The Income Tax Act, 1961 provides several provisions for individuals and Hindu Undivided Families (HUFs) to claim deductions on various expenses and investments. One such provision is Section 80D, which allows taxpayers to claim deductions for premiums paid towards health insurance. This article will provide a detailed overview of the deduction available under Section 80D and the related provisions.
Eligibility and Deduction Limits:
According to Chapter VI-A of the Income Tax Act, individuals and HUFs are eligible to claim deductions under Section 80D. The maximum deduction limit for health insurance premiums is INR 25,000 for self, spouse, and dependent children. Additionally, an additional deduction of INR 25,000 is available for senior citizens, i.e., individuals aged 60 years or above. This results in a total deduction of INR 50,000 for senior citizens.
Mode of Payment:
Deduction under Section 80D can be claimed for premiums paid through approved modes of payment such as debit cards, credit cards, or net banking. However, it’s important to note that cash payments are not eligible for deductions under this section.
Residential Status:
Any individual, whether a resident or non-resident, can claim deductions under Section 80D. However, the enhanced deduction limit for senior citizens is applicable only to resident senior citizens.
Expenses Not Allowed for Deduction:
While Section 80D provides deductions for health insurance premiums, certain expenses are not eligible for deduction. These include:
1. Group health insurance premium paid by a company.
2. Health insurance premium paid in cash, except for preventive health check-ups.
3. Insurance premium paid on behalf of non-dependent children or other relatives.
Illustrative Examples:
The amount of deduction available under Section 80D can vary based on the age and number of insured individuals. Here are some examples:
1. If the age of insured individuals and parents is below 60 years, the maximum deduction allowed is INR 50,000.
2. If the age of insured individuals is below 60 years but the age of insured parents is above 60 years, the maximum deduction allowed is INR 25,000 for the insured individuals and INR 50,000 for the insured parents, resulting in a total deduction of INR 75,000.
3. If the age of insured individuals and insured parents is above 60 years, the maximum deduction allowed is INR 50,000 for each, resulting in a total deduction of INR 1,00,000.
Additional Provisions:
From the financial year 2018-19 onwards, the Income Tax Act allows for a deduction on medical bills paid for senior citizen parents. This provision can further contribute to tax savings.
New Tax Regime:
It’s important to note that the benefit of deduction under Section 80D is not available to taxpayers who opt for the new tax regime, which was introduced in the latest Budget of 2023-24.
Conclusion:
Section 80D of the Income Tax Act provides individuals and HUFs with an opportunity to claim deductions on health insurance premiums. Understanding the eligibility criteria, deduction limits, and other provisions is essential to maximize tax savings. It is advisable to consult with a tax professional or financial advisor to ensure compliance with the Income Tax Act and make the most of available deductions.
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Introduction of Author :- Winner of the Title ‘Best Paper Presenter’ in ICAI National Conference of Indore in the Technical Session of GST, Ishwin Kaur is a dedicated and diligent professional, awarded for her academic excellence and communication skills. Alongwith being a Contributor at ICAI newsletters of various branches, she is also a Professional Associate of many leading professional sites, and has contributed many publications in the same. She is also a Book Author and a Podcast Speaker, and has been featured in Top Newspapers Twice.
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