Some time back i wrote an article Why do we need Health Insurance Policy? It is quite unfortunate that in India, people buy insurance only for investment purpose that too with a carrot of Tax Benefit. Recently, one of my friend was explaining me the benefits of Health Insurance Policy. I was glad that atleast few people are realizing the true benefit of Health Insurance and thinking beyond tax benefit. After 15 mins, he told me that the key reason for buying health insurance is tax benefit under section 80D :)
He paid a premium of Rs 10,240/- for family floater plan and was regretting that though he is in 30% tax bracket but he is not able to save tax on full amount i.e. Rs 15,000/- (Max deduction allowed under section 80D). I bowled a googly and briefed him about Tax Benefit of Rs 5,000/- on Preventive Health Check-up u/s 80D. Preventive Health Check-up is one of least known tax benefits.
Section 80D was amended w.e.f April 01, 2013 and a sub limit/deduction of Rs 5000/- was introduced within overall max deduction of Rs 15000/- under section 80D. The deduction of Rs 5000/- for preventive health check-up can be availed even without opting for Health Insurance under section 80D.
Preventive Health Check-up is an alien concept for India. It can be interpreted as Annual Health Check up or to know risk factors in advance to maintain healthy lifestyle. The correct definition of Preventive Health Check-up is “Health check-up not to cure or diagnose any disease”. According to Finance Bill, 2012 the amendment to section 80D include any payment made by an individual on account of preventive health check-up of self, spouse, dependent children or dependent parents is eligible for max deduction of Rs 5000/-.
Best part is that Tax benefit under Section 80D (for Preventive Health Check-up) is also available for cash payments towards Preventive Health Check-up. Though it is mandatory to make payment only through cheque or electronic mode to avail tax benefits under various other sections of income tax act including Health Insurance under Section 80D but Preventive Health Check-up is the only exception.
Imp Point: If you have availed separate health insurance policy for dependent parents than Section 80D provides a Max deduction of upto Rs 35,000/- i.e. tax benefit can be availed by clubbing A + B or A + C
A = Rs 15,000/- Health insurance premium for Self, Spouse and Children
B = Rs 15,000/- Health insurance premium for Dependent Non-Senior Citizen Parents
C = Rs 20,000/- Health insurance premium for Dependent Senior Citizen Parents (Completed age of 60 years at the beginning of FY or during FY)
Even if you have not availed separate health insurance for dependent parents, You can claim deduction of Rs 5000/- for Preventive Health Check-up of dependent parents. In short, Total deduction under Preventive Health Check-up can be max Rs 5000/- i.e. for self, spouse, children & dependent parents. You can claim tax deduction of Rs 5000/- for any of your family members including parents.
Que 1: Mr. Sunil Bhargava from Gurgaon asked me that he has paid a health insurance premium of Rs 13,453/- during FY 2013-14 and also spent Rs 7,500/- towards Preventive Health Check-up of his family i.e. self, spouse and dependent children. What is the max tax deduction available u/s 80D in his case?
Ans 1: The max deduction available u/s 80D is Rs 15,000/- with sub limit of Rs 5,000/- for Preventive Health Check-up therefore Mr. Sunil can claim deduction of Rs 15,000/- u/s 80D by showing either of following break up
(a) Health Insurance Premium = Rs 13,453 + Preventive Health Check-up = Rs 1,547
(b) Health Insurance Premium = Rs 10,000 + Preventive Health Check-up = Rs 5,000
Que 2: Ms. Gunjan Madan from Hisar asked me that she claimed Rs 15,000 as a medical reimbursement u/s 10 and she paid Rs 3,500 towards Preventive Health Check-up. Can she claim tax benefit u/s 10 and u/s 80D?
Ans 2: Yes, she can claim tax benefit under both the sections during FY i.e. Medical Reimbursement u/s 10 and Preventive Health Check-up u/s 80D.
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