Section 80D Deductions for FY 2018-19 & AY 2019-20
As the most crucial time of the year yet again has arrived, almost everyone is busy doing the formalities regarding income tax payment. As per the recent announcement on income tax made by Finance Minister Piyush Goyal, the individuals with income up to Rs. 5 lakh will be exempted from paying taxes for the FY 2019-20. However, those who are with an income more than Rs. 5 lakh are still struggling to save some money by opting various tax saving instruments. One such tax saving option is your health insurance plan!
Yes, you’ve heard it right. The premium paid for mediclaim insurance is exempted from tax deduction under Section 80C and 80D of Income Tax Act 1961. Nevertheless, to utilise the most out of it, you should know about the kinds of deductions fall under 80C and D of Income Tax Act. Here we go:
Decoding Section 80D, Income Tax Act
Most of us might haven’t aware of what is Section 80D. Well, Section 80D of Income Tax Act defines the tax deduction on mediclaim insurance. This Section allows you to receive the deduction on premiums paid towards the health insurance policy premiums for self, spouse, dependent child and senior citizen parents. You can claim a deduction up to Rs, 25,000 on every budgetary year against the paid premiums. In case you are paying the premiums of health insurance for your senior citizen parents, you can save up to Rs. 30,000.
Figuring Out the Deductions under Section 80D
Let’s consider the various deductions a taxpayer can claim to bring down his/her taxable income. The most important deductions under Section 80D are as mentioned below:
Deduction on Preventive Healthcare Checkups
You can claim tax benefits on preventive health checkups annually offered under your health insurance. Apart from the basic claim limit of Rs. 25,000 0r Rs. 30,000, under Section 80D, you can claim up to Rs. 5000 for preventive health checkups done annually.
Deduction on Health Insurance Premium Payment for Parents
The mediclaim insurance premium paid for guardian is furthermore qualified for tax deduction up to Rs. 25,000. In case you are paying the premiums of your elderly parents, the maximum limit goes up to Rs. 30,000 per year. This can be additionally subsumed with annual health checkups of worth Rs. 5,000.
Deduction for Treatment of Specified Illnesses: Section 80DDB
You can a deduction up to Rs. 1.4 lakh for medical expenses incurred towards certain specific illness. These can be any of the critical illness treatment cost of which is pricey. The exemption can be up to Rs. 60,000 for senior citizens and Rs. 80,000 for extremely senior citizens. While filing income tax returns, you’ll have to attach a consent from specialist to avail this benefit.
Deduction for Treatment of a Reliant with Disability: Section 80DD
The expenses incurred towards the nursing, treatment, preservation or rehabilitation of a dependent that is differently abled, can be claimed up to Rs. 75,000. You can claim even up to Rs. 1.25 lakh in case of serious disability. The dependant can be any of the parents, spouse, children or siblings. To claim the benefit under this category, you’ll have to submit a supporting medical certificate.
Deduction on Medical Allowance under Section 17
The reimbursement against a medical treatment paid by the employer can be exempted from the income tax payment up to Rs. 15,000 per annum. The treatment can be availed for self, spouse, dependent children, siblings or parents.
Section 80D Limit
As we already have mentioned, one can claim for tax exemption under Section 80D of IT Act for insurance premiums paid for self, family, children or dependent parents. The limit of tax exemption one can claim is given below:
|Person Covered||Exemption Limit||Additional Health Check-up||Total Claimable Amount|
|Self, Spouse and Dependent Children||Up to Rs. 25,000||Rs. 5,000||Up to Rs. 25,000|
|Self, Spouse and Dependent Children, along with parents||25,000+25,000= 50,000||Rs. 5,000||Rs. 55,000|
|Self, Spouse and Dependent Children + the parents above 60 years old||25,000+30,000= 55,000||Rs. 5,000||Rs. 60,000|
|Self (age 60 or above) + the parents above 60 years old||30,000+30,000= 60,000||Rs. 5,000||Rs. 65,000|
Let’s understand the exempted tax limit with an example:
Just imagine, you are 61 years old and pay an annual premium of Rs. 40,000 for yourself and your dependent. Moreover, you also pay the premiums of Rs. 35,000 for your super senior citizen parents who are in their 80s. As per the Section 80D, you are eligible to claim the following deduction:
If we consider the premiums paid towards mediclaim insurance, the total amount is Rs. 75,000, benefits of which can be claimed up to a maximum of Rs. 65,000. Remember that the deduction is subject to the provisions of Section 80D of Income Tax Act 1961 and one can only claim as per the rule.
