Medical Expenditure – 80D

John Billings has rightly said “Health is like Money, we never have a true idea of its value until we loss it”. In the fast moving economy, there is a vast increase in the amount paid towards medical expenditure. Day by day the medical treatment is getting more and more expensive and health insurance is turning out to be a mandatory thing rather than the optional one.

In order to boost the individual for health insurance, Government is providing deduction under section 80D of the Income Tax Act, 1961 towards the premium paid towards health insurance. Deduction under section 80D is available to individual and Hindu Undivided Family. The article highlights the provisions of section 80D of the Income Tax Act, 1961 as applicable for the assessment year 2019-2020.

Deduction under Section 80D Available to Individual –

1.    Amount paid towards insurance premium or amount paid for preventive health check-up of self or his family up to a maximum amount of INR 25,000;

2.    Amount paid towards insurance premium or amount paid for preventive health check-up of parents of the assessee up to a maximum amount of INR 25,000;

3.    Amount paid towards medical expenditure for self or any member of the family of the assessee up to a maximum amount of INR 50,000;

4.    Amount paid towards medical expenditure for parents of the assessee up to a maximum amount of INR 50,000.

It must be noted that in case of preventive health check-up (as mentioned at point 1 and 2 above) the maximum amount of INR 5000 is allowed as deduction.

Further it must also be noted that deduction under section 80D is available on medical expenditure suffered by an individual on the health of senior citizen provided that no amount has been paid to effect or to keep in force an insurance on the health of such person.

Allowable Mode of Payment For Claiming Deduction –

Amount paid towards preventive health check-up –

Any mode of payment, including cash, is allowed for claiming deduction towards amount paid in case of preventive health check-up.

Amount paid towards any other case –

In any other case, any mode of payment is allowable except cash payment. In other words, cash payment is not an allowable mode of payment.

Deduction Under Section 80D Available to Hindu Undivided Family –

1.    Amount paid towards insurance premium of any member of the Hindu Undivided Family up to a maximum amount of INR 25,000;

2.    Amount paid towards medical expenditure of any member of the Hindu Undivided Family up to a maximum amount of INR 50,000.

Treatment of Insurance Premium Paid in Lumpsum –

In order to give corrective deduction in case of the insurance premium which is paid on the lump-sum basis, sub-section (4A) has been inserted to section 80D. The said newly inserted sub-section (4A) to section 80D is effective from 1^st April, 2019.

According to said sub-section, in case of lump-sum payment of insurance premium, in a previous year to effect or to keep in force an insurance on the health of specified person for more than a year, in such case, deduction shall be allowed equal to the appropriate fraction of the amount for each of the relevant previous year.