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Saturday, April 11, 2015

Understand Health care provisions (Section 80D) for you post Budget 2015

Section 80D of the Income Tax Act provides provisions for us to claim deductions in taxable income for the health insurance policies, medical expenses and preventive medical checkups that we do throughout the year. Make sure you are aware of the latest provisions as per Budget 2015, so that you can save on taxes for the money you pay on covering your health.

With Budget 2015, there has been a long awaited change in the Health Insurance related deductions that can be claimed to save taxes. These changes were long overdue, and indicate the increasing costs towards medical expenses and health insurance.
To understand the earlier health insurance provisions, please read the earlier article on Section 80D from the archive by clicking here.

Here are the list of new deductions allowed as per Budget 2015:

SECTION 80D

The deductions that can be claimed under Section 80D are as follows:

Case 1 : No one has attained the age of 60 years
Self, Spouse and Dependent Children : Rs. 25,000/- (increased in Budget 2015 from the existing Rs. 15,000/-)
Parents : Rs. 25,000/- (increased in Budget 2015 from the existing Rs. 15,000/-)
Total : Rs. 50,000/-

Case 2 : Assessee and family is less than 60 years but parents are above the age of 60 years
Self, Spouse and Dependent Children : Rs. 25,000/- (increased in Budget 2015 from the existing Rs. 15,000/-)
Parents : Rs. 30,000/- (increased in Budget 2015 from the existing Rs. 20,000/-)
Total : Rs. 55,000/-

Case 3 : Assessee as well as parents are above the age of 60 years
Self, Spouse and Dependent Children : Rs. 30,000/- (increased in Budget 2015 from the existing Rs. 20,000/-)
Parents : Rs. 30,000/- (increased in Budget 2015 from the existing Rs. 20,000/-)
Total : Rs. 60,000/-

Example:
Assessee is 40 years and parents are 65 years. Assessee has paid Rs. 13,000 as his family's health insurance premium and also Rs. 28,000 as his parent's insurance premium. In this case, Assessee would be allowed a deduction of Rs. 13,000 for himself and Rs. 28,000 for his parents. So, the total deduction that can be claimed on health insurance premium under Section 80D by the assessee would be Rs. 41,000/-. 
Note that the Service Tax on the health insurance premium is not eligible for deduction.

Preventive Health Checkup
Under Section 80D, a maximum deduction of Rs. 5,000 is allowed on any preventive health checkups during the year. This is in addition to the deductions allowed for health insurance premiums.

For Very Senior Citizens
For very senior citizen above the age of 80 years who are not eligible to take health insurance, deduction is allowed for Rs 30,000 toward medical expenditure.


SECTION 80DDB - For Specified Diseases
Deduction towards medical treatment for senior citizens suffering from specified diseases raised from Rs 60,000 to Rs 80,000.  The deduction is for the medical treatment of specified critical ailments of certain chronic and protracted diseases such as cancer, thalassaemia and others.

SECTION 80DD - For Differently Abled
In order to provide tax benefit to those who are differently abled or those caring for dependents who may be differently abled, Under Section 80DD and Under Section 80U – where disability is 40% or more but less than 80% the fixed deduction. The deduction earlier allowed was Rs 50,000 which is now raised to Rs 75,000. And in case of more than 80% disability deduction allowed was Rs 1,00,000 which is now raised to Rs 1,25,000.

Make sure you make use of the revised limits and save on the tax related to your health. Remember that a rupee saved is five rupees earned.



Cheers

Manoj Arora
Freedom can buy you.... what money cannot !!

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