Deductions under Section 80C
Under this Section of Income Tax Act allows an individual or a HUF family to invest in various tax-saving instruments to save on taxes. One can exemption claim up to Rs. 1.5 lakh by investing in any of the investment tools including Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), Employees’ Provident Fund, National Saving Certificate (NSC), 5-year bank fixed deposits and so on. The claimable deductions under Section 80C include:
It is beneficial to invest in NPS and claim additional deduction up to Rs. 50,000. If you combine your savings under Section 80C and 80CCD (1b), the total claimable amount could be Rs. 2 lakh per annum.
Up to Rs 2 lakh can be claimed under this section on the contribution of your employer’s towards NPS account. A maximum deduction of 10% of your basic salary including the dearness allowance is exempted from a tax deduction, without a monetary restriction.
Deduction Table under Section 80C
|Section 80C||premiums paid for a life insurance policy, principal repayment of home loan, amount aid towards EPF/PPF/VPF, ELSS, NSC, SCSS and so on|
|Section 80CCC||Payment paid for receiving pension towards any pension plans or mutual funds|
|Section 80CCS(1)||Payment for receiving a pension from National Pension System (NPS), Atal Pension Yojana|
|Total Amount||It should not exceed 1.5 lakh|
|Section 80CCD (1B)||Additional investment up to Rs. 50,000 through NOPS can be cl;aimed|
|Section 80CCD(2)||Deduction under employer’s contribution of 10% of the basic salary to NPS can be claimed.|
Section 80D Vs Section 80C
However, both the sections of Indian Income Tax Act, allows you to save on taxes, they are slightly different from each other in terms of the offered benefits. Without digging into much, let’s consider the basic differences here:
- The upper limit of tax savings is higher in the Section 80C than 80D.
- Section 80D allows a taxpayer to avail tax exemptions for the premiums paid towards health insurance or medical insurance for self, family and parents. On the other hand, Section 80C of IT Act allows, a taxpayer to claim under various tax savings instruments such as PPF, EPF, NPS or other investment.
- Under Section 80D, the upper limit of tax exemption is Rs 1.5 lakhs. Alternatively, the upper limit for tax exemption under section 80D is Rs 65,000.
Section 80D Income Tax Act: What’s Excluded
Section 80D comes with certain exclusions:
- The tax benefits are only offered to taxpayers only, not a third person. So, make sure the premiums are paid by your name. No cash payment is allowed to claim the exemption. However, in case of preventive health check-ups paid through cash can be claimed under Section 80D.
- No tax benefits are paid for the service tax and Cess charged paid under premium payment. Every health insurance policy charges certain service taxes (14%), which can’t be claimed under this Section of IT Act.
- Moreover, an employer’s health insurance policies are not liable to attract tax benefits. That means employees can’t claim a deduction for group medical insurance. However, if the employer chooses to pay the extra premiums to enhance the policy coverage, it can claim the additional amount.
- Payment must have paid through online banking, debit/credit card, cheque etc. to claim tax benefits. No claim will be entertained where payments are done through cash.
FAQ On Tax Deduction under Section 80C and 80D
Who are eligible to enjoy tax benefits under Section 80D?
Those who are with a health insurance policy and pay the premiums for self, spouse, children or dependent parents are eligible for tax benefits. Moreover, if you are paying the premiums of your elderly or super senior citizen parents, you can avail additional tax benefits.
I have made an investment on PPF account on 29th April 2018. From which year I can claim deduction under this?
You can claim for the deduction for investments while filing income tax returns for the year you have started the investment. So, if you have started the PPF account o April 29th, you can claim the deduction under Section 80C, during Financial Year 2018-19.
I have taken a loan for pursuing higher studies. Is the interest paid for the loan eligible for tax exemption under Section 80E?
Yes, you can provided the loan is taken only from a financial institution. But if you are taking a loan from your current employer, the same will not be entitled to tax exemption.
Is there any maximum limit while claiming deduction under Section 80EE?
The maximum limit that you can claim under Section 80EE is Rs. 50,000.
Who all are eligible to take the benefits of Section 80C?
The individuals and Hindu Undivided Family (HUF) are eligible to enjoy the benefits under Section 80C. However, company or firms are not entitled to this benefit.
If I pay premiums for my life insurance to a private insurance company, will I eligible to claim the deduction?
Deduction under Section 80C is available up to 1.5 lakh towards life insurance premiums paid to any insurer, whether public or private. Hence, the premiums paid for your life insurance policy can be exempted from the tax deduction.
What if my spouse or children are not dependent on me?
Even that case, you can claim the deduction if the premiums are paid by you.
I have a health insurance plan covering myself, spouse and my kids, which premium is paid by me. In addition, I also pay the premiums towards my parents who are above 60 years. Will the premiums be exempted from tax?
The health insurance premiums taken for yourself, spouse and children are eligible for tax deduction as per the provisions of Section 80D, Income Tax Act, up to a maximum limit of Rs. 25,000. Moreover, you can claim for an additional deduction for the premiums paid towards the insurance plan of your senior citizen plan, up to Rs. 30,000. This way, you can claim for both the premiums and save a considerable amount.
Am I eligible to claim FD interest exempt under Section 80TTB?
The senior citizens above 60 years age can claim exemptions on interests earned from Fixed Deposit accounts under Section 80TTB.
Can HUFs (Hindu Undivided Family) also avail tax exemptions?
Similar as individual taxpayers, even Hindu Undivided Family can also enjoy tax benefits for all or any members as per the provisions under Section 80D and 80C. However, the upper limit shouldn’t be exhausted, which is 30,000.
I usually pay the premiums for my health insurance by cash. Can I avail tax benefits for the contribution?
No, you are not eligible to enjoy any benefit under Section 80D or 80C, as premiums paid through cash are not considered for tax exemption. To avail the tax benefits, you must pay the premiums through cheque, online transaction via credit/debit cards, Net Banking etc.
Am I eligible to claim a tax deduction for the group health insurance provided by my current employer?
No, you can’t enjoy tax benefit against the group insurance policy provided by the employer, as the premiums are not paid by you but the employer. In addition, if you have independent health insurance, apart from the group insurance. You can claim an exemption for the premiums paid by you.
If I avail medical treatment outside India, am I eligible for claiming deduction under any of the Sections of Income Tax Act?
Well, you can avail tax exemption for the treatment expenses incurred outside India. Provided, your health insurer permits this and it is mandatorily registered with IRDA.
My children are not anymore dependent on me. Can I claim tax benefits for their mediclaim insurance and preventive health check-ups?
No, if your children are not dependent, you can’t claim tax benefits against their health insurance plans or preventive medical check-ups. But your children can avail tax benefits out of it.
When my parents are not dependent on my, can I claim tax exemption for their mediclaim insurance? What if me and my father both pay the premiums? Can both of us enjoy tax benefits?
Yes, you can avail tax benefits if you pay the insurance premiums for any of your parents. Even both of you can claim tax exemption for the part of premiums payment made.
What is the maximum limit of claiming deduction under Section 80C and 80D?
Under Section 80C you can claim up to 1.5 lakh for investing any of the tax saving tools. On the other hand, the maximum limit of savings offered under Section 80D is 65,000.
What if I paid more than maximum limit that can be claimed towards insurance premiums as a tax deduction?
You can claim only up to the upper limit under Section 80D. So, even if you pay more under health insurance, you can’t claim above the upper limit.
Can I claim tax benefits for multiple health insurance policies?
You can claim for tax exemption for multiple policies as well, provided the minimum conditions are met and premiums are paid continuously.
Is it possible to claim the 80C deduction, even if not submitting the adequate proof to the employer?
Without submitting proof of investment, you can’t claim a deduction against any investment. The proofs need to be submitted before the end of the financial year, as the employers consider these while determining your taxable incomes and the claimable deduction. However, in case if you miss submitting any such proof, the taxable amount can be reimbursed by filing an ITR (Income Tax Return), whenever is required. But submitting the proof of investments with the employer is the safest and hassle-free way of claiming tax deduction under section 80C or 80D.
Am I eligible to claim health check-up deductions under Section 80D?
You can claim up to Rs. 5000 for an annual health check-up for yourself or dependent as well.
Wrapping it Up!
Now that you are aware of the provisions of tax deductions u/s 80D and 80C of Indian IT Act, 1961, it’s time to get the maximum benefits out of it. The recent budgetary announcement has appeared as a huge incentive for low and middle-income group. As per the announcement, a person with an annual income up to Rs. 5 lakh are exempted from paying taxes. However, those who don’t fall under this category can consider saving a considerable amount by adhering the various claimable deductions under Section 80D of the Income Tax Act.