Mediclaim Deduction Tax benefit: Section 80D of Income Tax Act, 1961
Income Tax Act provides number of deductions or schemes for tax saving. These are schemes in which you can invest and avail tax deduction. One of the deductions is under Section 80D in which a taxpayer invests their money in medical insurance premium and that amount can be availed as mediclaim deduction. This had been introduced to promote medical insurance and encourage public to buy medical insurance for future safety.
Eligibility to Avail Mediclaim Deduction
Any individual/HUF can avail deduction under section 80D. Also a person can invest money or can buy insurance on the name of
- his spouse,
- dependent child,
- dependent /independent parents
and he can still avail the deduction. The deduction of mediclaim insurance policy under section 80D is over and above the deduction availed under section 80C/ 80CCD/ 80CCC.
National Pension Scheme (NPS) in India
Quantum of deduction
Individuals/HUF: any person who bought mediclaim insurance policy can avail the deduction under section 80D maximum to –
- Rs 25000 if person’s age is less than 60 years, and
- Rs 50000 if person’s age is more than 60 years (i.e., senior citizen and very senior citizen).
Therefore, if a person is senior citizen and buy policies for himself and for his parents who are senior citizen as well, in such case that person can claim total deduction of Rs. 1,00,000.
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Preventive Health Checkups
Preventive health check-up as the name itself suggests is an expense which one incurs on preventive measures for early detection and safeguard against possible exposure to any disease in future.
Any expense made by taxpayer towards preventive health check-ups will be eligible to a deduction of up to Rs.5,000, which is within the overall limit of Rs.25,000/ 50000.
This deduction can also be claimed either by the individual for himself, spouse, dependent children or parents. The payment for preventive health check-up can be made in cash.
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Lump sum amount of Mediclaim Insurance Policy
If a person has paid lump sum amount in a single year for the policy which is more than one year premium then the whole amount will not be allow as a deduction in same year. The deduction will be available on a fractional basis i.e amount will be allocated to each year on the basis of total amount divided by number of years.
The resulted amount will be allowed as deduction in a single year and remaining amount in another years. Also, that amount of deduction will subject to the limit given under section 80D i.e. amount of deduction shall not be more than Rs 25,000 or Rs 50,000.
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There is no document specified by Income Tax Act, 1961 to avail the mediclaim deduction under section 80D. But it will be advisable to keep the necessary document as a evidence such as medical bills, invoice or payment slip of medicine, insurance policy paper, etc in case you have been asked for proof.
If you don’t have any documents then it will become difficult to proof the deduction. However you can ask for a time to arrange papers and evidence.
Mode of payment
In case of payment of medical insurance, the payment should be made by way other than cash. If you make payments by cash than the whole expenditure will be disallowed. That means a person will not be able to claim any deduction. Therefore person can use net banking, debit card, credit card, UPI etc. for payment.
Important points to keep in mind
A. Payment should be made by any mode other than cash except for preventive health checkups.
B. Meaning of Senior citizen- Senior Citizen means an individual resident in India of the age of 60 yrs or more during the relevant financial year.
C. Premium paid on behalf of a brother, sister, grandparents, aunts, uncles or any other relative cannot be claimed as a deduction for taking tax benefit.
Penalty for not showing the income in Income Tax Return
D. In the case of part payment by you and a parent, both of you can claim a deduction to the extent paid by each.
The author of above article is Shruti Jain.
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