from the financial institution

7. Loan sanction letter

8. Details of the borrower and the relationship to the student

Ensure you keep all these records organized and ready when filing your returns to avoid any delays or disallowance of deductions.

Tips to Maximize Benefits Under Section 80D and 80E

Here are some practical tips to maximize your deductions under Section 80D and Section 80E:

1. Cover Both Family and Parents under Health Insurance: To optimize the deduction under Section 80D, it’s beneficial to cover both yourself and your parents under health insurance. This allows you to claim up to ₹1,00,000 in health insurance premiums.

2. Utilize Preventive Health Check-up Allowance: Annually, take advantage of the ₹5,000 limit for preventive health check-ups. Not only does it contribute to a healthier lifestyle, but it also reduces your taxable income.

3. Start Repaying Your Education Loan Early: To make full use of the 8-year period for education loan deductions, start repaying your loan as early as possible. This helps you maximize the benefits for the entire duration of the repayment period.

4. Opt for the Old Tax Regime: If you plan to take advantage of deductions under Sections 80D or 80E, it’s important to opt for the old tax regime while filing your ITR. The new regime removes most deductions, including those under these sections.

5. Use Platforms Like TaxBuddy: Filing your taxes with a platform like TaxBuddy can help ensure that you don’t miss any eligible deductions. The platform offers expert guidance, automated data entry, and flags eligible deductions, reducing the chances of errors and disallowances.

   
   

Recent Policy Updates on Health and Education Tax Benefits

As part of ongoing discussions around tax reforms and ease of compliance, several policy-level conversations are gaining momentum, particularly concerning deductions under Sections 80D and 80E. These reforms aim to expand benefits and make it easier for taxpayers to claim legitimate deductions without friction.

1. Extension of Section 80E Deduction Period Beyond 8 Years

At present, Section 80E offers tax deduction on the interest paid for education loans for a maximum of 8 consecutive assessment years, starting from the year in which loan repayment begins. However, many borrowers—especially those with high-interest loans or prolonged education-to-income transitions—find this window inadequate. There’s growing demand among financial experts and taxpayer groups to extend this deduction period to 10 or even 15 years, aligning it with the actual repayment periods of many modern education loans. As education costs rise, such an extension would provide meaningful financial relief over a longer duration.

2. Inclusion of Principal Repayment in Section 80E

Currently, only the interest component of an education loan qualifies for deduction under Section 80E. The principal amount repaid is not eligible for any tax benefit under this section. There’s an active push for legislative change that would allow taxpayers to claim deductions on both principal and interest, similar to the structure under Section 80C for home loans. Including principal repayment would offer a more holistic incentive for investing in higher education, particularly for middle-income families bearing large loan burdens.

3. Increased Awareness Around Preventive Health Check-Ups (Section 80D)

Section 80D allows a deduction of up to ₹5,000 annually for preventive health check-ups, which is currently underutilized due to low public awareness. Government and healthcare industry bodies are promoting campaigns to educate taxpayers about this lesser-known benefit. The aim is to encourage early diagnosis and reduce long-term healthcare costs by incentivizing regular health screenings. Tax advisors and digital platforms like TaxBuddy are also playing a role in flagging this deduction during the ITR process to prevent missed opportunities.

4. Digitization and Simplification of Deduction Documentation

The Central Board of Direct Taxes (CBDT) has been working towards simplifying compliance and digitizing documentation for deduction claims. Proposals include:

• Auto-import of insurance premium and loan interest data directly into ITR forms

• E-verification of deduction-related documents via PAN-linked financial systems

• Centralized access to deduction certificates issued by banks and insurers

If implemented, these steps could eliminate the need for physical receipts or manual entries, reducing the chance of errors and speeding up processing.

Conclusion

Deductions under Section 80D and 80E are often overlooked, yet they offer substantial tax relief. Whether you're safeguarding your family’s health or investing in education, these provisions help reduce liability efficiently. For a simplified, secure, and hassle-free experience, it’s advisable to use a trusted platform. For anyone looking for assistance in tax filing, I highly recommend you download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.

