Section 80D Deduction on Medical Insurances Scheme by State Governments

Deduction may be available soon for Medical Insurances under State Govt. Health Scheme

1.  Existing provisions of section 80D

The existing provisions contained in sub-section (2) of section 80D provides that the whole of the amount paid to effect or to keep in force an insurance on assessee’s 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.

2.  Amendment proposed by Finance Bill, 2013

Finance Bill, 2013 proposes to expand the scope of deduction under section 80D by expanding the eligible schemes on which deduction shall be available by amending section 80D with effect from 1.04.2014 which provides as under:

In section 80D of the Income-tax Act, in sub-section (2), in clause (a), after the words “Central Government Health Scheme”, the words “or such other scheme as may be notified by the Central Government in this behalf” shall be inserted with effect from the 1st day of April, 2014.’

3.  Impact of amendment

It has been noticed that there are other health schemes of the Central and State Governments, which are similar to the Central Government Health Scheme 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, it is proposed to amend section 80D, 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.

This amendment will take effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

The effect of this amendment is that section 80D shall now give deduction to assessee’s across all health services scheme provided by the Central and the State Government as and when they are notified by the Central Government. This will ensure that assessee’s who are investing in State Government health schemes will also be eligible for deductions. It will be appreciated if the Central Government notify these health schemes as early as possible so that the assessee’s are aware of the same and can make the right investment to ensure that they can avail deduction under section 80D

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