The Indian government provides multiple ways to the citizens of the country to reduce their tax burdens. From mutual fund investments and loans to health insurance, there are several options that can help you enjoy such reductions on taxes. Out of the many tax-saving laws that are launched by the government, section 80D of the Income Tax Act, 1961 is one of the most common ways to save on taxes.

What is section 80D in the Income Tax Act, 1961?

Section 80D is a portion of the entire Income Tax Act that was passed by the government in 1961. This section highlights the tax deductions that one can enjoy when paying the premium of their health insurance policy. Section 80D is applicable to the premiums you pay for your regular health insurance, life insurance, critical illness health insurance, and top-up insurance plans. Furthermore, you can also enjoy the deductions provided by section 80D Income Tax Act on the health insurance policies that you buy for your family members such as spouse, kids, and parents. Section 80D is also applicable to the premium you pay for the riders that are included in your health insurance policy

Conditions applicable on the tax deduction under section 80D

The tax deductions offered by Section 80D vary depending on the age of the primary policyholder. To give you a clearer idea, here are the conditions that are applicable for tax deductions

1. Conditions on health insurance policies that are bought for self, spouse, or children

   As per section 80D of the Income Tax Act of 1961, you can enjoy up to Rs.25,000 of tax deductions per financial year on the premiums of health insurance policies that are bought for you, your spouse, and your kids. Do note that the upper limit of tax deduction enjoyed through Section 80D reaches up to Rs.50,000 for senior citizens

2. Conditions on health insurance policies that are bought for your parents

   Under section 80D, you can enjoy a tax deduction of up to Rs.25,000 on the premiums you pay for the health insurance policies that are bought for your parents. However, if your parents are above 60 years of age and you are below the same threshold, you can get an annual tax deduction of up to Rs.50,000

3. Conditions to get tax deductions that are more than Rs. 50,000

   There are two conditions under which you can enjoy a yearly tax deduction that is worth more than Rs.50,000 in a year. Firstly, if you, your spouse, or your kids are aged below 60 but your parents are above the age of 60, you can enjoy a section 80D deduction limit of up to Rs.75,000 (Rs25,000 + Rs. 50,000). Secondly, if you, your spouse, or your kids are aged above 60 and your parents are also above the age of 60, you can get a tax deduction of up to Rs.1,00,000 in such a scenario

Tax deductions by section 80D on preventive check–ups

Apart from the premium of health insurance policies, you can also avail of the tax deductions offered by Section 80D on the fees you pay for preventive health check-ups. A preventive health check-up is done to detect an illness at an early stage and get it treated before it does severe damage to the body

Preventive health check-ups became a part of Section 80D in 2013 as an initiative taken by the government to encourage the population to be more self-aware about their health. As per Section 80D of the Income Tax Act of 1961, you can get an annual tax deduction of up to Rs.5000 on the fees you pay for preventive health check-ups. This is inclusive of all the money you pay for a check-up of your entire family (spouse, kids, and parents).

What is section 80DDB?

80DDB is a section in the Income Tax Act of 1961 that helps Indian citizens to avail tax deductions on the medical expense incurred due to the treatment of certain chronic diseases. According to section 80DDB, if you are below 60 years of age, you can enjoy a tax deduction of up to Rs.40,000. However, for senior citizens, the upper limit of the tax deduction is stretched to Rs. 1 lakh under section 80DDB

Illness such as cancer, AIDs, and Parkinson's disease are counted as eligible for the tax deductions offered by section 80DDB. You can get a complete list of such illnesses by referring to the rule of 11DD.

What is section 80DD?

Section 80DD is a part of the Income Tax Act of 1961 that allows Indian citizens to get tax deductions on the money they pay for the treatment of a disabled and dependent person. According to section 80DD, you can claim tax exemptions of up to Rs.75,000 on the treatment of a dependent who is about 40% disabled. The section further provides a tax exemption of Rs.1.5 lakhs on the treatment of a dependent person who has a major disability, more than 70%. The dependents, according to Section 80DD, can be the parents, spouse, children, and siblings of the taxpayer.

Points to remember

1. You cannot avail the tax deductions offered by Section 80D if you pay for the health insurance premiums in cash. Hence, it is better to always pay for your health insurance policy using credit cards or debit cards. However, you can still claim a deduction of Rs.5,000 even if you pay for the preventive health check-ups using cash

2. Section 80D is not applicable on the medical insurance premium paid by an employer on behalf of his/her employees.

3. The tax deduction available under Section 80D is only applicable if your parents, children, and spouse are not working professionals.

4. Many people confuse the tax deductions offered under Section 80D with the tax deductions offered under Section 80C. While Section 80D provides tax deductions on the premium of your health insurance plan, Section 80C offers tax benefits on the investments made in the Indian capital markets

We hope that this was an insightful read for you today.

Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale