Income tax is a compulsory liability for anyone earning over the stipulated deducted amount. So if your income is more than Rs. 2.5 lakhs, you will need to pay income tax to the government. However, income tax remains one of the most confused and dumbfounding issues in India and a lot of taxpayers do understand the nuances of income tax deduction. Resultantly, they end up paying more than what is necessary for their income tax liabilities or end up getting penalized for paying less than their income tax obligations.
It is important to understand that different provisions of income tax allow taxpayers to save their hard-earned money from getting depleted at the time of taxation by various tax-saving instruments. One such instrument is a Mediclaim policy that provides income tax savings under Section 80D of the Indian income tax act.
Under the provisions of Section 80D of the IT Act, 1961, the premium payments made by tax payers for their mediclaim policy is valid for getting them tax deduction. The limit of income tax deduction under Section 80D is equal to the amount of the premium paid by the tax payer for self, their spouses, their dependent children and their dependent parents.
But sadly, a large part of tax payers often remain confused about the provisions of Section 80D. Why is that? This is because they do not understand the benefits offered under this section. A barrage of questions cross their mind when they are faced with terms like mediclaim policy and income tax deduction on Section 80D.
In order to help out such people, here we present to you some general questions, and their answers, related to income tax deductions under Section 80D. So let’s dive right in! Shall we?
Q 1: What are the eligibility criteria for income tax deductions under Section 80D?
Answer: Any individual, HUF (Hindu Undivided Family) or senior citizens earning taxable salary and making premium payments for mediclaim policies can avail Income Tax Deduction Under Section 80D of the Indian Income Tax Act.
Q 2: What is the maximum amount of income tax deduction allowed under section 80D of Income tax Act?
Answer: Under the provisions of Section 80D of the Indian Income Tax Act, the maximum amount of deduction allowed for individuals less than 60 years of age is Rs. 25,000.
For senior citizens, more than 60 years of age, the total income tax deduction allowed under Section 80D is Rs. 30000.
If you are paying for the medical expenses of your super senior citizen (80 years plus) parents, then you can claim income tax deductions on the medical expenditure up to Rs. 30,000 under section 80D.
Q 3: Can you avail income tax deductions for preventive health check-ups under Section 80D?
Answer: Expenses incurred on preventive health care check-ups are subject to income tax deductions for a maximum limit of Rs. 5000. However, individuals paying mediclaim policy can avail income tax deduction for Rs. 25000 inclusive of expenses incurred on preventive health care check-ups. Those paying for mediclaim policy for their senior citizen or super senior citizen parents can avail income tax deductions for up to Rs. 30000 inclusive of expenses incurred on preventive health care check-ups.
Q 4: Can you claim income tax deduction under section 80D if you have already availed benefits under section 80C?
Answer: This remains one of the trickiest questions and a lot of people remain confused about it. However, the answer to this question is yes! One can claim full income tax deduction benefits of Section 80C of the Indian Income Tax Act, 1961 as well as the benefits under Section 80D of the Indian Income Tax Act. This limit of tax deductions allowed under Section 80C is subject to a maximum limit of Rs 150,000.
Q 5: Are income tax deductions under section 80D allowed for Overseas Mediclaim Policy?
Answer: The answer to this question is a little tricky. Though a large number of experts on the web advice that one can even avail tax benefits on overseas mediclaim policy, it makes sense to consult a tax expert before investing in any such mediclaim policy with the intention of getting a tax deduction. In addition, it is important to pay heed to the following:
The mediclaim policy that you intend to purchase should be in accordance with the rules stipulated by:
(a) General Insurance Corporation of India and approved by Government of India; or
(b) any insurer and approved by the Insurance Regulatory and Development Authority.
So there you have it – 5 most dreadful questions that you need to know about tax deductions under the Section 80D of the Indian Income Tax Act. We are sure this article would have cleared all your confusions regarding income tax deductions under Section 80D of the Indian Income Tax Act.