Section 80D of the IT Act: Achieving Tax Savings on Health Insurance

A Health Insurance Plan is a contract between the insurer and the policyholder, where the health insurance company offers complete coverage to the insured maximum up to the limit of the sum assured. It also offers medical coverage for expenses that are incurred during an emergency or planned hospitalisation.

Eligibility Criteria

Provided below are the parameters to be met to claim deductions u/s 80D:

• It includes individuals and the Hindu Undivided Family (HUF).
• This deduction can be claimed against health insurance plans for self, children and parents.
• The additional riders are also eligible for tax deductions.
• The maximum cumulative deduction benefit is limited to INR 1 lakh. Mentioned are the deduction limits:

Deductions covered u/s 80D

Provided below are the deductions covered u/s 80D:

• Deduction for preventive health check-up payments
• Deduction for contributions made to any government health insurance scheme
• Deduction towards health insurance premium paid for self, children, spouse and parents.
• Deduction for expenses incurred on maintaining the senior citizen's health without any medical insurance

Deductions not covered u/s 80D

Provided below are the deductions not covered u/s 80D:

• If the amount of premium has been paid in cash,
• If the amount of premium has not been paid within the fiscal year.
• If the individual’s company already bears the premium cost under the employee’s group health insurance plan.
• If payment is made for working children, siblings, grandparents or any other relative.

Steps to Get Taxation Benefits u/s 80D in Health Insurance.

Provided below are the steps to avail of the benefits under Section 80d of the Income Tax Act in health insurance:

• Buy a health insurance plan from an insurance company, online, or a broker to avail of tax deductions u/s 80D.
• For proof purposes, maintain records, i.e. policy documents, such as premium payment receipts and policy certificates.
• While filing an income tax return, one has to file a claim to avail of a deduction on the amount of premium paid towards a health insurance plan.
• Submit the income tax return and all supporting documents to the Income Tax Department, either online or by visiting the Income Tax office.

Conclusion

One can get a tax deduction on payments made towards medical insurance premiums in a financial year u/s 80 D of the Income Tax Act. Most of the population in India does not purchase health insurance plans; hence, to encourage them, the government has launched taxation benefits to avail medical insurance u/s 80D.