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Deduction in Respect of Health Insurance Premia & Medical Expenditure

Deduction in Respect of Health Insurance Premia & Medical Expenditure

Deduction in respect of health insurance premia & medical expenditure under section 80D of the Income tax act, 1961

Provisions applicable for A.Y.2015-2016 and A.Y.2016-2017 for deduction from total income in respect of payment for medical insurance premia and preventive health checkup and medical expenditure under section 80D of the Income tax act, 1961

Additional deduction on account of medical expenditure in case of “Very senior citizen”  new clauses and sub section inserted by finance act, 2015 applicable from A.Y.2016-2017.

Section 80D provides for deduction while computing the total income of the assessee in respect of amount of medical insurance premium and preventive health checkup paid during the year. Following tables explains the deduction allowable for A.Y. 2015-2016 and A.Y. 2016-2017 in respect of same:

Pre-requisites for claiming deduction u/s 80D:

  1. To claim deduction under section 80D, it shall be borne in mind that payment in respect of medical insurance or preventive health checkup or medical expenditure of very senior citizen shall be made by the assessee out of his income chargeable to tax. Therefore no deduction is allowable if assessee takes a loan and pays the amount obtained from loan as medical insurance or preventive health check up or medical expenditure.
  1. Deduction is allowable to individual or HUF (Hindu undivided family) only. Individual or HUF may be resident or non-resident to claim the deduction.
  1. Payment of medical insurance shall be by any mode but not in cash. No deduction allowed for medical insurance premium paid in cash.
  1. Payment towards preventive heath check up shall be any mode including cash.
  1. Payment for medical expenditure in case of very senior citizen shall be by any mode but not in cash. No deduction allowed for medical expenditure paid in cash in such cases.
  1. Payment can be made by individual for the benefit of himself, spouse and dependent children or for the benefit of parents whether dependent or not.
  1. Medical reimbursement which is not taxable up to Rs.15, 000/- u/s 17(2) is different from health insurance premia and both can be claimed by the assessee.
  1. Only premium amount to be claimed as deduction, not taxes amount like service tax, etc.
  1. Payment can be made by HUF for the benefit of any member of the HUF.
  2. Insurance shall be in accordance with a scheme made by
  3. The General Insurance Corporation of India and approved by central government, or
  4. Any other insurer and approved by IRDA (Insurance Regulatory and Development Authority)

Following charts helps to remember the amount of deduction allowable in different cases:

deductions avaialble chart

Note: In case individual has made payment for all as narrated above maximum deduction is available for Rs.30,000/- (15,000 plus 15,000 for parents) or 35,000/- (15,000 plus additional Rs.20,000/- for parents being senior citizen as the case may be).Senior citizen is individual who has age of 60 years or more at any point of time in previous year.

deductions on account

Note: In case individual has made payment for all as narrated above maximum deduction is available for Rs.50, 000/- (25,000 plus 25,000 for parents) or 55,000/- (25,000 plus additional Rs.30,000/- for parents being senior citizen/very senior citizen) as the case may be. Very Senior citizen is individual who has age of 80 years or more at any point of time in previous year.

payment made by HUF

Note: In case HUF has made payment for both the members as narrated above maximum deduction is available for Rs. 20,000/- (15,000 plus additional Rs.5,000/- for senior citizen). Senior citizen is individual who has age of 60 years or more at any point of time in previous year.

payment made by huf 2

Note: In case HUF has made payment for both the members as narrated above maximum deduction is available for Rs.30 ,000/- (25,000 plus additional Rs.5,000/- for senior & very senior citizen). Very senior citizen is individual who has age of 80 years or more at any time during the previous year.

Additional deduction for A.Y.2016-2017 in respect of medical expenditure incurred in respect of very senior citizen: (For individual assessee) 

Finance act, 2015 has made changes in section 80D by inserting clauses (c) and (d) to section 80D (2)  w.e.f. A.Y.2016-2017 to provide for deduction u/s 80D in respect of medical expenditure incurred in respect of very senior citizen. It provides for following:

  1. In case of individual making the payment for parent who is very senior citizen in respect of medical expenditure subject to condition that no health policy has been taken in name of such person, deduction on account of medical expenditure of such person can be claimed for maximum of Rs.30, 000/-. OR 
  1. In case of individual making payment for himself or spouse or dependent children where he or spouse or dependent children as the case may be is very senior citizen, subject to condition that no health policy has been taken in name of such person, deduction on account of medical expenditure of such person can be claimed for maximum of Rs.30, 000/-

However, the aggregate deduction available to any individual in respect of health insurance premia and the medical expenditure incurred would, be limited to Rs. 30, 000/-. Similarly, aggregate deduction for health insurance premia and medical expenditure incurred in respect of parents would be limited to Rs.30, 000/-. Therefore maximum deduction can be taken for Rs. 60, 000/- in combined situation.

Additional deduction for A.Y.2016-2017 in respect of medical expenditure incurred in respect of very senior citizen. (For HUF assessee) 

Finance act, 2015 has made changes in section 80D by substituting section 80D (3) w.e.f. A.Y.2016-2017 to provide for deduction u/s 80D in respect of medical expenditure incurred in respect of very senior citizen. It provides for following:

In case a HUF has made payment for medical expenditure for very senior citizen and no medical insurance premium has been paid in respect of such person, than maximum deduction on account of medical expenditure incurred for very senior citizen be allowed for Rs.30,000/-. However total deduction u/s 80D in case of HUF making the payment shall not exceed Rs.30,000/- in aggregate for medical insurance of other members and medical expenditure for very senior citizen. Therefore in a case very senior citizen has no medical policy, than deduction on account of medical expenditure shall be claimed, otherwise only medical insurance deduction be allowed if health insurance has been taken.

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