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ANALYSIS OF SECTION 80D

In case of an Individual

(a).Deduction in respect of insurance premium paid for family: A deduction to the extent of Rs.25,000 is allowed in respect of the following payments :-

(1) Premium paid to effect or keep in force an insurance on the health of self, spouse and dependent children or

(2) Any contribution made to the Central Government Health Scheme or

(3) such other health scheme as may be notified by the Central Government. Contributory Health Service Scheme of the Department of Atomic Energy has been notified by the Central Government.

(4) Deduction in respect of insurance premium for parents: A further deduction up to ₹ 25,000 is allowable to effect or to keep in force an insurance on the health of parents of the assessee. There is no difference that parents are dependent or not.

Quantum of deduction in case of senior citizen: An increased deduction of ₹ 50,000  (instead of ₹ 25,000) shall be allowed in case any of the persons mentioned above is a|senior citizen| /.e., an individual resident in India of the age of 60 years or more at any time during the relevant previous year.

(b) Deduction in respect of payment towards preventive health check-up:

Section 80Dprovides that deduction to the extent of ₹ 5,000 shall be allowed in respect payment made on account of preventive health check-up of self, spouse, dependant children or parents made during the previous year. However, the said deduction of ₹ 5,000 is within the overall limit of ₹ 25,000 or 50,000 specified in (a) and (b) above.

(c) Deduction for medical expenditure incurred on senior citizens:

As a welfare measure towards senior citzens i.e., person of the age of 60 years or more and resident in India, who are unable to get health insurance coverage, deduction of upto would be allowed in respect of any payment made on account of medical expenditure in respect of a such person(s), if no payment has been made to keep in force an insurance on the health of such person(s)

‘Senior citizen’ means an individual resident in India who is of the age of 60 years or more at any time during the relevant previous year. But there is an exception to this rule as provided in circular no.28/2016 dt 27.07.2016 which  states that if any resdent individual whose 60th/80th  birthday falls on 1st April 2022  shall be treated as senior citizen as having completed the age of 60/80 years on 31.03.2022.Inthis case, he/she will be senior citizen for the previous year 2021-22.

(d) Mode of payment:

For claiming such deduction under section 80D, the payment can be made:

(i) by any mode, including cash, in respect of any sum paid on account of preventive health check-up;

(ii) by any mode other than cash, in all other cases.

It is to be noted that only cash payment can be made in cash for preventive health checkup. No other cash payment is being allowed to avail deduction u/s 80D of the Act.  It is further to be noted that no cash payment is allowed even in case of medical expenditure incurred for senior citizen. The payment other than cash  can be by bearer cheque, crossed cheque, etc.

In case of a HUF

Deduction under section 80D is allowable in respect of premium paid to insure the health of any member of the family. The maximum deduction available to a HUF would be ₹25,000 and in case any member is a senior citizen, ₹ 50,000.

Further, the amount paid on account of medical expenditure incurred on the health of any member(s) of a family who would qualify for deduction subject to a maximum of (50,000) provided no amount has been paid to effect or keep in force any insurance on the health of such person(s).

Other conditions

The other conditions to be fulfilled are that such premium should be paid by any mode, other than cash, in the previous year out of his income chargeable to tax. Further, the medical insurance should be in accordance with a scheme made in this behalf by :–

(a) The General Insurance Corporation of India and approved by the Central Government in this behalf; or

(b) Any other insurer and approved by the Insurance Regulatory and Development

Amount of deduction Individual HUF
  Self, Spouse,

Dependent Children

Parents Members
i)Medical Insurance Premium Yes Yes Yes
ii)HG Health scheme Yes x x
iii)Preventive health check-up Yes Yes x
General deduction i+ii+iii Max Rs.25,000 Max Rs.25,000 Max Rs.25,000
+
Additional deduction (When medical insurance policy taken on the life of senior citizen) Age 60 or more. (A) Max Rs.25,000 Max Rs.25,000 Max Rs.25,000
Medical expenditure of senior citizen
(Age 60 or more) & mediclaim premium not paid for such person   (B) Max Rs.50,000 Max Rs.50,000 Max Rs.50,000
Maximum Deduction (A+B) Max Rs.50,000 Max Rs.50,000 Max Rs.50,000

