Tax Deductions under Section 80D of the Income Tax Act - Medical Expense Reduction Deduction
Maximum Deduction Limit for Medical Expenses under Section 80D in 2024-25
For the financial year 2024-25, also known as the assessment year 2025-26, the maximum deduction limit under Section 80D for families with senior citizen parents is a substantial ₹1,00,000.
This generous limit is split into two parts:
- Up to ₹50,000 can be claimed for health insurance premiums paid for the taxpayer, their spouse, and dependent children if they are senior citizens (age 60 or above).
- An additional ₹50,000 can be claimed for health insurance premiums paid for senior citizen parents (age 60 or above).
For families without senior citizen parents, the limit is lower at ₹25,000 for health insurance premiums for senior citizens and ₹25,000 for preventive health check-ups.
Preventive health check-ups can also be claimed under Section 80D, up to a maximum of ₹5,000 per financial year. However, this amount is included within the overall limit of ₹25,000 or ₹50,000 and does not add to it.
It's important to note that premium payment for insurance must be made through non-cash modes for deduction eligibility, except for preventive health check-ups which can be paid in cash.
When it comes to claiming deductions, remember that you cannot claim for expenses that have already been claimed by someone else. For instance, if you have paid health insurance premiums for your working children, you cannot claim the deduction. Similarly, if you claim a deduction for your parent's premium, your parents are not eligible to claim it.
Additionally, group health insurance provided by your employer is not eligible for deduction under Section 80D. Service tax and cess paid on medical insurance premiums are also not eligible for deduction.
When buying health insurance, remember that you can't claim a deduction for the total premium paid in a multi-year plan. Instead, you can claim a deduction on a proportionate basis.
Lastly, the deduction under Section 80D is available for medical insurance premiums paid for yourself, your spouse, dependent children, and parents. Premiums paid for other relatives are not eligible for deduction.
So, if you have senior citizen parents and are looking to save on your taxes, make the most of the ₹1,00,000 deduction limit under Section 80D by ensuring you pay your health insurance premiums through non-cash modes and keep your bills as proof.
- In the financial year 2024-25, one can save on personal-finance by claiming up to ₹1,00,000 as tax saving under Section 80D if they have senior citizen parents.
- Beyond health insurance for senior citizens, one can additionally claim for insurance coverage related to health-and-wellness, with a separate limit of ₹50,000 for preventive health check-ups.
- However, it's essential to remember that group health insurance coverage provided by an employer is not eligible for tax saving under Section 80D.
- To maximize tax savings, consider purchasing health insurance for yourself, spouse, dependent children, and senior citizen parents, ensuring all premiums are paid through non-cash modes, and keeping receipts for record-keeping purposes.
