The income tax you pay is also about how you structure your finances. Your taxable income sits within a slab, determining how much of your earnings go toward taxes. Naturally, reducing this taxable income can ease your financial burden and that’s where tax deductions come in. They allow you to legally lower your tax outgo by accounting for eligible expenses, including those related to health and well-being.
If you’ve ever explored how to calculate taxable income, you would know that deductions play a crucial role in bringing down the final tax liability. Among the many deductions available, the one for health insurance often stands out. It not only supports financial planning but also ensures medical expenses don’t become overwhelming.
But tax benefits on health insurance have their own set of conditions—who qualifies, how much can be claimed and whether specific dependents are covered. One question that often comes up is whether medical insurance for dependent in-laws qualifies for a deduction. Let’s look at who is eligible and not in this post.
Section 80D
Section 80D of the Income Tax Act allows individuals to claim deductions on premiums paid for health insurance policies, offering a way to reduce taxable income while securing financial protection. This deduction applies to policies covering yourself, your spouse, children and parents, with specific limits based on the insured person’s age. It also extends to expenses for preventive health check-ups.
However, it does not cover health insurance premiums paid for dependent in-laws. The deduction is strictly available for policies covering your parents—your father and mother—but not your spouse’s parents.
Deductions that can be claimed under Section 80D
Section 80D deduction is related to health-related expenses, reducing taxable income while promoting financial preparedness for medical needs. These deductions cover health insurance premiums and specific medical costs. However, to qualify, the premium must be paid through non-cash modes like credit/debit cards, net banking or UPI. Only preventive health check-ups can be paid in cash and still be eligible for deductions. Below is a breakdown of the benefits available:
Deduction for health insurance premium
Individuals can claim a deduction of up to ₹25,000 on premiums paid for health insurance covering themselves, their spouse and dependent children. If the insured person (self or spouse) is a senior citizen (aged 60 or above), the deduction increases to ₹50,000.
Deduction for health insurance premium paid for parents
An additional deduction is available for health insurance premiums paid for parents. If both parents are below 60 years, the deduction limit is ₹25,000. However, if either parent is a senior citizen, the limit increases to ₹50,000.
Deduction for preventive health check-ups
Preventive health check-ups help detect illnesses early, reducing the risk of severe health complications. These screenings, typically conducted by physicians or general practitioners, encourage proactive health management.
Under Section 80D, individuals can claim a deduction of up to ₹5,000 for preventive health check-up expenses incurred for themselves, their spouse, dependent children, or their parents. This amount is not separate but included within the ₹25,000 or ₹50,000 limit.
Deduction for medical expenses of uninsured senior citizens
If a senior citizen (60 or above) does not have health insurance, their medical expenses can still be claimed as a deduction. The maximum deduction allowed for such medical expenses is ₹50,000. This provision ensures tax relief even for those who cannot avail of insurance due to age or pre-existing conditions.
Maximum deduction limits under Section 80D
- If neither the taxpayer nor their parents are senior citizens:
₹25,000 (for self, spouse and children) + ₹25,000 (for parents) = ₹50,000.
- If the taxpayer is below 60, but the parents are senior citizens:
₹25,000 (for self, spouse and children) + ₹50,000 (for parents) = ₹75,000.
- If both the taxpayer and parents are senior citizens:
₹50,000 (for self, spouse and children) + ₹50,000 (for parents) = ₹1,00,000.
Conclusion
Claiming deductions under Section 80D is simple. When filing your Income Tax Return (ITR), ensure that the health insurance premium or medical expenses are paid through the accepted mode. Maintain receipts, policy documents and payment proofs as supporting records.
While filing your ITR, enter the relevant deduction amount under Section 80D in the appropriate section. If your employer provides tax benefits, submit these details in advance for payroll adjustments. Keeping proper documentation helps avoid discrepancies and ensures a smooth claim process, so that you can keep enjoying the tax benefits year on year.
