Section 80D: Claiming Medical Expenses & Proof Needed

Posted on: Jan 20, 2023 | 3 mins | Written by: HDFC ERGO Team

Section 80D: Claiming Medical Expenses & Proof Needed

As you sit down with your CA and make investments in order to save taxes, you will look at the various sections of the Income Tax Act to see where you can make maximum savings. Section 80D is one of the most beneficial ways of getting a tax rebate, as this tax benefit is given on premiums paid for medical insurance policies. It’s a great investment as you get to secure yourself and your loved ones financially in case of medical emergencies. However, when buying the policy and using it for a tax rebate, you should know if proof is required for claiming medical expenses under 80D.

The Tax Deductions Permissible Under Section 80D of the Income Tax Act, 1961

Under 80D of the Income Tax Act, the following expenses relating to health are eligible for tax deductions:

1. Premium paid towards health insurance policy by individuals and Hindu Undivided Families (HUF)

2. Premium paid for top-up healthcare plans

3. Preventive health check-ups

4. Medical expenses of senior citizens if they are not covered under any health insurance policies

5. Any contributions made to Central Government health schemes

Now, let’s take a look at how much tax benefit you can avail of:

• For insurance of self (if you are below 60 years of age), spouse and dependent children, you can claim a deduction of up to Rs 25,000.

• For insurance of self, family, and parents (all below 60 years of age), the maximum deduction is Rs 50,000 (Rs 25,000+Rs 25,000)

• For insurance of self and family (below 60 years of age) and senior citizen parents, the maximum deduction is Rs 75,000 (Rs 25,000+Rs 50,000). For senior citizens, the amount of deduction is up to Rs 50,000.

• For insurance of self, family and parents (when both you and your parents are above 60 years), you can claim up to Rs 100,000 (Rs 50,000+Rs 50,000).

• Members of HUF can avail of a deduction of Rs 25,000 for insurance of self, spouse and dependent children and an additional Rs 25,000 for parents’ insurance if all are below 60 years. If the insured is aged above 60 years, it is Rs 50,000.

• For preventive health check-ups, you can avail of a deduction of Rs 5,000, but this deduction will be within the overall limit of Rs 25,000/50,000.

Tax Deduction for Medical Expenses Under Section 80D of the Income Tax Act

As per Section 80D of the Income Tax Act, senior citizens can claim a maximum deduction of Rs 50,000 per annum incurred on medical expenses, provided they don’t have health insurance. This means if you already have health insurance for your senior citizen parent, you cannot claim an additional deduction for medical expenses. This 80D tax benefit is applicable only to senior citizens. To claim the deductions, all expenses should be made in any mode other than cash, such as credit card/Net banking, UPI, etc.

A tax deduction of Rs 5,000 towards preventive health check-ups can also be availed, but this should be within Rs 50,000 ceiling. The payment for preventive check-ups can be made in cash.

Know More: Tax Benefits on Preventive Health Check-Ups

Is Proof Required For 80D Deductions?

The Income Tax Act Department does not mandate the submission of proof to claim tax benefits under Section 80D, but it is advisable to keep a record of all the expenses incurred during the year, such as health insurance premium receipts, medical bills, medical expenses, test reports, etc. This is because your employer may ask you for documentary evidence of all the deductions while issuing Form 16 to file your tax returns. Secondly, if you are filing tax returns on your own and are not dependent on Form 16, keeping a record of the bills will make it easier for you while availing of tax deductions.

Maximising Deductions: Key Strategies for Senior Citizens

Senior citizens who want to maximise their deductions under Section 80D can follow these tips:

• Choosing plans with wider coverage

One of the best tips to save your taxes is to choose health insurance plans offering comprehensive coverage. The more treatment options and inclusions of the plan, the higher the premium amounts you can claim deductions for.

• Making dependent parents part of the policy

Are your parents dependent on you financially? You can include them as dependents in your health insurance plan as well. You can claim deductions for the premiums you pay for their health insurance.

• Submitting deduction claims for preventive health checkups

Preventive health checkups are part of most health insurance plans for senior citizens. This helps detect issues, if any, early and ensures they get proper treatment on time. However, most people don’t know they can save taxes by claiming deductions for the costs spent on these preventive checkups.

• Breaking down premiums in case of joint family policies

Having separate health insurance policies for each member allows you to split and pay the premium individually, even if you live in a joint family. This way, every member can claim deductions on the premium paid, thereby maximising the tax savings of the entire family.

• Making use of the super senior citizen benefit

Super senior citizens (people aged 80 and above) are eligible for higher deductions under Section 80D. Hence, when choosing health insurance plans, choose the right policy applicable to the elderly members of your family to maximise your deductions.

Medical Deductions for Senior Citizens

When claiming medical deductions for senior citizens, you should remember the following points:

• Deductions for alternative forms of medicine

Some senior citizens may not be comfortable with allopathy and may seek treatment in alternative forms of medicine, such as Ayurveda, Homeopathy, Unani, etc. Deductions are also available for their medical treatment in these fields, thereby broadening the scope of treatment for senior citizens.

•Deductions for preventive health checkups for dependents

In most cases, you can claim deductions for preventive health checkups for yourself and your dependents as well. This is why it is important to include them in your plan.

•Deductions for treating specific diseases

You are eligible for deductions for treating certain critical illnesses. Check your critical illness insurance plan to know which diseases are covered and save taxes accordingly.

Conclusion

Health insurance provides financial protection during a medical crisis. It is also a great tax-saving instrument. As per Sec 80D of the Income Tax Act, an individual can save up to Rs 1 lakh on health insurance for self, spouse, dependent children and parents. If senior citizens do not have health insurance, they can claim a deduction for their medical expenses. While buying a health insurance policy, do thorough research, compare the plans, calculate the premiums using the health insurance premium calculator, which is available online and take the final call.

Frequently Asked Questions

1. Can I claim deductions for OTC medications?

Over-the-counter medications are not covered under Section 80D deductions.

2. Am I eligible for deductions if I have paid my medical bills in cash?

A tax deduction of Rs 5,000 towards preventive health checkups can also be availed and payment can be made in cash.

3. Is there a limit on the maximum deduction I can claim for preventive health checks?

A tax deduction of up to ₹5,000 in a financial year can be claimed for preventive health check-ups. However, this is included in the overall Section 80D limit of ₹25,000 for persons under 60 and ₹50,000 for senior citizens.

4. Am I eligible for deductions for medical bills paid for my adult children?

As per Section 80D, medical bills paid for adult children cannot be claimed as deductions.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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