Amendment in section 80D relating to deduction in respect of health insurance premia

The existing provisions contained in section 80D, inter alia, provide for deduction of

a. upto fifteen thousand rupees to an assessee, being an individual in respect of health insurance premia, paid by any mode, other than cash, 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 any other notified scheme or any payment made on account of preventive health check up of the assessee or his family; and

b. an additional deduction of fifteen thousand rupees is provided to an individual assessee to effect or to keep in force insurance on the health of the parent or parents of the assessee.

A similar deduction is also available to a Hindu undivided family (HUF) in respect of health insurance premia, paid by any mode, other than cash, to effect or to keep in force insurance on the health of any member of the HUF. The section also presently provides for a deduction of twenty thousand rupees in both the cases if the person insured is a senior citizen of sixty years of age or above.

The quantum of deduction allowed under Section 80D to individuals and HUF in respect of premium paid for health insurance had been fixed vide Finance Act, 2008 at Rs.15000/- and Rs.20,000/- (for senior citizens). In view of continuous rise in the cost of medical expenditure, it is proposed to amend section 80D so as to raise the limit of deduction from fifteen thousand rupees to twenty five thousand rupees. It is further proposed to raise the limit of deduction for senior citizens from twenty thousand rupees to thirty thousand rupees.

Further, very senior citizens are often unable to get health insurance coverage and are therefore unable to take tax benefit under section 80D. Accordingly, as a welfare measure towards very senior citizens ,it is also proposed to provide that any payment made on account of medical expenditure in respect of a very senior citizen, if no payment has been made to keep in force an insurance on the health of such person, as does not exceed thirty thousand rupees shall be allowed as deduction under section 80D. The aggregate deduction available to any individual in respect of health insurance premia and the medical expenditure incurred would however be limited to thirty thousand rupees. Similarly aggregate deduction for health insurance premia and medical expenditure incurred in respect of parents would be limited to thirty thousand rupees.

Example:

(i) For Individual and his family Rs.
Health insurance premia 21,000
(ii) For parents
Health insurance of Mother : 18,000
Medical expenditure on father (very senior citizen) 15,000
Deduction eligible u/s 80D Rs. 21000 + Rs. 30000 = Rs. 51,000

It is also proposed to define a ‘very senior citizen’ to mean an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year.

These amendments will take effect from the 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years.

 NOTE ON RELEVANT CLAUSES  OF FINANCE BILL 2015

Clause 18 of the Bill seeks to amend section 80D of the Income-tax Act relating to deduction in respect of health insurance premia.

The existing provisions contained in the aforesaid section inter alia provide for deduction of up to fifteen thousand rupees to an assessee, being an individual or a Hindu undivided family in respect of health insurance premia, paid by any mode, other than cash, 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 any other notified scheme or any payment made on account of preventive health check up of the assessee or his family. An additional deduction of fifteen thousand rupees is provided to an individual assessee to effect or to keepin force insurance on the health of the parent or parents of the assessee. The deduction is enhanced to twenty thousand rupees in both cases if the person insured is a senior citizen of age sixty years or above.

It is proposed to amend the said section so as to raise the limit of deduction from fifteen thousand rupees to twenty-five thousand rupees.

It is also proposed to define a ‘very senior citizen’ to mean an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year.

It is further proposed to raise the limit of deduction in respect of senior citizens or very senior citizens from twenty thousand rupees to thirty thousand rupees.

It is also proposed to provide that any payment made on account of medical expenditure in respect of a very senior citizen, if no payment has been made to keep in force an insurance on the health of such person, as does not exceed thirty thousand rupees shall be allowed as deduction under section 80D.

Online GST Certification Course by TaxGuru & MSME- Click here to Join

It is also proposed to provide that the aggregate of the deduction on account of health insurance premium and the medical expenditure in respect of the assessee or his family would not be more than thirty thousand rupees. Similarly, such aggregate deduction in respect of the parents is also proposed to be not more than thirty thousand rupees.

These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent years.