Note: Aggregate payment for preventive health check-up of Self, Spouse, Dependent children & Parents cannot exceed Rs.5,000/-

DEDUCTION WHERE PREMIUM FOR HEALTH INSURANCE IS PAID IN LUMP SUM[SECTION 80D(4A)]

(a) Appropriate fraction of lump sum premium allowable as deduction: In a case where mediclaim premium is paid in lumpsum for more than one year by:

(1) an individual, to effect or keep in force an insurance on his health or health of his spouse, dependent children or parents; of

(2) a HUF, to effect or keep in force an insurance on the health of any member of the family, then, the deduction allowable under this section for each of the relevant previous year would be equal to the appropriate fraction of such lump sum payment.

(b) Meaning of certain terms

Term

Meaning
Appropriate fraction        ‘Appropriate fraction’ means the fraction, the numerator of which is one and the denominator of which is the total number of relevant previous years.
Relevant previous year   The previous year in which such lump sum amount is paid; and the subsequent previous year(s) during which the insurance would be in force.

Q. Rohan is aged 45 years, and his father is aged 75 years. Rohan has taken a medical cover for himself and his father for which he pays insurance premium of Rs 30,000 and Rs 35,000 respectively. What would be the maximum amount he can claim by way of a deduction under Section 80D?

Ans. Rohan can claim up to Rs 25,000, for the premium paid on his policy. As for the policy taken for his father, who is a senior citizen, Rohan can claim up to Rs.50,000. In the given case, the deduction is Rs 25,000 and Rs 35,000. Therefore, the total deduction that he can claim for the year is Rs 60,000.

Deduction in respect of insurance premium is allowable from Gross Total Income of a tax payer who is an Individual (may be resident/non-resident/Indian citizen or foreign citizen) or a HUF (may be resident/non-resident) If

√ Payment made out of income chargeable to tax

√ Payment should be made any mode other than cash (exception is payment for preventive health check-up)

Example: Mr. A(aged 45 years) incurs the following expenditure for family (spouse and dependent children) and parents- father (64 years) and mother (58 years), during the P.Y. 2021-22

  Medical Insurance Premium Preventive health check up Medical Expenditure
For Mr. A and family Rs. 23,000   Rs.5,000
For Father of Mr. A Rs.6,000 Rs.45,000
For Mother of Mr. A Rs. 8,000 Rs.6,500

All the above payments are by cheque

Medical expenditure is deductible only if it is incurred on the health of a senior citizen and who has not taken health insurance. Consequently Rs. 5,000 and Rs. 6,500 are not deductible. Preventive Health check-up can be allowed up to Rs. 5,000. Amount of deduction allowable u/s 80D is as under

  Medical Insurance Preventive Health Check Up Medical Expenditure Total
Mr. A and family Rs. 23,000 Rs.23,000
Parents Rs.8,000 Rs.5,000 Rs.45,000 Rs. 50,000
Total       Rs.73,000

PRACTICAL POINTS WHILE CLAIMING DEDUCTION U/S 80D

(a) Independent children are not covered.

(b) Spouse and Parents are covered, Whether dependent or not.

(c) Parents-In-law and grandparents are not covered.

(d) Overall limit of Rs.50,000 is separate for each category: self/spouse/children; parents; HUF.

(e) payment (other than health check-up) should not be in cash. It can be by bearer cheque, crossed cheque, etc.

(f) Total possible deduction can go upto Rs. 1 lakh. For example, assessee pays health insurance premium of Rs. 50,000/- each for self and his parents and both are senior citizens.

(g) Limit of Rs. 5,000/- for preventive health check is the combined limit (not separately) for self/spouse/children and parents. Bit it is separate for individual assessee and HUF asseessee, Both being two different assessees.

(h) If preventive health check up has been undertaken for both self/spouse/children and parent, overall limit of Rs. 5,000 can be split between the two in a manner so as to maximize the overall deduction u/s 80D.

(i) If health insurance premium is paid for a person who is not a senior citizen and for another who is senior citizen, deduction for non senior citizen can be claimed upto Rs.25,000/- while deduction for senior citizen can be claimed till Rs.50,000/-

(j) Dependent children: Children are said to be dependant if their own resources are not sufficient enough to support them.

