Under Section 80D of the Income Tax Act, deduction in respect payment made towards Health Insurance Premium and Preventive health check-up is allowable as deduction from total income.
Who can claim the deduction & for what?
– Individual or HUF can claim deduction under this section in respect of payment made by them towards:-
1. Health insurance premium by any mode, other than cash, in the previous year out of income chargeable to tax,
2. Payment made on account of preventive health check-up by any mode, including cash (effective from assessment year 2013-14).
In case of Individual, the deduction is available for Health insurance premium or Preventive Health Check-up of the assessee himself, his/her spouse, dependent child/children and parents (parents need not be dependent).
Amount of deduction under section 80D –
1. If the assessee is an Individual–
a. If Payment made towards Health Insurance Premium – for the assessee himself, spouse & dependent children – Sum paid or Rs. 15,000/- whichever is less, if the individual is senior citizen then the deduction amount is Sum paid or Rs.20,000 whichever is less.
b. If payment made towards Health Insurance Premium for Parents – then additional deduction of Sum Paid or Rs.15,000/- whichever is less is available. If either of the parents is Senior Citizen then the additional deduction available is Sum paid or Rs. 20,000/- whichever is less.
c. If payment made towards Preventive Health Check-up – effective from assessment year 2013-14– for the assess himself, spouse, dependent children and parent(s) (Parents not necessarily to be dependent) – Amount spent or Rs.5,000/- whichever is less. The aggregate deduction of Rs.5,000/- This deduction will be allowed within the overall monetary limit prescribed in Sec 80D (i.e. limits given in (a) above).
2. IF the assessee is a HUF – payment towards Health Insurance Premium – of any member of that Hindu Undivided Family –Sum paid or Rs.15,000 (Rs.20,000 whether insured is a senior citizen) whichever is less.
Special Provision for Senior Citizens –For Senior Citizens the maximum amount deductible is “Twenty thousand rupees” instead of “Fifteen thousand rupees”.
Who is a Senior Citizen? – Senior Citizen means (a) An Individual (b) Resident in India (c) Who is of the age of sixty years or more (from assessment year 2013-14 – 60 years; earlier 65 years) at any time during the relevant pervious year. ——*****[ Students (a)+(b)+(c) is very IMPORTANT] *****
Scope of Deduction under section 80D extended
– The existing provisions of section 80D, inter alia, provide that the whole of the amount paid in the previous year out of the income chargeable to tax of the assessee, being an individual, to effect or to keep in force an insurance on his health or the health of the family or any contribution made towards the Central Government Health Scheme (CGHS) or any payment made on account of preventive health check-up of the assessee or his family, as does not exceed in the aggregate fifteen thousand rupees, is allowed to be deducted in computing the total income of the assessee. There are other health schemes of the Central and State Governments, which are similar to the CGHS but no deduction for such schemes is available to the subscribers of such schemes. In order to bring such schemes at par with the CGHS, the Finance Act, 2013 has amended section 80D effective from the assessment year 2014-15 so as to allow the benefit of deduction under this section within the said limit, in respect of any payment or contribution made by the assessee to such other health scheme, as may be notified by the Central Government.
Analysis – Deduction in available for payment made in cash in respect of Preventive Health Check-up plan but deduction is not available if payment made in cash in respect of Health Insurance premium, i.e., for claiming deduction for health insurance premium, the payment must be made by any mode other than cash – example – by Bank Draft / Cheque (Account Payee), by Credit/Debit Card, by Net Banking/Electronic Fund Transfer etc.
Health Insurance premium shall be paid out of income chargeable to tax.
From assessment year 2013-14 an individual can also claim deduction towards sum paid on account of preventive health of himself and his family or his parent. It may be noted that total deduction towards payment in respect of preventive health check-up of self, family and parents cannot exceed Rs.5,000 in aggregate.
Family means the spouse and dependent children of the assessee
Parents need not be dependent whereas children must be dependent.
Case 1 – An Individual Assessee paid Health Insurance Premium for parent amounting to Rs.22,000 by Cash, what will be the amount of deduction available under section 80D?
