Section 80D: FAQs on Deduciton of Mediclaim Premium Paid
Q.Which deduction can be claimed under section 80D of Income-Tax Act 1961?
A. The deduction is available for health insurance i.e.
- Medical insurance , commonly known as Mediclaim policy.
- Keeping in effect a medical insurance already bought.
- Preventive Health Check-Ups
- Central Government Health Scheme (CGHS)
Q. Assessee eligible to claim deduction?
A. This deduction is available to Individual and HUF assessee only, making payments for medical insurance.
- Individual can claim for self, wife, dependent children and parents (dependent or non-dependent).
- HUF can claim for premium paid for Mediclaim policy for any member.
Q. Is Service Tax Paid on Premium amount is also deductible?
A. Premium paid consists of two parts, i.e.
- Premium Amount
- Service Tax on Premium.
Unfortunately Section 80D is restricted to premium amount only, means deduction is allowed only for Premium paid, no deduction can be claimed in respect of service tax levied and paid on premium amount under section 80D.
Q. Quantum of deduction available?
A. The maximum deduction which can be claimed under this section:
- Mediclaim for any person aged less than 60 years, then Rs 15,000 per annum inclusive of preventive health check-ups of Rs.5000.
- Mediclaim for person having 60 years or more , Rs 20,000 per annum inclusive of preventive health checkups.
Please note that Maximum deduction claimed for preventive health check-ups is Rs.5000 in aggregation.
Q.If an individual gets Mediclaim for himself as well as for his parents exceeding 60 years i.e. senior citizen, how much deduction is available?
A. Where the assessee is an individual, the sum referred to in sub-section (1) shall be the aggregate of the following, namely:
- the whole of the amount paid to effect or to keep in force an insurance on the health of the assessee or his family as does not exceed in the aggregate fifteen thousand rupees; and
- the whole of the amount paid to effect or to keep in force an insurance on the health of the parent or parents of the assessee as does not exceed in the aggregate twenty thousand rupees.
- the whole of the amount paid for preventive health check-ups for himself, spouse, dependent children and parents (dependent or non-dependent).
It is clear that an individual can claim deduction up to Rs 35,000 (inclusive of payment of Rs.5000 towards preventive health check-ups) for medicalim insurance , if he makes insurance for his family and any parents exceeding 60 years.
A simple example for clarity:
For example, If sanyam spent Rs. 12,000 for self health insurance and also paid Rs.4,000 towards Central Government Health Check-up. In addition, he has also incurred Rs.17,000 on his father’s (age 65 years) insurance policy with another payment Rs.24,00 towards his health check-up. Now, the total deduction would be.
|For Sanyam’s Father
Although deduction limit for Senior Citizen is Rs.20,000 but the limit of preventive health check-up is maximum of Rs.5,000 in aggregation. So even if the limit is not exhausted in sanyam’s father case but payment towards health check-up would not exceed Rs.2,000.
Q. What should be mode of payment of insurance premium?
A. It should normally be paid via any mode other than cash:
- Any mode other than cash for payment of Premium.
- Cash can be paid for Preventive Health Check-ups.
Q. Is deduction available under section 8D, in case employer deducts amount of medical insurance for employee and his family from salary?
A. Yes, deduction is available. Employee needs to get a certificate from the employer regarding deduction of amount for medical insurance purpose.
Q. Can the amount of premium be paid from any income?
A. No, you must have noticed that Section 80D begins with the line “the payment should be only out of income chargeable to tax”.
Initial para of Section 80D for your reference:
80D. (1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted such sum, as specified in sub-section (2) or sub-section (3), payment of which is made by any mode, other than cash, in the previous year out of his income chargeable to tax.
For example, one cannot pay premium out of income earned from agriculture which is exempted under section 10(37) or income earned from dividends on share of Indian Companies which is exempted under section 10(34).
Q. Is deduction under section 80D available for Mediclaim policy taken or held Overseas?
A. Yes, you can , there in nothing in the provision u/s 80D which prohibits claim of deduction u/s 80D for medical insurance for overseas journey. The only requirement, as given in section 80D(5) is that the insurance companies issuing such overseas insurance should be one of these
(5) The insurance referred to in this section shall be in accordance with a scheme made in this behalf by
(a) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalization) Act, 1972 (57 of 1972) and approved by the Central Government in this behalf; or
(b) any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999).