(k) Such mediclaim insurance policy should be in accordance with the scheme framed in this behalf by –

  • General Insurance Corporation of India (GIC) & approved by the Central Government (i.e. Mediclaim insurance policy); or
  • Any other insurer who is approved by the Insurance Regulatory and Development Authority.

(l) Payment out of taxable income: The amount must be paid out of income, which is chargeable to tax. However, it is not necessary that such income relates to current year.

(m) Where lumpsum health insurance premium is paid (single premium) covering insurance for more than a year, then, deduction is available on proportionate basis.

(n) For claiming higher deduction ofRs.50,000/- payer need not be a senior citizen but person insured must be a senior citizen.

(o) Senior citizen means an individual resident in India who is of the age of 60 years or more at any time during the relevant previous year.

Example. X, 40 years old, paid following sums by cheque –

Person Insured

Amount
Mediclaim Insurance premium for X 18,000
Mediclaim Insurance premium for Mrs. X (not dependent on X) 5,000
Contribution to the Central Government Health Scheme for Dependent Daughter 3,000
Mediclaim Insurance premium for Son (not dependent on X) 3,000
Contribution to the Central Government Health Scheme for Brother (dependent on X) 1,000
Mediclaim Insurance premium for Mother-in law (dependent on X age 70 years) 900
Mediclaim Insurance premium for Mother (dependent on X age 59 years) 26,500
Mediclaim Insurance premium for Grand parents (dependent on X) 1,600
Mediclaim Insurance premium for Father (not dependent on X age 61 years) 32,000
Contribution to the Central Government Health Scheme for Father 2,000
Total 68,000

Compute deduction available to Mr. X u/s 80

Ans. Computation of deduction u/s 80D available to Mr. X

Person Insured

Notes Amount Amount
X Himself 18,000
Mrs. X Spouse 5,000
Daughter Dependent 3,000
Son Not dependent Nil
Brother Not eligible   Nil
Mother in law Not eligible Nil
Grand parents Not eligible Nil
Qualifying amount 26,000
Restricted to the maximum limit 25,000
Add: Additional deduction for parents
Mother 26,000
Restricted to the maximum limit 25,000
Add: Additional deduction for insurance of Father (a Senior Citizen) 32,000
Add: Contribution to the Central Government Health Scheme for Father (Not eligible) Nil
Qualifying amount 57,000
Restricted to the maximum limit 50,000 50,000
Deduction u/s 80D 75,000

Example. Mr. Ram (38 years) has incurred following expenses:

Particulars Amount
Mediclaim Insurance premium paid for himself 9,000
Mediclaim Insurance premium paid for spouse 8,000
Mediclaim Insurance premium paid for dependent children 6,000
Mediclaim Insurance premium paid for father (62 years) 18,000
Preventive health-check up expenditure for father 6,000
Preventive health-check up expenditure for himself (paid in cash) 4,000

Compute deduction available to Mr. Ram u/s 80D

Ans. Computation of deduction u/s 80D available to Mr. Ram

Particulars Amount Amount
Mediclaim Insurance premium paid for himself 9,000
Mediclaim Insurance premium paid for spouse 8,000
Mediclaim Insurance premium paid for dependent children 6,000
Qualifying amount (A) 23,000
Add: Additional deduction for parents
Mediclaim Insurance premium paid for father (B) 18,000
Add: Expenditure incurred for preventive health check up Incurred Max. Limit
Preventive health-check up expenditure for father Max. limit 6,000 5,000
Preventive health-check up expenditure for himself  [`25,000 – (A)] 4,000 2,000
  7,000
Restricted to overall maximum limit for preventive health check ups (C) 5,000
Deduction u/s 80D (A + B + C) 46,000
 

Can you get deduction u/s 80D of Mediclaim policy for Overseas Journey?

Deduction for policy for overseas travel can be taken. There is nothing in the provision u/s 80D which prohibits claim of deduction u/s 80D for medical insurance for overseas journey. The only requirement, as given in section 80D(5) is that the insurance companies issuing such overseas insurance should be one of these

 The insurance referred to in this section shall be in accordance with a scheme made in this behalf by

(a) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and approved by the Central Government in this behalf; or

(b) any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999).

