Nikhil Surana

 1. Introduction

Section 80D of the Income-tax Act seeks to provide deduction of INR 15,000 to a taxpayer who has incurred expenditure on health insurance of himself, spouse, and dependent children. A further, deduction of INR 15,000 is provided, if the expenditure is incurred on behalf of the parents. The quantum of deduction is enhanced to INR 20,000 for each category, in case any of the persons specified above is a senior citizen i.e. 60 years or more at anytime during the year under consideration.

As it’s a famous saying that prevention is better than cure, the provision of section 80D of the Act were amended by Finance Act 2012, to include the expenditure incurred on preventive health checkups under aforesaid limit of INR 15,000 or INR 20,000 as the case maybe. Read- S. 80D Deduction for expenditure on preventive health check-up not exceeding Rs. Five Thousand 

2. Controversy

Subsection (2A) of section 80D lays an additional bar to restrict the maximum amount to be spent on preventive health checkups to INR 5,000. The text of sub-section (2A) of section 80D of the Act has been reproduced below in verbatim:

(2A) Where the amounts referred to in clauses (a) and (b) of sub-section (2) are paid on account of preventive health check-up, the deduction for such amounts shall be allowed to the extent it does not exceed in the aggregate five thousand rupees.

On a studied scrutiny of sub-section (2A) two divergent views are possible:

i. The deduction of amount spent on preventive health checkup cannot exceed INR 5,000 individually i.e. to say INR 5,000 for individual, spouse, dependent children and separate limit of INR 5,000 for parents; or

ii. The deduction of amount spent on preventive health checkup cannot exceed INR 5,000 in toto i.e. to say that the amount spent for individual, spouse, dependent children and parents;

Arguments in support of view (i)

Medical InsuranceOn a critical perusal of the language used in sub-section (2A), it may be observed that the word ‘amounts’ and ‘such amounts’ has been used. Therefore, one may argue that the intention of the Act by using word ‘amounts’ and not just ‘amount’ indicate that a reference has been made to both the amounts (i.e. of INR 15,000 each) mentioned in clause (a) and (b) sub-section (2) of section 80D of the Act. Accordingly, the upper threshold limit of INR 5,000 has been provided individually for both the limits provided under clause (a) and (b) of sub-section (2) of section 80D of the Act. Further, language used in the CBDT circular 17/2014 dated 10th December, 2014 also fortifies this interpretation. The relevant extract of the same has been reproduced below:

5.5.5 Deduction in respect of health insurance premia paid, etc. (Section 80D) Section 80D provides for deduction available for health insurance premia paid, etc. which is calculated as under:

Sl No Persons for whom payment made Nature of payment Mode of payment Allowable Deduction (in Rs)
1 Employee or his family * the whole of the amount paid to effect or to keep in force an insurance on the health of the employee or his family or
* any contribution made to the CGHS or such other scheme as may be notified by Central Government (Finance Act 2013)
* any payment on account of preventive health check-up of the employee or family, [restricted to Rs 5000/-; cash payment allowed here]
any mode other than cash Aggregate allowable is Rs 15,000/ {For Senior Citizens it is Rs 20000/-}.
2 Parent or Parents of employee * the whole of the amount paid to effect or keep in force an insurance on the health of the parent or parents of the employee or
* any payment made on account of preventive health check-up of the parent or parents of the employee [restricted to Rs 5000/-; cash payment allowed here]
any mode other than cash Aggregate allowable is Rs 15,000/ {For Senior Citizens it is Rs 20000/-}

 Arguments in support of view (ii)

On the flip side one may argue that sub-section (2A) also uses the phrase ‘does not exceed in the aggregate five thousand rupees’ and accordingly the amount incurred on preventive health check-up of individual, spouse, dependent children and parents will be restricted to INR 5,000 in aggregate. Further, a reference to memorandum explaining the Finance Bill, 2012 also suggests the same. The relevant extract of memorandum explaining the Finance Bill, 2012 has been reproduced below:

‘However, the proposed deduction on account of expenditure on preventive health check-up (for self, spouse, dependent children and parents) shall not exceed in the aggregate Rs. 5,000’.

However, as an counter argument one may say that the word ‘aggregate’ has been used since the payment can be made for more than one person under both the limits as provided under clause (a) and (b) of sub-section (2) of section 80D of the Act i.e. aggregate INR 5,000 for individual, spouse and dependent children and again aggregate INR 5,000 for father and mother. Further, the language used in the memorandum explaining the Finance Bill is not to be interpreted in a strict sense and the language used under the Act will always prevail.

Considering the aforesaid divergent views, it is likely that CBDT will bring a clarification in this regard, so that the tax payer can appropriately plan there expenditure on health insurance and preventive health care.

Recommended Post-1.  Section 80D- Hike in Deduction Limit for Mediclaim  2. Deduction U/s 80D for Mediclaim Premium to Individual, HUF, Senior Citizens

(Author is working as a Manager (Taxation) with Lodha & Co., Delhi)

Image courtesy of digitalart at FreeDigitalPhotos.net

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15 responses to “Section 80D: Threshold of Rs. 5,000 on preventive health checkup & controversy involved”

  1. ashok says:

    How to get a benefit of Rs.5000/- for preventative health check up, what documents are required.

  2. Rahul says:

    How preventive health check up is different from prescribed test?

  3. Kumari says:

    Dear Sir
    I am a diabetic and thyroid patient and under medication. Can I claim my blood test like h1bac etc bill amount u/ s80D preventive health check up?
    I don’t have any health insurance policy in my name. Please reply as early as possible.

    Kumari

  4. Geetha R says:

    How do I prove that a test is not prescribed by a doctor? If the reports state the test referred by as ‘Self’, will that suffice. I had done a master checkup and some related tests on my own as prevention in Sep 2015. The assessment for this year 2016-17 is also over and refund received. Can I revise and claim this deduction now? I may not have the bill but I have all the reports. Can I claim now and what will the procedure be? Kindly advise.

    Also this year I have done some tests on my own but they are not master health checkups. I presume they should also qualify. Please confirm.

    Thank you

  5. sudhakar a sutar says:

    i have two receipt of Preventive Health Check-Up for Spouse /parents, related to minimal check requested by doctor. This expenses can claim in 80D.

  6. KURESH says:

    do we need to support any documentary evidence against preventive medical chek up expenses claimed under section 80D

  7. Girish Kilpady says:

    Travel Health Insurance (90 days) premium – is it permitted to be deducted under 80D?

  8. Aadish Jain says:

    Limit- 5000/- Format is not necessary. You need to spent amount on preventive health checkup..Also allowed if paid in cash.

  9. Dimple Sahu says:

    I have not taken any health insurance and I have paid in cash for Preventive Health Checkup for self and family. Can I claim for deduction?

  10. R.Prabhakar Rao says:

    Preventive medical check up maximum limit and the format we need.

  11. Parveen G Tolani says:

    Hi,
    My Q is
    if i want to take a benefit of Rs.5000/- for preventative health check up, what documents are required to submit to employer for claiming deduction, p
    Please also explain that how can i opt for this check up???

    Thanks

  12. Manoj Jindal says:

    at the end Finally this is not clarify Rs. 5000/- each is allowable for Individual like self,spouse,children or aggregate for all is rs. 5000/-.

  13. B.Chackrapani Warrier says:

    Read. It’s a vexed question.

  14. Dr A Subrahmanyam says:

    1) If premium paid for mediclaim policy, the limit is 15,000; or
    2) if cash paid by the assessee on expenses incurred for health check-up and claims deduction, the restriction of such expenses upto 5,000

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