Deductions available to senior citizens in respect of health insurance premium and medical treatment

Section 80D, inter-alia, provides that a deduction upto Rs 30,000/- shall be allowed to an assessee, being an individual or a Hindu undivided family, in respect of payments towards annual premium on health insurance policy, or preventive health check-up, of a senior citizen, or medical expenditure in respect of very senior citzen. It is proposed to amend section 80D so as to raise this monetary limit of deduction from Rs 30,000/- to Rs 50,000/-.

In case of single premium health insurance policies having cover of more than one year, it is proposed that the deduction shall be allowed on proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit. .

These amendments will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.

Extract of Clause 24 of Finance Bill 2018

Clause 24 of the Bill seeks to amend section 80D of the Income-tax Act relating to deduction in respect of health insurance prem ia.

The said section, inter alia, provides that for medical insurance or preventive health check-up of a senior citizen, deduction of thirty thousand rupees shall be allowed. Further, in the case of very senior citizens, the said section also provides for a deduction of medical expenditure within the overall limits of thirty thousand rupees.

It is proposed to amend the said section so as to provide that the deduction of fifty thousand rupees in aggregate shall be allowed to senior citizens in respect of medical insurance or preventive health check-up or medical expenditure.

It is further proposed to provide that where an amount is paid in lump sum in the previous year to effect or to keep in force an insurance on the health of a person specified therein for more than a year, then, subject to the provisions of this section, there shall be allowed for each of the relevant previous years, a deduction equal to the appropriate fraction of the amount.

It is also proposed to define the expressions “appropriate fraction”and”relevant previous years”.

These amendments will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 201 9-2020 and subsequent years.

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