Section 80D and 80DD of Income Tax Act, 1961

SECTION 80D OF INCOME TAX ACT, 1961                                                                          

The Income Tax Act, 1961, provides various provisions for taxpayers to reduce their taxable income by claiming deductions. Two important sections under this Act that provide relief in terms of deductions for health insurance and medical treatment are Section 80D and Section 80DD. Both of these sections aim to encourage taxpayers to secure health and medical coverage, especially for themselves and their dependents.

Section 80D Applicability:

Only Individual or HUF can claim deduction under Section 80D.

Medical Insurance:

An Individual can claim Maximum deduction of Rs. 25,000/- for the insurance of self, spouse and dependent children. An additional deduction can be claimed on insurance of parents of Rs. 25,000/-, if they are below 60 and up to 50,000/-can be claimed if they are above 60.

An HUF can claim a maximum deduction of Rs. 25,000/- if the member insured is less than 60 years and up to 50,000/-can be claimed if the member insured is above 60.

Budget 2018 has introduced a new provision in which single premium health insurance can claim deduction subject to limitation of 25,000/- and 50,000/- as per above provisions. If the insurance has taken for more than one year, then deduction is limited to medical insurance premium divided by number of years of the policy restricted to 25,000/- and 50,000/- as per above provisions.

If the insurance has taken for more than one year(lump sum policy), then deduction is limited to medical insurance premium divided by number of years of the policy restricted to 25,000/- and 50,000/- as per above provisions.

Kindly note that the mode of payment towards insurance premium payments should be other than cash. i.e Acccount Payee, Bank Transfer, UPI etc.                                                                                                                                                                              

Preventive Health Check-up:

If any payments has been made towards health check up of self, spouse and dependent children, deduction can be claimed up to Rs. 5,000/-

Same can be paid through any mode, including cash..

Medical expenditure:

An Individual can claim a deduction of Rs. 50,000/- for the medical expenditure of self any family members.

For parents deduction can be claimed on medical expenditure of Rs. 50,000/-

But, the medical expenditure deduction can be claimed only if the person is senior citizen and they should not have any of the existing running insurance policy.

Also, the aggregate amount of deduction considering both the medical expenditure and health insurance cannot be more than 50,000/-”                                                                                                                                                                                                                                           

 Section 80DD of Income Tax Act, 1961                                                                          

“This section is applicable to the dependant Resident Individual or HUF who is differently abled and is wholly dependent on the individual for support & maintenance.

Applicability:

1. This deduction is allowed to differently abled person and not for the person who has paid for maintenance.
2. If the taxpayer has claimed deduction under section 80U, he cannot claim this deduction.
3. Dependant for this deduction includes spouse, children, parents, brothers & sisters of the taxpayer and members in case of HUF.
4. Disability of the dependant should not be less than 40%.

Maximum Deduction

1. Rs. 75,000/- where disability is less than 80%.
2. Rs. 1,25,000/- where disability is more than 80%.