Buying health insurance policies for ourselves or family members is one way to save tax. However, an individual who is supporting his/her parents can also save tax by buying health insurance for them.
The 2018 Budget amended Section 80D of the Income Tax Act allows deduction for medical expenditure incurred on senior citizens. This deduction can be claimed by the senior citizen himself/herself or by his/her children, if the latter are incurring medical expenditure for their senior citizen parents.
This amendment is a tax saving measure and allows to claim deductions against the high interest insurance premiums. The main condition to claim the deduction for medical expenditure incurred is that the senior citizen should not be covered under any health insurance policy.
Here is all you need to know to claim deductions under this amendment:
Eligibility for Deduction
There are two eligibility requirements:
The medical expenditure must be incurred on the family members and/or parents who are aged 60 years and above.
The amendment defines a family member as the person himself, spouse and dependent children.
The person for whom medical expenditure has been incurred should not be covered under any health insurance policy.
Who Can Claim the Deduction?
Deductions can be claimed by the person who has incurred the medical expenditure:
If you are a senior citizen and are not covered under any health insurance policy, you can claim the deduction yourself.
If you are supporting your parents who are above the age of 60 and have incurred medical expenditure during the financial year for them.
Mode of Payment Eligible for Deduction
According to the amendment, payment of premium on medical policy or medical expenditure will be available only if payment is done via any mode other than cash i.e., net-banking, cheque, debit card etc., or digital channels such as UPI, mobile wallets.
If the payment is made in cash, the individual who incurred the expense will not be able to claim deduction.
Maximum Deduction Allowed
The person who incurred the medical expense can claim maximum deduction of Rs 50,000 in a financial year for the expenses incurred.
| Family Member | Parents | |||
|---|---|---|---|---|
| Nature of amount spent | Age below 60 years | Age above 60 years | Age below 60 years | Age above 60 years |
| Medical Insurance (Rs) | 25,000 | 50,000 | 25,000 | 50,000 |
| CGHS (Rs) | 25,000 | 25,000 | Not Available | Not Available |
| Health Check-up* (Rs) | 5,000 | 5,000 | 5,000 | 5,000 |
| Medical Expenditure** (Rs) | Not Available | 50,000 | Not Available | 50,000 |
| Maximum deduction U/S 80D (Rs) | 25,000 | 50,000 | 25,000 | 50,000 |
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