Sec 80 D – Deduction – Health Insurance Premium

Medical insurance covers medical expenses which are incurred by insured. Apart from safeguards against financial crisis, it also gives opportunity to save tax. An assessee, being an individual or a Hindu undivided family, while computing total income, can claim deduction under Sec 80D of Income Tax Act, 1961 for the payment of premiums towards medical insurance policies.  

Keeping into account the rising cost of Medical expenses, Finance Minister extended prescribed limits for deduction under sec 80D (Medical insurance premium) for FY 2015-16. Additionally, medical expenditure incurred by the assessee on the health of super senior citizen is also allowed for deduction, provided no amount has been paid towards the medical insurance of such person.

For Individual:-

In case of an individual, for FY- 2015-16, an assessee can claim maximum deduction of the following amount paid as premium/medical expenses as the case maybe:-

Description

Assessee and his family (if none of them are senior citizen)

Parents of Assessee (None of them are senior citizen)

Assessee and his family (if senior citizen or very senior citizen)

Parents of Assesses (if senior citizen or very senior citizen)

Case

(A)

(B)

(C)

(D)

Medical Insurance

25,000

25,000

30,000

30,000

Contribution towards CGHS

25,000

0

30,000

0

Preventive Health Check up

5,000

5,000

5,000

5,000

Medical expenditure if no amount is paid towards medical insurance

0

0

30000

(only if incurred on Very Senior citizen)

30000

(only if incurred on Very Senior citizen)

Maximum deduction

25,000

25,000

30,000

30,000

Total of maximum deduction an assessee can get in FY-2015-16, if premium/medical expenses is paid for:-

(a) Only individual or any member of his family and not for any of his parent Rs. 25,000/- [(A)]
(b) Individual or any member of his family and any of his parent is not senior or very senior citizen: Rs. 50,000/- [(A) + (B)]
(c) Individual or any member of his family is not senior citizen but any of his parent is a senior citizen or very senior citizen: Rs. 55,000/- [(A) + (D)]
(d) Individual or any member of his family and any of his parent is senior citizen or very senior citizen: Rs. 60,000/- [ (C) + (D)]

Notes:-

(a) Family includes Spouse and Dependent children.

(b) Deduction for preventive health check-up of assessee, spouse, dependent children and parents shall not exceed in aggregate Rs.5,000/-.

(c) For the purpose of deduction, the payment shall be made by-

1. Any mode (including cash) for the payment of Preventive Health Checkup.

2. Any mode other than cash for Premium and expenditure.

(d) Deduction under sec 80D is additional deduction available which is over and above deduction  under sec 80C, 80CCC and 80CCD for which overall limit is Rs. 1,50,000/-.

(e) If Premium is partly paid by assessee and partly by Parents than, both can claim deduction to the extent of their contribution to maximum deduction allowed.

(f) Medical Premium is allowed for deduction only if it is paid under Medical insurance scheme of General Insurance Corporation approved by the Central Government, or any other insurer approved by the Insurance Regulatory & Development Authority (IRDA).

Example:-

Ques: Suppose, Mr. Shah (45 years) has health insurance policy and paid Rs.21,000 as premium in FY 2015-16. He also spent Rs.7, 000 towards preventive health checkup. What is the total tax deductible amount?

Ans: Since, he is not a senior citizen, the health insurance premium to the extent Rs.25, 000 can be claimed as tax deduction under section 80D. Even though, he incurred Rs.28, 000 (Rs.21,000+Rs.7,000=Rs.28,000) as expenses, he can only claim tax deduction to the extent of Rs.25,000/-.

Ques: Mr. Rahul (40 years) has made following payment of medical insurance premium in FY 2015-16:-

(i)            For his parents, Rs.20,000/- on his father policy, aged 81 years and Rs. 15,,000/- o his mother policy, aged 68 years.

(ii)           For CGHS Rs. 10000/- and his wife’s policy Rs. 8,000/-.

(iii)          For his younger son’s policy who is dependent on him Rs. 7,000/-.

(iv)         For his daughter’s policy who is self-employed and not dependent on him Rs. 8,000/-.

Additionally, he incurred expense Rs. 6,000/- on Preventive Health Checkup for his own.

Calculate the maximum deduction under Sec 80D.

Ans: Mr. Rahul incurred Rs.35,000/- (Rs.20,000 + Rs.15,000) towards his parents policy and Rs. 39,000/- (Rs.10,000 + Rs.8,000 + Rs.7,000 + Rs.8,000 + Rs.6,000) as insurance and Preventive Health Checkup for himself and his family.

Rs. 8000/- paid towards his daughter policy is not allowed as she is not dependent on him. Rest all premiums on policy and expenditure are allowed for deduction.

As he is not senior citizen, he can claim Rs. 25,000/- for his and his family’s policy and additionally he can claim for Rs. 30,000/- for his parent’s policy. Thus, the total amount of deduction he can claim under section 80D is Rs. 55,000/-.

Ques: Akash is 61 years old and he paid Rs.27,000/- towards health insurance for himself and his wife. He also spent Rs.7,000/- towards preventive health checkups for both. Additionally, he paid Rs.42,000/- for medical treatment of his mother (81 years).

Calculate maximum deduction under Sec 80D for FY – 2015-16.

Ans: Rajeev is a senior citizen thus he can claim tax deduction of Rs.30,000/- though he incurred Rs. 27,000/- towards health insurance and Rs. 7,000/- towards preventive health checkups for himself and his wife.

For FY – 2015-16, he can additionally claim Rs.30,000/- for his mother treatment as no amount is paid towards the medical insurance of his mother.

Thus total amount of deduction Akash can claim for FY 2015-16 is Rs. 60,000/-.

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Donations to Political Parties by Individuals – Sec 80GGC

There has been a rise in the number of people wanting to donate to political parties in the recent past. We have witnessed various people movements in the past on a number of issues like corruption, black money which has created awareness amongst citizens. People now realise that these issues can be tackled only by electing the right people and political parties to power. This has led to an increased interest in political affairs and political parties in the country.

Although Sec 80GGC was introduced by Finance Act 2009 closer to last General Elections to make election funding transparent and free of corruption, this section appears to be even more relevant in the current times. This section is meant for donations made by non-corporate assesses to political parties (for donations made by corporate assesses to political parties, Section 80GGB is relevant).

Who is eligible?

Any person, other than

  • Local Authority
  • Artificial Juridical Person, wholly or partly funded by Govt.

To whom donation can be made?

  • Political parties registered under section 29A of the Representation of the People Act, 1951
  • Electoral Trust

Exceptions

  • Donations made in cash are not allowed for deduction. This exception was introduced with effect from 01st April 2014 and will be applicable for assessment year 2014-15 and onwards.
  • Contributions made in kind are also not allowed for deduction.

Amount of deduction

The whole amount of contribution is allowed as deduction from your taxable income. Since this deduction falls under Chapter VIA deductions, the amount of deduction allowed cannot exceed the total taxable income.

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