Section 80D Deduction in respect of health insurance premia

SECTION 80GGA 

Donations for scientific research or rural development

An Assessee (other than an assessee whose Gross Total Income includes income chargeable under the head “profits and gains of business or profession”) is entitled to deduction in respect of certain donations for scientific, social or statistical research or rural development programme or for carrying out an eligible project or National Urban Poverty Eradication Fund. Such donation can be given in cash, or by cheque or draft. However, no deduction is allowed in respect of cash transaction/contribution exceeding Rs.10,000 (Rs. 2,000 w.e.f 01/06/2020).

SECTION 80GGB 

Donations by Indian company to political parties / electoral trust

Any sum contributed by an Indian company to any political party or an electoral trust is not allowed as deduction while computing taxable income in respect of any sum contributed by way of cash.

SECTION 80GGC 

Donations by any person (other than Indian Company) to political parties / electoral trust

Any sum contributed by any person (other than Indian company) to any political party or an electoral trust is not allowed as deduction while computing taxable income in respect of any sum contributed by way of cash.

****

PROVISIONS OF SECTION 80 D

DEDUCTION IN RESPECT OF HEALTH INSURANCE PREMIA.

80D.

(1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted such sum, as specified in sub-section (2) or sub-section (3), payment of which is made by any mode as specified in sub-section (2B), in the previous year out of his income chargeable to tax.

(2) Where the assessee is an individual, the sum referred to in sub-section (1) shall be the aggregate of the following, namely:—

(a) the whole of the amount paid to effect or to keep in force an insurance on the health of the assessee or his family or any contribution made to the Central Government Health Scheme or such other scheme as may be notified by the Central Government in this behalf or any payment made on account of preventive health check-up of the assessee or his family as does not exceed in the aggregate twenty-five thousand rupees; and

(b) the whole of the amount paid to effect or to keep in force an insurance on the health of the parent or parents of the assessee or any payment made on account of preventive health check-up of the parent or parents of the assessee as does not exceed in the aggregate twenty-five thousand rupees;

(c) the whole of the amount paid on account of medical expenditure incurred on the health of the assessee or any member of his family as does not exceed in the aggregate fifty thousand rupees; and

(d)the whole of the amount paid on account of medical expenditure incurred on the health of any parent of the assessee, as does not exceed in the aggregate fifty thousand rupees.

Provided that the amount referred to in clause (c) or clause (d) is paid in respect of a senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person.

Provided further that the aggregate of the sum specified under clause (a) and clause (c) or the aggregate of the sum specified under clause (b) and clause (d) shall not exceed fifty thousand rupees.

Explanation.For the purposes of clause (a), “family” means the spouse and dependant children of the assessee.

(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.

(2B)For the purposes of deduction under sub-section (1), the payment shall be made by—

(i)any mode, including cash, in respect of any sum paid on account of preventive health check-up;

 (ii)any mode other than cash in all other cases not falling under clause (i).

(3) Where the assessee is a Hindu undivided family, the sum referred to in sub-section (1), shall be the aggregate of the following, namely:—

(a).  whole of the amount paid to effect or to keep in force an insurance on the health of any member of that Hindu undivided family as does not exceed in the aggregate twenty-five thousand rupees; and

(b).  the whole of the amount paid on account of medical expenditure incurred on the health of any member of the Hindu undivided family as does not exceed in the aggregate fifty thousand rupees:

Provided that the amount referred to in clause (b) is paid in respect of a senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person:

Provided further that the aggregate of the sum specified under clause (a) and clause (b) shall not exceed fifty thousand rupees.

(4) Where the sum specified in clause (a) or clause (b) of sub-section (2) or clause (a) of sub-section (3) is paid to effect or keep in force an insurance on the health of any person specified therein, and who is a senior citizen, the provisions of this section shall have effect as if for the words “twenty-five thousand rupees”, the words “fifty thousand rupees” had been substituted.

Explanation.