Frequently Asked Questions (FAQs)

Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?

Yes, TaxBuddy provides flexibility for all types of taxpayers. If you're comfortable handling your taxes independently, you can use their intuitive self-filing platform. Alternatively, if you're looking for guidance, TaxBuddy’s expert-assisted plans ensure your return is filed accurately, with all eligible deductions—including Sections 80D and 80E—optimized by tax professionals.

Q2. Which is the best site to file ITR?

The best site depends on the level of support you need. While the official Income Tax Department website is suitable for experienced users, platforms like TaxBuddy stand out due to their AI-driven tax optimization, automatic deduction checks, and expert assistance. These features are especially helpful when dealing with complex deductions like education loans and health insurance.

Q3. Where to file an income tax return?

Income tax returns in India can be filed on the official Income Tax e-filing portal: incometax.gov.in. However, if you want a more guided, user-friendly, and error-free experience, especially when dealing with deductions under Sections 80D and 80E, platforms like TaxBuddy offer a more seamless option—both via web and mobile.

Q4. Can I claim both Section 80D and 80E in the same year?

Yes, you can claim deductions under both Section 80D and Section 80E in the same financial year, provided you qualify for each. Section 80D allows deductions on health insurance premiums, while Section 80E covers interest paid on education loans. Both deductions are independent and can be claimed simultaneously under the old tax regime only.

Q5. Is preventive health check-up covered under Section 80D?

Yes. Preventive health check-ups for self and family can be claimed up to ₹5,000 annually within the overall Section 80D limit. This includes check-ups paid in cash, unlike health insurance premiums which must be paid digitally. The check-up deduction is part of the ₹25,000/₹50,000 total and not an additional benefit.

Q6. Can I claim Section 80D for my in-laws?

No, deductions under Section 80D are limited to payments made for health insurance premiums of the taxpayer, spouse, dependent children, and parents. Premiums paid for in-laws are not eligible for deduction, even if you bear their medical expenses. This restriction applies even if they live with you or are financially dependent.

Q7. Is there a cap on the amount claimable under Section 80E?

Section 80E does not impose any upper monetary limit. You can claim the entire interest paid on an eligible education loan during the financial year. However, this benefit is capped to a period of 8 consecutive assessment years starting from the year of repayment, even if interest continues beyond that.

Q8. Can I claim Section 80E for part-time or online courses?

No, Section 80E is applicable only for full-time courses pursued after completing senior secondary education (Class 12 or equivalent). The course must be recognized as higher education, whether pursued in India or abroad. Deductions for interest on part-time or unrecognized courses are not allowed.

Q9. What documents are needed to claim Section 80E?

To claim deduction under Section 80E, you must obtain a loan interest certificate from the financial institution or approved charitable trust from which the education loan was taken. This certificate must clearly show the borrower, the interest paid, and the financial year to which it applies. Keep sanction letters and repayment schedules as additional support.

Q10. Is Section 80D available under the new tax regime?

No, the new tax regime does not permit most deductions and exemptions, including those under Section 80D. If you wish to claim deductions for health insurance premiums or preventive check-ups, you must opt for the old tax regime while filing your ITR.

Q11. What is the maximum deduction I can claim under Section 80D if both I and my parents are senior citizens?

If both the taxpayer and their parents are aged 60 or above, they can claim up to ₹50,000 each for premiums paid. This brings the total maximum deduction under Section 80D to ₹1,00,000. Preventive health check-up expenses are included within this limit, not in addition.

Q12. Can I claim Section 80E deduction if I took an education loan from a friend or relative?

No, loans taken from friends, relatives, or employers do not qualify for the Section 80E deduction. The loan must be availed from a financial institution or an approved charitable institution to be eligible. This ensures legitimacy and proper documentation, which is required during ITR filing.