Section 80D Provides Significant Assistance in Reducing Your Tax Liability. Discover How?

| Updated on December 22, 2023
reducing tax liability

There are a lot of conducts in the Indian Income Tax Act, of 1961 that are meant to provide a better tax system for taxpayers with the help of some deductions. One of those brilliant moves in the tax system is the Section 80D deductions. This section allows the deduction of money spent on health insurance and for practice in maintaining health. 

The deductions that are allowed under this section are: 

  • Money spent as a premium for the health insurance policy.
  • Amount spent on healthcare of family members (including parents).

Thanks to this provision from the government, you can claim the amount spent on insurance from your income tax. That being just a trailer for the whole movie, in this write-up, we are going to give you a clear image of Section 80D and how it works.

Are There Any Restrictions Under Section 80D?

The restrictions under this section are pretty clear and are directly based on the age groups. To explain these restrictions clearly, you can refer to the table given below that is applied to people (insured under the policy) aged below 80 years:

InsuredDeduction Amount
Aged Under 60 YearsAged Above 60 Years
Self, Partner, and Children25,00050,000
Parents25,00050,000
Maximum Deduction50,0001,00,000
Pot: Preventive Healthcare*5,0005,000

Since there is no health insurance available for people over the age of 80 years, a deduction of ₹50,000 will be provided even if you have spent that money on medical treatment instead of paying the insurance premium. 

Note: Speaking of eligibility, only individual people and families under the Hindu Undivided Families Act are eligible for the 80D tax reductions. A company or an enterprise cannot claim these returns.

What Deductions are Allowed in Section 80D of the Income Tax Act of 1961?

The following are the deductions that you can claim as an individual or a HUF:

  1. The health insurance premium that is paid for self, spouse, children, and parents.
  2. The amount that is paid towards preventive health check-ups.
  3. Medical expenses to maintain the health of senior citizens without medical insurance.
  4. Contributions made to any government health insurance scheme.

Things to Consider Prior to Applying for Tax Deductions Under Section 80D

Claiming for this return is not as forward as you might think. There are some things to consider before applying for the returns. The list below consists all those points on which you must rely:

  1. The Insurance paid in cash will not be considered as the appropriate form of payment.
  2. If you and your parents have made the payment for insurance premiums in part, then both of you can claim tax deductions for their paid amount under section 80D.
  3. The premium that was paid for siblings, grandparents, uncles, or other relatives will not be qualified for tax deductions.
  4. If your children are working professionals, the premium paid by you on their behalf will not be counted.
  5. Group health insurance premiums paid by the employer are strictly prohibited from applying for deductions.
  6. In terms of service tax and Cess amount, no deduction is provided to them when they are added to health insurance premiums.

If you violate any of the points from this list, we recommend you not waste your time on applying for the tax returns as it would be a complete waste of time for you.

pie chart

Statistics
This pie chart shows the percentage of the population that is covered or not covered by a health insurance plan. As we can see, in the urban areas, people are more aware and have chosen to get a coverage plan. But it’s still much lower than expected.

Is Section 80D Different from 80C?

If you are not aware of the fact that along with section 80D, there is another section that allows tax deduction in some areas, which is known as section 80C. This section has its own rules are guidelines, and the difference between both sections is evaluated below:

Basis of DifferenceSection 80CSection 80D
Meaning Section 80C provides deductions in several investment payments such as ULIP, PPF, ELSS, EPF, LIC premium, etc.Under section 80D, the tax exemptions are only allowed in health insurance payments for self, family, & parents.
Maximum limit of tax deductionsUp to 1.5 LakhUp to 1 Lakh
Scope of BenefitsHigh scope of benefitsLow scope of benefits

Conclusion

Finally, this was the complete and detailed introduction to Section 80D of the Income Tax Act of 1961. Now you know that this section provides tax exemptions for the payments made against the health insurance premium for yourself, your spouse, or your parents. Also, one thing to consider is that sections 80D and 80C are not at all the same and hold their significance and set of rules.




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