How to Claim 80D Deduction: A Guide for Taxpayers

Under the Income Tax Act, Indians have one very powerful tool for tax planning, i.e., the 80D deduction. This deduction leads the way to tax savings on the premiums paid by any individual for a health insurance policy benefiting your physical well-being as well as financial condition. Understanding when and how to take this deduction can reduce the amount of money that is subject to income tax. This guide contains everything you need regarding 80D Deductions, explaining how to claim this deduction.    

Meaning of Section 80D Deduction

Section 80D of the Income Tax Act provides a deduction for premiums paid on insurance policies. This section motivates individuals to protect their health by providing tax benefits on health insurance premiums.

The deduction is available for policies purchased for oneself, spouse, children, and parents. This makes Section 80D a perfect tool for ensuring that your entire family’s health is covered while enjoying tax benefits.

80D Deduction Claim Eligibility

Let’s first understand who can claim the 80D deduction before heading over to the claiming part:

• Individual Taxpayers: Deductions can be claimed on health insurance premiums paid by the policyholder, spouse, children and parents
• Hindu Undivided Families (HUFs): HUFs can also claim the deduction, with the premium paid on health insurance policies for any of their members qualifying for the deduction.

Limits Of Section 80D

The deduction limits under Section 80D vary depending on the age of the insured and the relationship between the insured and the taxpayer:

1. For Individuals Below 60 Years: Premium paid for self, spouse and children on health insurance can be claimed up to ₹25,000.
2. For Parents Below 60 Years: You can claim the additional deduction upto ₹25,000 for premiums paid on policies bought for your parents.
3. For Senior Citizens (60 Years and Above): The deduction limit rises to up ₹50,000 for premiums paid by you on behalf of yourself or your spouse/parents.
4. Preventive Health Check-Ups: A maximum of ₹5,000 is available as a tax deduction for preventive health check-ups, and the same falls under the overall limit of ₹25,000/₹50,000 for HUF.

Note: A maximum deduction of ₹1,00,000 can be claimed under section 80D, provided you and your parents are senior citizens.

Process of Claiming Under 80D Deduction

Claiming the 80D deduction is straightforward if you follow these steps:

1. Buy Health Insurance: Purchase a policy that qualifies for Section 80D deduction, covering you, your spouse, children, or parents.
2. Keep Payment Records: Retain proof of all premium payments made through non-cash methods like cards or net banking.
3. Check Eligibility: Ensure your premiums align with Section 80D limits, considering the insured’s age and relationship.
4. List in ITR: While filing your Income Tax Return, enter the eligible deduction under Section 80D.
5. Keep Documents: Keep payment receipts and statements handy for tax inquiries, though submission is not required.
6. Include Preventive Health Check-ups: Add up to ₹5000 for preventive check-ups to your total claim, if applicable.

Key Factors to Considering

Section 80D deductions offer substantial tax advantages, but there are a few considerations to keep in mind to avail the maximum advantage:

1. Avoid Cash Payments: If you pay your premiums in cash, then they do not fall under the 80D deduction. Make sure to always pay in a non-cash way for your deduction safety.
2. Choose Family Floater Policies: Family floater policy provides broader coverage for all the members of the family under one plan, which is more cost effective and makes it easy to avail deductions.
3. Payments: Make sure all your premiums have been paid for the deduction to be valid in a year of assessment. Missed payments are subject to loss benefits of the deduction.
4. Be Aware of Policy Terms: Refrain yourself from the terms and conditions that your health insurance policy consists of, especially regarding coverage, exclusions, and renewal timelines. This will make sure you can optimise your tax benefits and are insured well enough in health coverage too.

Make the Most Out of the 80D Deduction Granted Under Income Tax

This is a powerful concept, and every Indian should know about the 80D deduction. It offers significant savings while encouraging the purchase of health insurance. Knowing how to qualify for it, the maximum eligible amount and the procedure of claiming a deduction will likely make you better accustomed to maximising all aspects of this tax benefit while taking care of your family’s health.

If you are a first-time taxpayer or someone keen to direct your tax planning ability, making use of section 80D may create a marked change in your financial Personal Planning. For a thorough health cover from which you can prove utility for this deduction, you can look into options provided by Canara HSBC Life Insurance.

Prioritise marginal well-being as a lifestyle choice.