Deduction under Section 80D and the Medical Insurance

Deduction under Section 80D and the Medical Insurance

Tax & Auditing

Vakilsearch Staff

Vakilsearch Staff

200 week ago — 7 min read

Medical emergencies can affect and derail even the best of us. While we do plan for most things in life, sudden emergencies take us by surprise and cause huge problems due to their unpredictability. Since it is better to be prepared than to be sorry, most families now invest in medical insurance to ensure that they have enough resources for a rainy day. Medical insurance is, therefore, an integral part of any investment portfolio. In this article, we will take a look at deduction under Section 80D, the health insurance policies that it covers, and why the 80D deduction is so valuable. 

We will discuss the following:

  1. What is Section 80D of the Income Tax Act?

  2. Applicability of Section 80D for Medical Insurance

  3. Deduction under Section 80D

  4. Preventive health check-up conditions and availability

  5. Health Insurance Policies under Section 80D

  6. Things to keep in mind

What is Section 80D of the Income Tax Act?

Taxpayers are always on the look-out for ways to legitimately lower their tax liability, and one of the best ways to do so is to make use of Section 80D. Utilising this clause will help you reduce your liability and improve your preparedness for the future. Section 80D contains rules, procedures, and guidelines regarding deductions handed out for the payment of medical insurance policy premiums. 

Applicability of Section 80D for Medical Insurance

Every individual and HUF can avail deduction under Section 80D, which concerns itself with the payment of medical insurance policies. The payment or premium for medical insurance is taken out from their income every year, and hence, Section 80D allows people to deduct that from their taxable income. In fact, under Section 80D, you can avail tax benefits by buying a policy that covers your spouse, or even your extended family, including children and parents. Furthermore, the deduction under Section 80D can be claimed above and over the ones you receive through Sections 80C, 80CCC, and 80CCD.

Deduction available under Section 80D

The 80D deduction for an individual goes up to a maximum of INR 25,000 for the payment of medical insurance that covers themselves, their spouse, and dependent kids. Furthermore, the 80D deduction can be extended to an additional INR 25,000 if their policy also covers their parents. In case their parents are more than 60 years old, the extension rises to INR 50,000, instead of the usual INR 25,000. 

In case the person availing the benefit, and their parent is above the age of 60, then the maximum deduction possible under Section 80D is INR 1,00,000. Here’s a look at the entire break-up of the Section 80D deduction that an individual can avail.  

Sl No Scenario Premium: Kids+Spouse Premium: Parents Deduction Under Section 80D
1 Both individual and parents are under 60 25,000 25,000 50,000
2 Individual and family are under 60, but parents are 60 + age Rs 25,000 50,000 75,000
3 Everyone is above 60 50,000 50,000 1,00,000
4 HUF members Rs 25,000 25,000 Rs 25,000
5 Non-Resident 25,000 Rs 25,000 Rs 25,000



There are 6 members in your family. Self (40), Spouse (36), two children (10 and 6). Father (64) and mother (58). You purchased such health insurance (1) that you, your spouse and 2 children are covered. ₹ 15,000 is the annual premium that you have to pay and you have paid an additional ₹ 15,000 for a health checkup. Simultaneously, you also purchased a health policy (2) for your parents. And, its annual premium is ₹ 28,000 and they got their health checked at an additional cost of ₹ 10,000.

The deduction you can avail

Expense Actual Expense ₹ Maximum Deduction ₹ Applicable Deduction ₹
Health Policy 1 15,000 25000 15000
Health Checkup 15000 5000 5000 
Health Policy 2 28000 30000 28000
Health Checkup                       10000 5000 5000


Total = ₹ 50,000

Total Deduction Available for the Year ₹ 50,000

Preventive health check-up conditions and availability

Section 80D of the Income Tax Act also includes deductions for the payments made for preventive health check-ups. As per our present taxation laws, taxpayers can avail of Section 80D deductions of up to INR 5,000 for preventive health check-ups. The overall limit for this is INR Rs 25,000, INR 30,000, or INR 50,000 depending on situations and circumstances. Such deductions for health insurance policies and preventive health check-ups can be claimed for an individual, or the check-up of a spouse, child, or parent. Furthermore, the payment for such health check-ups can be made in cash. 

Health Insurance Policies under Section 80D

As per 2018’s Budget, there is a new provision that allows for the claiming of the deduction for the payment of single-premium health insurance policies. As per this new rule, whenever an individual makes a large donation or premium payment for a health insurance policy valid for any period longer than a year, they can claim a deduction under Section 80D. The deduction is an appropriate fraction of the premium amount and is calculated by dividing the premium by the number of years for which the policy is valid. However, 80D limits with regards to deduction are valid for such claims as well and lie at either INR Rs 25,000 or INR 50,000.

Things to keep in mind

  1. Contributions towards such health insurance policies must occur as per schemes specified by the Central Government. All these schemes and policies are also verified and approved by the IRDA.
  2. To claim these deductions, the premium for health insurance must be made through any mode of payment except for cash payments.
  3. To avail tax benefits and deductions, you cannot use premium payments for siblings, grandparents, aunts, uncles, and other relatives.
  4. Furthermore, the deduction under 80D does not hold for the payment of premiums for working children.
  5. If you have paid the premium for insurance that your parent uses, both individuals can claim for a deduction, quoting the share of the premium paid by either party. 
  6. To claim the deduction, the individual must show the portion of the premium that excludes the Service Tax and CESS.
  7. The payment of Group Health Insurance policies handed out by companies will not make you eligible for any deduction under Section 80D of Income Tax Act.

Also read: How to pay your Income Tax using Challan 280


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