Tax* saving is an important financial goal. It helps you save money to invest in financial products to secure the future. In addition, there are other forms of investments that extend the benefits to handling family expenses while saving on tax, such as the medical insurance policy. However, if you haven't purchased one for your parents and spent a huge amount on their treatment, you can still save on tax! Would you like to know how? Section 80D of the Income Tax Act, 1961 is a tax provision to help you benefit. And here is a detail about it for your reference.

 

What is Section 80D of the Income Tax Act, 1961?
 

Section 80D of the Income Tax Act is a provision that allows individuals to claim a deduction from the total gross income for the expenses incurred towards managing health complications and other ailments. The benefit is applicable for a deduction on the amount spent on self, spouse, dependent parents, and children. The tax provision to medical expenses deduction in income tax for parents who are senior citizens came as an amendment in the Budget 2018 under Section 80D.

 

An important point to note here is that it is over and above the deduction that you can claim under Section 80C. Also, this benefit is applicable for the individuals opting for the old tax regime to calculate their Income Tax.

 

From April 2021, the government allowed individuals to choose between the old tax regime and the new tax regime for tax computation. They differ based on the tax slab. Also, the consideration of major deductions and exemptions under the old regime is not applicable under the new regime. Therefore, you must choose the old regime for the tax calculation to allow the medical bills spent on yourself and your family to qualify for a tax deduction.

 

What Medical Expenses Qualify for Income Tax Benefits?
 

 

Here is a list of medical expenses that qualify for tax benefit under Section 80D:
 

1. Any medical expenditures incurred for treating your parents above 60 years of age (senior citizens). However, they should not be covered by any other health insurance. It is a deduction that applies to you if you are a senior citizen as well.
2. Amount spent on a health scheme notified by the Central Government.
3. Expenses incurred due to preventive health check-ups.
4. The premium amount is paid towards a health insurance policy for self or family members.

 

It is important to note that the amount spent on such expenses for your parents only qualifies for deduction when the payment mode is not cash. You can do it through cheques, net banking, or other digital payment options like mobile wallet, UPI, etc. The amount spent can be on consultation fees, medicines, etc., Also, maintain a record of the documents for medical bills submission during income tax verification if deemed necessary.

 

Why Section 80D is a Preferred Option for Medical Bills and Income Tax Benefits?
 

Saving in a health insurance policy is a great way to manage medical emergencies on short notice. However, the premium cost for purchasing a health insurance policy for your parents who are senior citizens can be more considering their pre-existing ailments or any other serious health complications. Also, the premium rates will increase as they get older. And, you can use the benefits predominantly when they get affected due to a health complication that requires immediate attention. However, you can use the amount spent on medical expenses for your parents in a specific financial year to avail of tax benefits under Section 80D.

 

How Much Can You Save on Tax for the Medical Expenditure?
 

According to Section 80D, you can avail a maximum deduction of ₹25000 for you and your family below 60 years of age and ₹50,000 above 60 years of age. Here is a detail for your better understanding.

 

Type of expense	Family and self - Age below 60 years of age(₹)	Family and self - Age above 60 years of age(₹)	Parents - Age below 60 years of age(₹)	Parents - Age above 60 years of age(₹)
Health insurance premium	₹25000	₹50000	₹25000	₹50000
Medical expenditure	Not applicable	₹50000	Not applicable	₹50000

 

 

Therefore, you can deduct ₹25000 for premium paid for yourself, your spouse, children. And, additionally, a total sum of ₹25000 for your parents below 60 years of age and ₹50000 if they are above 60 years of age.

 

Section 80D also provides ₹5000 additionally for preventive health check-ups for your family and parents. Section 80DDB is another tax provision that covers expenses related to specific diseases or illnesses such as malignant Cancers, AIDS, Dementia, Parkinson's disease, etc. The list of diseases is available in Rule 11DD in the Income Tax ACT. However, if you require consistent financial support for treating a critical illness, you can also consider purchasing riders^# for health with life insurance products.

 

 

Conclusion
 

Medical expenses emerge as great financial difficulty as you grow older. And, if you have your parents depending on your income for their survival, then taking care of their medical expenses becomes your responsibility. The Government of India provides tax*-saving benefits on such medical expenses incurred, especially for your parents above 60 years of age. Therefore, if you feel purchasing a health insurance plan and paying a premium is not affordable, then availing of medical deduction in income tax under Section 80D for your parents is the right choice!

 

L&C/Advt/2022/Dec/3141