Answer – NIL, because for claiming deduction under section 80D the premium on health insurance must be paid by any mode other than cash.
Case 2 – If in Case 1, the premium paid by account payee bank draft, then what will be the amount of deduction available under this section?
Answer – Age of parent is not given, hence Rs.15,000 will be allowed as deduction.
Case 3 – Referring Case 1, if the age of parent is 60 years then the amount of deduction will be as under –
If the parent is Resident of India during the previous year then he will be treated as Senior Citizen and the maximum amount of deduction allowable under this section will be Rs.20,000/-.
If the parent is Non-Resident during the previous year then he will not be treated as Senior Citizen and the maximum amount of deduction allowable under this section will be Rs.15,000/-.
Case 4 – An Individual (aged 30 years) pays Rs.21,000/- for self and family and Rs.26,000/- for parents (aged
65 years residing in Germany from last 4 years) as health insurance premium by mode other than cash, deduction allowable under section 80D will be ?
Answer – For self & family Rs.15,000 and for parents Rs.15,000 Total Rs.30,000/-. In this case parents will not be treated as Senior Citizen as they are not resident of India during the previous year, hence the deduction will be restricted to Rs.15,000/- only in case of parents.
Case 5 – In case 4 if either of the parents is a Senior Citizen, then the deduction will be Rs.15,000 for self & family and Rs.20,000 for parents Total Rs.35,000/-
Case 6 – In case 4 if the individual himself is a senior citizen and his parents are also senior citizen, then the deduction will be Rs.20,000 for self & family and additional Rs.20,000 for parents total deduction will be Rs.40,000/-.
Note the definition of Senior Citizen carefully…… Senior Citizen means (a) An Individual (b) Resident in India (c) Who is of the age of sixty years or more.
Case 7 – Mr. X (aged 40 years) pays health insurance premium by Credit Card Rs.12,000 for self and family,Rs,17,000 for his parents and his father (aged 66 years) pays Rs. 10,000 as health insurance premium (other than cash) –
Answer – Deduction in the hands of Mr. X – for self & family Actual sum paid Rs.12,000 or Maximum Rs.15,000, whichever is less = Rs.12,000/-; for parents (father is senior citizen) Actual sum paid Rs.17,000 or Maximum in case of senior citizen Rs.20,000, whichever is less = 17,000/-; therefore total deduction in the hands of Mr. X = Rs.29,000/-
Deduction in the hands of Father of Mr. X = Actual sum paid Rs.10,000 or Maximum in case of senior citizen Rs.20,000 whichever is lower = Rs.10,000/- deduction under section 80D.
Case 8 – Mr. X (aged 65 years) pays Rs.20,000 for self and spouse, Rs.15,000 for children who are not dependent on Mr. X and Rs.17,000 for his parents who are senior citizen, as health insurance premium –
Answer – Deduction available in the hands of Mr. X under section 80D –
For
Self & Spouse [Maximum Rs.
20,000 as he is senior citizen] Rs.20,000/-
For
Children – children are not dependent hence no deduction NIL
For
Parents – Parents are senior citizen hence Max.20,000 or actual
Amount
paid whichever is less Rs.17,000/-
Total
Deduction available in the hands of Mr. X Rs.37,000/-
Case 9 – Mr. Y incurs the following expenses during the previous year 2013-14 –
(a) Payment of medical insurance premium for self & family Rs.12,000
(b) Payment of medical insurance premium for parents Rs.12,000
(c) Expenditure incurred on preventive health check-up of self & family Rs. 6,000
(d) Expenditure incurred on preventive health check-up of parents Rs.6,000
Deduction available under section 80D in the hands of Mr. Y is as follows –
(a) For payment of medical insurance premium for self & family Rs.12,000
(b) For payment of medical insurance premium for parents Rs.12,000
(c) Expenditure incurred on preventive health check-up of all Rs. 3,000**
**(deduction for preventive health check-up plus health insurance premium should not exceed basic deduction amount of Rs.15,000 or Rs.20,000 in case the assessee himself is a senior citizen)
Total deduction available u/section 80D Rs.27,000
Hope that this will give you a clear understanding of the section…..
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