How to Claim Health Insurance Tax Deduction Under 80D
Health insurance is not just about protecting yourself against medical emergencies — it is also a powerful tax-saving tool. Section 80D of the Income Tax Act allows you to claim a deduction for health insurance premiums paid for yourself, your family, and your parents. For self-employed individuals who buy their own health insurance, understanding Section 80D can lead to significant tax savings. Here is everything you need to know.
What Is Section 80D?
Section 80D provides a tax deduction for premiums paid towards health insurance policies. This deduction is available over and above the Rs 1.5 lakh limit under Section 80C, making it an excellent additional tax-saving opportunity. The deduction is available under the Old Tax Regime only.
Deduction Limits Under Section 80D
The deduction limits depend on who the policy covers and their age:
- Self, spouse, and dependent children (below 60 years) — Up to Rs 25,000
- Self, spouse, and dependent children (any member above 60) — Up to Rs 50,000
- Parents (below 60 years) — Additional Rs 25,000
- Parents (above 60 years) — Additional Rs 50,000
This means a person below 60 with parents below 60 can claim a total deduction of Rs 50,000 (Rs 25,000 + Rs 25,000). If parents are senior citizens, the total can go up to Rs 75,000 (Rs 25,000 + Rs 50,000). If both the taxpayer and parents are above 60, the maximum deduction is Rs 1,00,000.
What Expenses Qualify for Deduction?
The following expenses qualify under Section 80D:
- Health insurance premiums — For individual, family floater, or group policies.
- Preventive health check-up — Up to Rs 5,000 per year (included within the overall limit). This is the only component that can be paid in cash.
- Medical expenditure for senior citizens — If your parents are above 60 and not covered by any health insurance, you can claim actual medical expenses up to the applicable limit.
- Contribution to Central Government Health Scheme (CGHS) — Premiums paid to CGHS also qualify.
How to Claim Section 80D Deduction: Step-by-Step
Step 1: Ensure Payments Are Made Correctly
Health insurance premiums must be paid through non-cash modes — cheque, credit card, debit card, net banking, or UPI. Cash payments are not eligible for deduction, except for preventive health check-ups. Keep all payment receipts and premium certificates.
Step 2: Collect Premium Certificates
At the end of the financial year, your insurance company issues a premium paid certificate. Download this from your insurer’s website or app. The certificate shows the total premium paid, GST component, and the policy period. Note that only the premium amount (excluding GST) qualifies for deduction.
Step 3: Include Health Check-Up Expenses
If you or your family members underwent preventive health check-ups during the year, include those expenses up to Rs 5,000. Keep the hospital or diagnostic centre bills and payment receipts.
Step 4: Enter Details While Filing ITR
In your Income Tax Return form, navigate to the deductions section. Under Section 80D, enter the premium paid for self and family, premium paid for parents, and preventive health check-up expenses. The form will automatically calculate the eligible deduction based on the limits.
Step 5: Keep Documents Ready for Verification
While you do not need to upload documents while filing, keep them safely in case the Income Tax Department requests verification. Maintain premium receipts for at least 6 years from the end of the assessment year.
Section 80D for Self-Employed Individuals
Self-employed professionals do not get employer-sponsored health insurance, which makes Section 80D even more valuable. By purchasing a comprehensive health insurance policy for yourself (Rs 25,000 deduction) and your parents (Rs 25,000 to Rs 50,000 deduction), you can save between Rs 5,000 and Rs 30,000 in taxes depending on your tax bracket, while also ensuring medical protection.
Common Mistakes to Avoid
- Claiming deduction for policies paid on behalf of siblings or in-laws (not allowed).
- Paying premiums in cash (not eligible except for health check-ups).
- Forgetting to claim the preventive health check-up deduction.
- Claiming the full premium including GST (only base premium is eligible).
- Not buying separate coverage for parents, missing out on additional deduction.
Invest Your Tax Savings with Bachatt
Every rupee you save on taxes is a rupee you can invest. Bachatt helps India’s self-employed professionals invest wisely in mutual funds and build long-term wealth. Combine your tax savings with smart investing and watch your money grow. Download Bachatt today and start your investment journey.
