Tax-Saving Benefits Under Section 80D You Might Be Missing

Health insurance offers a financial safety net for the entire family. In a time when medical inflation is at an all-time high, one can’t do without a health insurance plan. But these plans can prove to be expensive, especially if you have a big family and elderly relatives to care for. Section 80D under the Income Tax Act provided relief to millions of taxpayers who have opted for health insurance. A maximum tax deduction of INR 1,00,000 is possible under Section 80D for premiums paid towards health insurance. But you might not be making use of all the benefits that this section has to offer. Here’s a look at how to maximise your tax savings under Section 80D.

Who is eligible for tax deductions under Section 80D?

Taxpayers and Hindu Undivided Families are eligible for tax deductions on health insurance premiums, preventive health checkups, medical expenses for uninsured parents, and contributions made towards Central Government Health Schemes (CGHS) under Section 80D.

Tax deductions are allowed under Section 80D

Preventive health checkups

Preventive health checkups are a great way to keep track of your health. There are many diseases that, if caught early enough, can be nipped in the bud or may require less aggressive treatments to cure/manage. As a way to encourage people to take preventative health checkups, a tax deduction of up to INR 5000 has been allocated towards health checkups alone.

This can be applied to health checkups of your spouse and parents as well. Tax deduction on preventative health checkups is not linked to a health insurance policy. So even if you don't have a health insurance policy, you can claim this benefit. Payment can be made in cash in this case, as opposed to premium payments, which have to be made in non-cash mode.

Health insurance premiums for senior citizens

Health insurance premiums increase as we age, and some of the more expensive ones in the market are those for senior citizens. This is because they tend to fall sick more often and may require more care than young folks in their prime. With expensive premiums, a 25 lakh health insurance policy can seem like a luxury to the elderly. In order to make health insurance more affordable, tax benefits are afforded to their insurance premium under Section 80D.

If you and your partner are senior citizens, you can claim a deduction of up to INR 50,000. If you have senior citizen parents, you can claim another INR 50,000 on the premium paid for them as well. This will bring the total deduction to INR 1,00,000 (INR 50,000 for senior citizen self and spouse + INR 50,000 for senior citizen parents). If you are not a senior citizen but your parents are, then the total deduction will amount to INR 75,000 (INR 25,000 for self, spouse, and children + INR 50,000 for the senior citizen parents).

Medical expenses for uninsured parents

As previously discussed, not everyone can afford health insurance for their senior parents, given how expensive it can be. Section 80D can benefit those who don’t have the protection of health insurance as well. If your senior citizen parents remain uninsured, you can claim up to INR 50,000 spent on their medical expenses in a particular year under Section 80D. You will have to save their medical bills and medical records as proof for the same.

Contributions towards Central Government Health Schemes

If you are a central government employee and have opted for CGHS instead of a private health insurance scheme, you can claim it as a deduction under Section 80D. This amount stands at INR 25,000.

Mode of payment

The mode of payment is very crucial when it comes to Section 80D. Health insurance premiums will be eligible for consideration only if non-cash payments such as net banking, UPI, debit, and credit cards are used. Preventive checkups, on the other hand, are free from such a clause. You can use cash and all of the payment modes mentioned above for the same.

How to claim Section 80D deductions

When you are submitting proof related to your Form 16 to your employer, you can send in all the documents related to Section 80D deductions. Additionally, you can also claim the tax deduction directly by submitting proof when filing your income tax returns.

What is not eligible for tax benefits under Section 80D

• If you pay health insurance premiums using cash, the premiums are not eligible for deduction
• If you have paid a premium for working children, it is not eligible for deduction
• If your employer pays your health insurance premium under a corporate insurance scheme, a tax benefit cannot be claimed by you for the same

Remember to make full use of Section 80D every year to maximise your savings. Plan well in advance and start putting aside the necessary documents to support your claims, whether it's bills for the premiums paid for family members or medical bills for parents. This will eliminate the last-minute clamour to get everything sorted so that you don't make any mistakes that may prove to be costly.