(4A) Where the amount specified in clause (a) or clause (b) of sub-section (2) or clause (a) of sub-section (3) is paid in lump sum in the previous year to effect or to keep in force an insurance on the health of any 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 year, a deduction equal to the appropriate fraction of the amount.

Explanation.—For the purposes of this sub-section,—

(i) “appropriate fraction” means the fraction, the numerator of which is one and the denominator of which is the total number of relevant previous years;

(ii) “relevant previous year” means the previous year beginning with the previous year in which such amount is paid and the subsequent previous year or years during which the insurance shall have effect or be in force.

(5) The insurance referred to in this section shall be in accordance with a scheme made in this behalf by—

(a) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and approved by the Central Government in this behalf; or

(b) any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999).

Explanation.—For the purposes of this section,—

(i) “senior citizen” means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year;

(Republished with amendments)

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2 Restrictions on Expenditure (Capital & Revenue) Section 40A(3)/(3A) Restrictions on Cash Expenditure (Capital & Revenue)
3 Incentives to encourage cashless business transaction Tax Audit- Incentives to encourage cashless business transaction
4 Restrictions on Loans, Deposits& Advances Restrictions on Cash Loans, Deposits & Advances under Income Tax
5 Restrictions on cash transactions in Real Estate Restrictions on Cash Transactions in Real Estate under Income Tax
6 Disallowance of Income Tax Deductions Section 80D Deduction in respect of health insurance premia
7 Restrictions on cash transactions Rs. 2 Lacs or more Restrictions on Cash Transactions of Rs. 2 Lacs or More under Income Tax
8 Provisions of Section 269SU Section 269SU: Mandating Acceptance of Payment through prescribed Electronic modes
9 Tax Deducted At Source Provisions on Cash Transactions Section 194N TDS Provisions on Cash Transactions
10 Cash Transactions in Agriculture Sector Cash Transactions in Agriculture Sector- Income Tax Provisions
11 Cash Restrictions on Charitable Trusts Cash Transaction Restrictions on Charitable Trusts under Income Tax
12 Reporting High value Cash Transactions High Value Cash Transactions & Mandatory Return Filing (ITR)
13 Miscellaneous

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8 Comments

  1. Madan says:

    I am 59 and have Mediclaim Floater covering me, wife 54 & younger son 22 and am paying premium without claiming 80d. Can my elder son 27 claim 80d for premium payments by me.

  2. AHN says:

    Senior citizen paid premium for health insurance for Rs.17000/-. Incurred medical expenses of Rs. 45000 towards medicines for F Y 2021-22. No claim made or received from insurance company. How much deduction can I claim U/S 80 D for A Y 2022-23

  3. Rakesh ghadigaonkar says:

    can i claim benefit of Mediclaim for payment of My parents Mediclaim insurance , same has been paid from my Wifes account.

    one was paid from my Joint Account of wife/self.

  4. Amit Suchak says:

    If I buy policy for parent who is 64 year with 2 years premium of 36,000 then need to claim this entire amount this year or 18000 this year and 18000 next year?

  5. Somya verma says:

    Attendent & transport expenditure incurred in r/o medical where no hospital or treatment avaiable can claim expenditure deductions u/s 80 D.. No any tax guru has still clarify this issue. My wife got knee replacement from Amrirtsar from Amandeep Hospital from Batala lot of expe

  6. Somya verma says:

    Attendent & transport expenditure incurred in r/o medical where no hospital or treatment avaiable can claim expenditure deductions u/s 80 D.. No any tax guru has still clarify this issue. My wife got knee replacement from Amrirtsar from Amandeep Hospital from Batala lot of expe

  7. Vipan kumar verma says:

    Continue from previous – a lot of expenditure incurred in transportation as well one attendent as she admitted 14 days in said hospital. Both husband & wife can claim dedictions 80D equally if amount exceed prescribed limits. Under Section 80 D on rebotic knee replacement of spouse.

  8. Vipan kumar verma says:

    Attendent & transport expenditure incurred in r/o medical where no hospital or treatment avaiable can claim expenditure deductions u/s 80 D.. No any tax guru has still clarify this issue. My wife got knee replacement from Amrirtsar from Amandeep Hospital from Batala lot of expe

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