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Section 80D

Written by: CHETNAA GOYAL Posted on: 17 January, 2023

Deduction in Respect of Medical Insurance (Section 80D)

In the case of an Individual

1. Deduction in respect of insurance premium paid for the family Maximum deduction of Rs. 25,000 is allowed in respect of the following payments–

premium paid to effect or keep in force an insurance on the health of self, spouse, and dependant children or
any contribution made to the Central Government Health Scheme or
such other health scheme as may be notified by the Central Government. The Contributory Health Service Scheme of the Department of Atomic Energy has been notified by the Central Government.

2. Deduction in respect of insurance premium for parents: A further deduction of up to Rs 25,000 is allowable to effect or to keep in force insurance on the health of parents of the assessee.

3. Deduction in respect of payment towards preventive health check-up: Section 80D provides that deduction to the extent of Rs. 5,000 (any mode of payment, including cash) shall be allowed in respect to the payment made on account of preventive health check-ups of self, spouse, dependant children, or parents made during the previous year. However, the said deduction of Rs. 5,000 is within the overall limit of Rs. 25,000 or Rs. 50,000.

4. In case the assessee or the parent of the assessee is a senior citizen, i.e a person of the age of 60 years or more and resident in India, then the deduction amount would be Rs. 50,000 instead of Rs. 25,000.

5. Deduction for medical expenditure incurred on senior citizens: As a welfare measure towards the senior citizens i.e., a person of the age of 60 years or more and resident in India, who are unable to get health insurance coverage, a deduction of upto Rs. 50,000 would be allowed in respect of any payment made on account of medical expenditure in respect of such person(s), if no payment has been made to keep in force an insurance on the health of such person(s).

6. Mode of payment: For claiming such deduction under section 80D, the payment can be made:

by any mode, including cash, in respect of any sum paid on account of preventive health check-up;
by any mode other than cash, in all other cases

In the case of a HUF

Deduction under section 80D is allowable in respect of the premium paid to insure the health of any member of the family. The maximum deduction available to a HUF would be Rs. 25,000 and in case any member is a senior citizen, Rs. 50,000. Further, the amount paid on account of medical expenditure incurred on the health of any member(s) of a family who is would qualify for deduction subject to a maximum of provided no amount has been paid to effect or keep in force any insurance on the health of a such person(s).

Other conditions

The other conditions to be fulfilled are that such premium should be paid by any mode, other than cash, in the previous year out of his income chargeable to tax. Further, the medical insurance should be in accordance with a scheme made on this behalf by -

the General Insurance Corporation of India and approved by the Central Government on this behalf; or
any other insurer and approved by the Insurance Regulatory and Development Authority.

Let us simplify Section 80D and understand with the help of a Chart hereunder:

1.	a. Any premium paid, otherwise than by way of cash, to keep in force insurance on the health. b. Contribution to Central Government Health Scheme (CGHS)+ c. Preventive health check-up expenditure	In the case of individual	Self, spouse, and dependent children	Rs. 25,000
		In the case of HUF	Family member
	In case any of the above persons are of the age of 60 years or more + resident in India then limit should be Rs 50000
2.	Any premium paid, otherwise than by way of cash, to keep in force insurance on the health and Preventive health checkup.	Parents		Rs. 25,000

	In case either or both the parents are of aged 60 years or more + Residents of India then the limit should be Rs. 50000
3.	Amount paid on account of medical expenditure	For self/ spouse/ parents + who is of the age of 60 years or more + Resident in India + no payment has been made to keep in force an insurance on the health of the such person		Rs. 50,000
	Maximum Rs. 5,000 allowed as a deduction for an aggregate of preventive health check-up expenditure, by any mode including cash, mentioned in 1 and 2 (Subject to an overall limit of Rs. 25,000 or Rs. 50,000, as the case may be)

Note: In case the individual or any of his family members is a senior citizen, the aggregate of deduction, in respect of payment of premium, contribution to CGHS, and medical expenditure incurred, as specified in (1) & (3) above, cannot exceed Rs.50,000.

In case one of the parents is a senior citizen who is covered under mediclaim policy and another is also a senior citizen but not covered under mediclaim policy, the aggregate of deduction, in respect of payment of medical insurance premium and medical expenditure incurred, as specified in (2) & (3) above, cannot exceed Rs. 50,000.

Further, this is to be noted importantly, that, if an individual opts for the New Tax Regime, the deduction claimed for medical insurance premiums paid under Section 80D will not be claimable.

Section 80D(4A)

The deduction where the premium for health insurance is paid in a lump sum appropriate fraction of lump sum premium allowable as a deduction

In a case where mediclaim premium is paid in lumpsum for more than one year by

An individual, to effect or keep in force an insurance on his health or health of his spouse, dependent children, or parents; or
A HUF, to effect or keep in force an insurance on the health of any member of the family, then, the deduction allowable under this section for each of the relevant previous years would be equal to the appropriate fraction of such lump sum payment.

Meaning of certain terms

Term	Meaning
Appropriate fraction	1 ÷ Total number of relevant previous years
Relevant previous year	The previous year in which such lump sum amount is paid; and the subsequent previous year(s) during which the insurance would be in force.

Example 1

Mr. Sanjay, aged 45 years, paid a medical insurance premium of Rs.23,000 during the P.Y.2021-22 to insure his health as well as the health of his spouse. He also paid a medical insurance premium of Rs 44,000 during the year to ensure the health of his father, aged 67 years, who is not dependent on him. He contributed Rs. 4000 to Central Government Health Scheme during the year. He has incurred Rs. 2200 in cash on preventive health check-ups of himself and his spouse and Rs 4,500 by cheque on preventive health check-ups of his father. Compute the deduction allowable under section 80D for the A.Y. 2022-23.

Answer

Deduction allowable to Mr. Sanjay under section 80D for the A.Y. 2022-23

	Particulars	Actual Payment(Rs)	Maximum deduction allowable(Rs)
A.	Premium paid and medical expenses incurred for self and spouse
	(i) Medical insurance premium paid for self and spouse	23,000	23,000
	(ii) Contribution to CGHS	4,000	2,000
	(iii) Exp. on preventive health check-ups of self & spouse	2,200	Nil
		29,200	25,000
B.	Premium paid and medical expenses incurred for father, who is a senior citizen
	(i) Mediclaim premium paid for father, who is over 60 years of age	44,000	44,000
	(ii) Expenditure on preventive health check-ups of father	4,500	4,500
		48,500	48,500
	Total deduction under section 80D (25,000 + 48,500)		73,500

Notes - The total deduction under A.(i), (ii) and (iii) above should not exceed Rs.25,000. Therefore, the contribution to CGSH would be restricted to Rs 2,000 (25,000 - 23,000), and expenditure on preventive health check-ups for self and spouse would be Nil.

The total deduction under B. (i) and (ii) above should not exceed Rs.50,000. Therefore, the expenditure on preventive health check-ups for the father would be availed for the full amount of Rs 4500. [Since the max deduction permissible is Rs 50,000, and is Rs.48,500 [44000+4500] In this case
The total deduction allowed on account of expenditure on preventive health check-ups of self, spouse, and father is Rs.4,500, which is less than the maximum permissible limit of Rs.5,000.

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CHETNAA GOYAL

FCA, B.COM, More than 10 years of Experience in Direct Tax