Section 80D allows deduction of Rs.15,000 for covering insurance for own family & additional Rs.15,000 for premium paid for parents
Medical Insurance is becoming increasingly popular in India with the increasing cost of medical treatment and hospitalization expenses. The benefit of having a medical insurance is that by making a small payment of insurance premium, the proposer can cover the cost of medical treatment and hospitalization of himself and his family members in case of need.
Section 80D of the Income-tax Act provides for deduction out of the gross total income of the taxpayer in respect of such medical insurance premium paid. The popular medical insurance policy offered by the General Insurance Corporation of India is the ‘Mediclaim Policy.’ Several private insurance companies recognized by the Insurance Regulatory & Development Authority (IRDA) also offer a variety of medical insurance products, the premium payment of which is eligible for deduction under Section 80D.
TAX DEDUCTION UNDER SECTION 80D
Section 80D of the Income-tax Act provides that a taxpayer can claim a deduction up to Rs.15,000 per year in respect of medical insurance premium paid by him by cheque out of his income chargeable to tax. It needs to be noted that payment of premium by cheque (either bearer, crossed or account payee) is one of the important conditions prescribed under Section 80D.
Deduction under Section 80D, in the case of an individual is allowed for insurance premium paid to keep in force the insurance on the health of the individual himself or on the health of the spouse (i.e., wife or husband), parents, or children.
In the case of a Hindu Undivided Family, any sum paid to effect or to keep in force insurance on the health of any member of the family is also allowed as a deduction.
Where the individual or his spouse or dependent parents or any member of the family is a Senior Citizen, such deduction is allowed within an enhanced limit of Rs.20,000.
HIGHER DEDUCTION FOR MEDICAL PREMIUM PAID FOR PARENTS
Responding to the demand to allow higher deduction in respect of health insurance premium under Section 80D in view of the fact that insurance cover for the elderly comes at a higher price, under the Finance Act, 2008, further reliefs as under came to be announced with effect from FY 2008-09, i.e. Assessment Year 2009-10:
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