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October 11, 2020

Taxpayer can Claim Deduction of Rs 5000/- as Preventive Health Check Up in Income Tax

by CA Shivam Jaiswal in Income Tax

Taxpayer can Claim Deduction of Rs 5000/- as Preventive Health Check Up in Income Tax

The current COVID-19 pandemic has made the entire world sit up and realise that medical exigencies are unpredictable and can cause a financial upheaval that is tough to handle. In today’s time, the cost of healthcare in the country has risen significantly thanks to the ever-growing demand for medical services.

Having a health insurance or Mediclaim comes handy in times of medical emergencies. Many individuals often have to use funds from their savings in case of a medical emergency, which not only impacts their financial health but also jeopardises personal goals such as education and marriage.

With the rising cost of medical expenses, access to good medical facility and hospitalisation costs can be financially strenuous. Therefore, getting a health insurance cover for yourself and your family can provide the added protection you need in times like these. Apart from the obvious benefit of having the financial confidence to take care of your loved ones, a health insurance plan is extremely useful when it comes to beating medical treatment inflation.

For which medical expenditure in deduction available under Section 80D?

Deduction under Section 80D is available for the below mentioned medical expenditures:

  • Medical Insurance Premium
  • Preventive Health Check Up expenses and
  • Medical expenses like Purchase of medicines, Doctor consultation fees and hospitalization expenses

Who can avail the benefit of Section 80D?

Every individual can claim a deduction under Section 80D for their medical insurance which is taken from their total income in any given year. Not only can an individual take benefit by purchasing a health plan for themselves but also one can take advantage of buying the policy to cover their spouse, dependent children or parent. 

Hindu Undivided Families are also eligible to claim deductions under this section. The premium payments of any member in a Hindu Undivided Family can be used for tax deductions, which is however, subject to upper limit as per the Act.

What is the quantum of deduction under Section 80D?

An individual can claim a deduction of up to Rs 25,000 for the insurance of self, spouse, and dependent children. An additional deduction for the insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years of age, or Rs 50,000 if parents are aged above 60. Let us refer to the table given below to understand this better:

ScenarioPremium paid (Rs) for Self, spouse, childrenPremium paid (Rs) for ParentsDeduction under 80D (Rs)
Individual and parents below 60 years25,00025,00050,000
Individual and family below 60 years but parents above 60 years25,00050,00075,000
Both individual, family and parents above 60 years50,00050,0001,00,000
Members of HUF25,00025,00025,000

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What do you mean by preventive health check-up?

An early detection of a sickness or disease means offering treatment at a more favourable stage or taking action to prevent the disease. It is essential to have a coordinated, strategic prevention approach that promotes healthy behaviour, helps early detection and diagnosis of disease, supports people of every age, and eliminates health disparities. Early detection coupled with a few lifestyle changes can go a long way in prevention and cure of these diseases, enabling people to enjoy a better quality of life. After all, prevention is the best prescription for a healthy and long life.

A Preventive Health Check-up aims to identify and minimize risk factors in addition to detecting illnesses at an early stage. Research all over the globe has proven that it is more economical, not to mention far less distressing, to invest in an annual Preventive Health Check-up rather than visiting a hospital only when an emergency occurs.

Is any deduction available w.r.t preventive health check-up?

Yes. Any payments made towards preventive health check-ups will entitle a taxpayer to a deduction of up to Rs 5,000, which is within the overall limit of Rs 25,000/Rs 50,000 as the case may be.

For instance, Mr A has paid a health insurance premium of Rs 23,000 for the insurance of the health of his wife and dependent children. He also got a health check-up done for himself and paid Rs 5,000. Mr A can claim a maximum deduction of Rs 25,000 under Section 80D of the Income Tax Act. Rs 23,000 will be allowed towards insurance premium paid, and Rs 2,000 will be allowed for preventive health check-up. The deduction towards preventive health check-up is restricted to Rs 2,000 as the overall deduction cannot exceed Rs 25,000 in this case.

It is not necessary that the preventive health check up should be carried out for the taxpayer only. Deduction for preventive health check up is available even when the check-up is conducted for spouse, dependent children and parents of the assessee.

Does the assessee require receipt for claiming deduction for preventive health check-up?

Expenses of preventive health check up can be made in cash or any other mode other than cash. There is no requirement of submitting any document/receipt to the income tax department. However, it is important to remember that the taxpayer must keep documentary evidences such as doctor’s bill, medical report, receipt and other documentary evidence in case the income tax department asks for proof.

So even if any evidence is not required to be submitted while claiming deduction for preventive health check-up under Section 80D, it is always recommended to keep such evidences in case the income tax department later asks for the same during any scrutiny or proceeding.

Contribution towards health insurance plan has to made to a scheme as specified by the Central Government approved by IRDA.  While selecting a health plan, one should get an assessment on the health insurance that they really need and take adequate cover. Do not try to take cover just to maximise your tax savings, because in doing so you will be spending more money which could be used for other financial needs. 

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