EXTRACT OF RELEVANT CLAUSES FROM FINANCE BILL 2015

18. Amendment of section 80D.

In section 80D of the Income-tax Act, with effect from the 1st day of April 2016,—

(A) in sub-section (2), after clause (b), the following shall be inserted, namely:—

“(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 thirty 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 thirty thousand rupees:

Provided that the amount referred to in clause (c) or clause (d) is paid in respect of a very 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 thirty thousand rupees.”;

(B) for sub-section(3), the following sub-section shall be substituted, namely:—

“(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 thirty thousand rupees:

Provided that the amount referred to in clause (b) is paid in respect of a very 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 thirty thousand rupees.”;

(C) in sub-section(4), —

(i)       for the words, brackets and figure “or in sub-section (3)”, the words, brackets, letter and figure “or clause (a) of sub-section (3)” shall be substituted;

(ii)      after the words “senior citizen,”, the words “or a very senior citizen,” shall be inserted;

(iii)     for the words “fifteen thousand rupees”, the words “twenty-five thousand rupees” shall be substituted;

(iv)     for the words “twenty thousand rupees”, the words “thirty thousand rupees” shall be substituted;

(v) the Explanation shall be omitted;

(D) after sub-section (5), the following Explanation shall be inserted, namely:—

‘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;

(ii)      “very senior citizen” means an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year.’.

( Compiled by Taxguru Team)

More Under Income Tax

Posted Under

Category : Income Tax (25143)
Type : Articles (14559) Featured (4133)
Tags : Budget (1473) Budget 2015-16 (272) Income Tax Deductions (418) Section 80D (48)

19 responses to “Section 80D- Hike in Deduction Limit for Mediclaim”

  1. shravani says:

    Hi,
    I have taken medical insurance to my parent in laws . Can I claim it under section 80D

  2. V R RAJANEESH says:

    Sir, One of my relative is a senior citizen…she got pension as she was a teacher…she incurred minimum Rs.25000 every year for medical expenditure such as treatment,checkup,medicines etc due to old age problems…Is she got these amount as a deduction from Pension even though these are not in the nature of specified disease?..If yes, upto which extent?

  3. ankur chaudha says:

    Can I pay for health insurance for 3 years combinely? Will it be applicable for tax deduction in each year partly…or only for next AY?

  4. toshit jain says:

    Partially Yes, you cant be allowed deduction because as per sec80D its specifically mentioned only for the self,spouse and dependent children, but you can pay for the parents within the specified limit i.e. Rs30000 (if senior citizen)

  5. rs says:

    Does it apply to overseas mediclaim policy also ,as there is no specific mention

  6. Francis D'cruz says:

    For the A.E. 2016 – 17, whether a total of Rs. 55,000/- can be deducted under S. 80D (Rs. 15000/- for the assessee and his family and Rs. 30000/- for the parents.

  7. CA Kapil Goel says:

    No

  8. Jaya Sankar Kumar Veluguri says:

    No. It is Amended

  9. Jaya Sankar Kumar Veluguri says:

    It is inclusive of that amount already mentioned. hence no additional deduction

  10. Parveen T says:

    Hi,
    Is married daughter can claim the deduction under section 80D for medical premium paid for her parents incl sister.
    Whereas in the policy name of married daughter is not included, but she is paying it.

    Please help me to know

  11. snshah says:

    can service tax is considered as benefit ie Premium+ service tax + total premium.

  12. Gunjan Jain says:

    Sir,

    Please suggest the Senoir Citizen i.e. plus of 60 age. Insurance Limit Rs 100000/-, other wise insurance amount Rs. 80000/- & mediclaim amount Rs. 50000/- so rebate amount is Rs 100000/- or 130000/-.

    please advise

  13. Balamurali says:

    what about EXPENDITURE ON ‘PREVENTIVE MEDICAL CHECK UP Rs. 5000/- WAS ALLOWED. HAS THAT BEEN TERMINATED ? OR IT IS STILL ALLOWED ? IF IT IS ALLOWED THEN ANY INCREASE IN THIS EXPENSE? PARTICULARLY FOR SENIOR CITIZEN . PLEASE INFORM

  14. Richa says:

    During the budget speech, it was mentioned that life insurance premium was increased to Rs. 25,000/- from Rs. 15,000/-.
    However, the required amendments have not been taken place.
    Any views on the same?

  15. A H Poonawala says:

    what about EXPENDITURE ON ‘PREVENTIVE MEDICAL CHECK UP Rs. 5000/- WAS ALLOWED. HAS THAT BEEN TERMINATED ? OR IT IS STILL ALLOWED ? IF IT IS ALLOWED THEN ANY INCREASE IN THIS EXPENSE? PARTICULARLY FOR SENIOR CITIZEN . PLEASE INFORM .

  16. GOVINDARAJULU says:

    SERVICE TAX ADDITIONAL MEDICAL PREMIUM IS 1,400/- (I.E., 10000 @ 14%) The income tax liability on this is only Rs.1,000/- subject the persons total taxable income less than Rs. 5,00,000/-.

Leave a Reply

Your email address will not be published. Required fields are marked *