Deduction in respect of medical insurance premium [Section 80D] :
(i) As per section 80D, in case of an individual, a deduction is allowed in respect of premium paid to effect or keep in force an insurance on the health of self, spouse and dependent children or any contribution made to the Central Government Health Scheme, up to a maximum of Rs 25,000 in aggregate. A further deduction of Rs 25,000 is also allowed in case the premium is paid for the health insurance taken for the health of parents.
An increased deduction of Rs 30,000 (instead of Rs 25,000) shall be allowed in case any of the persons mentioned above is a senior citizen i.e., an individual resident in India of the age of 60 years or more at any time during the relevant previous year.
Further, deduction would be allowed only if the payment of insurance premium is made in any mode other than cash.
(ii) Section 80D provides that deduction to the extent of Rs 5,000 shall be allowed in respect payment made on account of preventive health check-up of self, spouse, dependent 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 30,000, as the case may be.
(iii) In effect, the maximum deduction allowable under this section in any assessment year shall be to the extent of Rs 25,000 for self, spouse and dependent children (Rs 30,000 in case any of the persons are senior citizen) in respect of the following payments made –
(1) to effect or keep in force an insurance on the health of self, spouse or dependent children.
(2) on account of contribution to the Central Government Health Scheme or such other health scheme as may be notified by the Central Government. Contributory Health Service Scheme of the Department of Space has been notified by the Central Government.
(3) on account of preventive health check-up of self, spouse or dependent children.
(iv) A further deduction up to Rs 25,000 (Rs 30,000 in case either of parents are senior citizens) is allowable –
(1) to effect or keep in force an insurance on the health of parents.
(2) on account of preventive health check-up of parents.
(v) The maximum deduction allowable in respect of expenditure on preventive health checkup of self, spouse, dependent children and parents would be ` 5,000.
(vi) Further it is provided that, for claiming such deduction under section 80D, the payment can be made:
(1) by any mode, including cash, in respect of any sum paid on account of preventive health check-up;
(2) by any mode other than cash, in all other cases.
(vii) As a welfare measure towards very senior citizens i.e., person of the age of 80 years or more and resident in India, who are unable to get health insurance coverage, deduction of upto Rs 30,000 would be allowed in respect of any payment made on account of medical expenditure in respect of a such person(s), if no payment has been made to keep in force an insurance on the health of such person(s).
(viii) “Very senior citizen‟ means an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year. The following table summarizes the provisions of section 80D –
| S. No. | Nature of payment/ expenditure | Expenditure on behalf of | Deduction for A.Y. 2016-17 | ||||
| I | (i) Any premium paid, otherwise than by way of cash, to keep in force an insurance on the health
(ii) Contribution to Central Government Health Scheme (CGHS) (iii) Preventive health check up expenditure |
|
Rs 25,000
Rs 30,000 |
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| In case any of the above persons is of the age of 60 years or more + resident in India
|
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| II | (i) Any premium paid, otherwise than by way of cash, to keep in force an insurance on the health
(ii) Preventive health check up |
Parents
|
|||||
| In case either or both the parents is of the age of 60 years or more + Resident in India | |||||||
| Maximum Rs 5,000 allowed as deduction for aggregate of preventive health check up expenditure mentioned in I and II (Subject to overall limit of Rs 25,000 or Rs 30,000, as the case may be) | |||||||
| III
|
Amount paid on account of medical expenditure | For self/ spouse/parents+who is of the age of 80 years or more + Resident in India+no payment has been made to keep in force an insurance on the health of such person
|
Rs 30,000
|
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Note: In case the individual or any of his family members is a senior citizen or very senior citizen, the aggregate of deduction, in respect of payment of premium, contribution to CGHS and medical expenditure incurred, as specified in (I) & (III) above, cannot exceed Rs 30,000.
In case one of the parents is a senior citizen and another is a very senior citizen or both of them are very senior citizens, the aggregate of deduction, in respect of payment of medical insurance premium and medical expenditure incurred, as specified in (II) & (III) above, cannot exceed Rs 30,000.
