Income Tax Act appreciates people for buying health insurance by allowing deduction on payment of premiums towards their insurance policies. Section 80D of the IT Act provides a deduction to the extent of ₹25,000 in respect of the premium paid towards an insurance on the health of self, spouse and dependent children. The section further allows a deduction for upto ₹25,000 for premium paid towards a health insurance policy of parents of the assessee. It does not matter whether parents are dependent or not.
Deduction for premium payment towards health insurance policy when parents are senior citizen
Section 80D of the Income Act provides an increased deduction of ₹50,000 in case any the parents of the assessee are senior citizens. An individual resident in India of the age of 60 years or more at any time during the relevant previous year is treated as a senior citizen.
Deduction in respect of payment towards preventive health check-up
Section 80D of the IT Act allows a deduction of up to ₹5,000 in respect of payment made towards preventive health check-up of self, spouse, dependent children or parents made during the previous year. Payment on account of preventive health check-up may be made in cash.
The deduction of ₹5,000 is counted within the overall limit of ₹25,000 or ₹50,000 as the case may be.
Deduction in respect of expenses towards medical treatment
Section 80DDB allows tax deduction on expenses incurred by an individual on himself or a dependent towards the treatment of specific diseases as stated in the act. The deduction amount can be availed for the sum actually paid or ₹40,000, whichever is lower.
The maximum deduction amount in case of a senior citizen is ₹1 lakh.
The amount of deduction shall be reduced by the amount paid by an insurance company or reimbursed by the employer.
Deduction for medical treatment of a dependent who is a person with disability
Sections 80DD of the Income Tax Act covers deduction for the medical expenditure incurred for self or for a dependent person. A dependent person can be spouse, children, parents, brothers and the sisters of the assessee.
A deduction up to maximum of ₹75,000 will be allowed under the section. The maximum deduction limit increases to ₹1.25 lakh in case of cases of severe disability. Severe disability means where the disability percentage is 80% or more.