What is Section 80D?

Section 80D is a provision under the Indian tax code that lets taxpayers deduct a part of their taxable income by adjusting it against premiums paid towards health insurance and expenses incurred towards preventive health checkups. The tax code also allows you to make these deductions even if the payments are made to cover your spouse, dependent children or parents. The total deductions you can claim are capped at different levels as outlined below.

Section 80D Deduction Calculator

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Total Deductions you can claim under Section 80D

Let’s start with the most simple use case - An individual self, or somebody who’s married with dependent children.

In this case, the direct taxpayer could include health insurance premiums and preventive health check-up costs incurred towards protecting themselves, their spouse and dependent children and deduct these expenses from their taxable income up to a limit of ₹25,000. The only exception here is that the limit for health checkups is also separately capped at ₹5,000.

But bear in mind, deductions here only mean that you can reduce this sum from your total taxable income. However, the total savings you can generate from this will depend on the tax rate applicable to you and the regime you pick. In any case, here’s a table illustrating the maximum sum you can save if you are claiming deductions on behalf of your self/spouse or dependent children under the old tax regime

But what happens if you are also providing for your parents?

Well, in that case, things change a bit. The government added these provisions in a bid to incentivize taxpayers to invest in health insurance and preventive healthcare. But we don’t have many nuclear families in India. Kids take care of their parents and oftentimes pay for their expenses too. So the government also allows you to deduct an extra sum from your taxable income if you bear the costs associated with your parent's health insurance and the expenses they incur towards preventive health checkups. The only caveat is that the government treats senior citizens (individuals aged >= 60 years) differently. So the total deductions you can claim will depend on your parents’ age.

But for now, let’s assume your parents are under the age of 60 years and aren’t senior citizens just yet. In which case you can deduct an additional ₹25,000 from your taxable income. The only exception once again is that the limit for health checkups is separately capped at ₹5,000.

Applicable tax deductions for an individual self, or somebody who’s married with dependent children, who also pays for their parents’ (age <60 years) health insurance and preventive health checkups

Total tax Savings through Section 80D if you are claiming deductions on behalf of your self/spouse/dependent children and parents

But what happens if your parents are above the age of 60? Well, the government believes older folk deserve more support since they’re more likely to need insurance. They also fully understand that insurance and preventive health checkups get a lot more expensive beyond the age of 60. In fact, you may not even have the provision to buy them health insurance, since insurers rarely extend a policy to senior citizens who may be dealing with pre-existing conditions.

So with these details in mind, the tax code allows you to deduct a maximum sum of ₹50,000 from your taxable income if your parents are older than 60 even if such expenses are merely medical expenditures. You also have the provision to include health insurance premiums and preventive health check-up costs (limit of ₹5,000) while calculating the total deductions. But such exemptions meant for dependent parents are capped at a sum of ₹50,000. Here’s a table illustrating the same.

Applicable tax deductions for an individual self, or somebody who’s married with dependent children, who also pays for their parents’ (age > 60) medical expenditure, health insurance or preventive health checkups.

Total tax Savings through Section 80D if you are claiming deductions on behalf of your self/spouse/dependent children and parents whose age is greater than 60

Finally, there is the rare possibility that you could also be over the age of 60 while tending to parents who also happen to be older than 60. In which case you claim deductions of up to ₹50,000 for medical expenditure, health insurance or preventive health checkup (with a limit of ₹5,000) for yourself. And claim deductions of another ₹50,000 for medical expenditure, health insurance or preventive health checkup (with a limit of ₹5,000) for your parents.

Applicable tax deductions for an individual self (age > 60), or somebody who’s married with dependent children, who also pays for their parents’ (age > 60) medical expenditure, health insurance or preventive health checkups.

Total tax Savings through Section 80D if you are claiming deductions on behalf of your self/spouse > 60 /dependent children and parents whose age is greater than 60

But bear in mind, there are some payments that the income tax department will not recognise as meaningful deductions, even if such payments are made towards paying insurance premiums, medical expenditure or preventive healthcare checkups. These are collectively termed exclusions.

Here are a few popular exclusions under Section 80D

1. All payments made in cash, even if such payments are made towards paying insurance premiums, medical expenditures or preventive healthcare checkups will not be considered.
2. If you have a corporate insurance plan or other similar group plans and you aren’t bearing the premiums on your own, then you cannot use such expenses and deduct them from your total taxable income.
3. If your kids aren’t dependent on you, then you cannot claim deductions on their behalf.

How to claim tax benefits under Section 80D?

You can claim tax deductions when you are filing your income tax returns. If you are a salaried individual you can also make these disclosures to your HR and reduce your tax outgo by lowering the TDS (Tax deducted at source by your employer).

How to calculate deductions under Section 80D if you’re buying multi-year policies?

In the case you’ve paid your premiums all at once while claiming coverage for 2 or 3 years, then you could deduct the premiums from your taxable income proportionately each year. So for instance if you paid ₹30,000 for a policy that extends coverage for 3 years, you could deduct ₹10,000 in the first year, ₹10,000 in the second year and ₹10,000 in the third year.