Illustration
Mr. A, aged 40 years, paid medical insurance premium of Rs 20,000 during the P.Y.2015-16 to insure his health as well as the health of his spouse. He also paid medical insurance premium of Rs 27,000 during the year to insure the health of his father, aged 63 years, who is not dependent on him. He contributed Rs 3,600 to Central Government Health Scheme during the year. He has incurred Rs 3,000 in cash on preventive health check-up of himself and his spouse and Rs 4,000 by cheque on preventive health check-up of his father. Compute the deduction allowable under section 80D for the A.Y.2016-17.
Solution
Deduction allowable under section 80D for the A.Y.2016-17
| Particulars | Actual Payment | Maximum deduction allowable | |
| A. | Premium paid and medical expenditure incurred for self and spouse | Rs | Rs |
| (i) | Medical insurance premium paid for self and spouse | 20,000 | 20,000 |
| (ii) | Contribution to CGHS | 3,600 | 3,600 |
| (iii) | Exp. on preventive health check-up of self & spouse | 3,000 | 1,400 |
| 26,600 | 25,000 | ||
| B. | Premium paid and medical expenditure incurred for father, who is a senior citizen | ||
| (i) | Mediclaim premium paid for father, who is over 60 years of age | 27,000 | 27,000 |
| (ii) | Expenditure on preventive health check-up of father | 4,000 | 3,000 |
| 31,000 | 30,000 | ||
| Total deduction under section 80D (Rs 25,000 + Rs 30,000) | 55,000 |
Notes:
(1) The total deduction under A.(i), (ii) and (iii) above should not exceed Rs 25,000. Therefore, the expenditure on preventive health check-up for self and spouse would be restricted to Rs 1,400, being (Rs 25,000 – Rs 20,000 – Rs 3,600).
(2) The total deduction under B. (i) and (ii) above should not exceed Rs 30,000. Therefore, the expenditure on preventive health check-up for father would be restricted to Rs 3,000, being (Rs 30,000 – Rs 27,000).
(3) In this case, the total deduction allowed on account of expenditure on preventive health check-up of self, spouse and father is Rs 4,400 (i.e., Rs 1,400 + Rs 3,000), which is less than the maximum permissible limit of Rs 5,000.
Illustration 7
Mr. Y, aged 40 years, paid medical insurance premium of Rs 22,000 during the P.Y.2015-16 to insure his health as well as the health of his spouse and dependent children. He also paid medical insurance premium of Rs 33,000 during the year to insure the health of his father, aged 67 years, who is not dependent on him. He contributed Rs 2,400 to Central Government Health Scheme during the year. Compute the deduction allowable under section 80D for the A.Y.2016-17.
Solution
Deduction allowable under section 80D for the A.Y.2016-17
| Particulars | Rs | |
| (i) | Medical insurance premium paid for self, spouse and dependent children | 22,000 |
| (ii) | Contribution to CGHS | 2,400 |
| (iii) | Mediclaim premium paid for father, who is over 60 years of age (Rs 33,000 but restricted to Rs 30,000, being the maximum allowable) | 30,000 |
| 54,400 |
Note – The total deduction under (i) and (ii) above should not exceed Rs 25,000. In this case, since the total of (i) and (ii) (i.e., Rs 24,400) does not exceed Rs 25,000, the same is fully allowable under section 80D.
However, had the medical insurance premium paid for self, spouse and children been Rs 24,000 instead of Rs 22,000, then, the total of Rs 26,400 (i.e., Rs 24,000 + Rs 2,400) under (i) and (ii) above would be restricted to Rs 25,000. In such a case, the total deduction allowable under section 80D would be Rs 55,000 [i.e., Rs 25,000 [(i) & (ii)] + Rs 30,000 (iii)].
(ix) In the case of a HUF, deduction is allowed under this section in respect of 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 30,000. Further, the amount paid on account of medical expenditure incurred on the health of any member(s) of a family who is a very senior citizen would qualify for deduction subject to a maximum of Rs 30,000 provided no amount has been paid to effect or keep in force any insurance on the health of such person(s).
(x) 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 in this behalf by –
(a) the General Insurance Corporation of India and approved by the Central Government in this behalf; or
(b) any other insurer and approved by the Insurance Regulatory and Development Author