Tax Benefits on Preventive Health Check-ups

Life, today, is only getting faster and faster. Long working hours, a sedentary lifestyle, unhealthy eating habits, and stress are harming your health far more than you realise. Hypertension, thyroid problems, diabetes, and high cholesterol are among common health issues among young and middle-aged people. While you must try to develop healthy habits to steer clear of these and similar conditions, you should not ignore the importance of regular preventive health check-ups.

Preventive check-ups not only help you monitor your health status, but they also allow early detection of major illnesses. To top it all, they come with tax benefits, thus, offering an edge to your financial planning.

Preventive health checkup income tax benefits can help you reduce your tax liability significantly. Section 80D of the Income Tax Act allows preventive health checkup deduction from your income tax liability even if you do not have a health insurance policy.

Read on to know all about preventive health checkup income tax relief under Section 80D of the Income Tax Act.

What is preventive healthcare?

Several factors contribute to maintaining a fit and healthy body and mind. These include proper nutrition, a balanced diet, regular exercise, good and proper sleep, and healthy recreational activities, among others. Although these things help you in living a healthy life, they offer no assurance that you will never fall sick. Therefore, it is essential to monitor your health closely and take all sorts of preventive measures to avoid any health complications. These measures include:

• Periodic health check-ups, shots and immunisation.
• Go for periodic blood tests for common conditions such as diabetes, thyroid, and high cholesterol.
• Going for other sets of preventive healthcare tests such as cancer screening, HIV tests and more.

The need for preventive healthcare becomes even more important after the age of 40 years. This is when the body’s immune strength starts decreasing.

Nowadays, almost all insurance providers offer preventive healthcare check-up coverage. In case your insurer does not cover health check-up costs, you can always buy a separate add-on or a preventive healthcare insurance package. There are different types of preventive healthcare insurance packages such as the family package, cancer package, dental package, package for children and likewise.

What is Section 80D of the Income Tax Act?

Under Section 80D of the Income Tax Act, you can get preventive health checkup income tax benefits. Section 80D allows tax benefits against the medical insurance premium that you pay for yourself, your spouse, children and your parents. The benefit can go up to Rs 25,000-Rs 50,000 depending on the age of the insured person. In addition, you get tax deductions up to a certain limit on the expenses incurred over preventive healthcare checkups. The preventive health checkup ITR benefit amounts to Rs 5000 under the overall limit of Rs 25,000-Rs 50,000.

You can avail of tax deductions for preventive health checkups for yourself, your spouse, children and dependent parents. This benefit applies even if the payment for preventive health check-ups is paid in cash.

Features and benefits of preventive health check-ups

These features of preventive health check-ups make them highly beneficial:

• Early detection of diseases: Preventive health checkup allows early detection of disease, thus, helping you against major financial and mental stress.
• Assists in the diagnosis of other medical conditions: It is possible to have some underlying medical condition that has no symptoms to show. Preventive health check-up allows the identification and diagnosis of the same.
• Better chance at prevention of health risks: With early detection of a dormant medical condition, you can do the needful on time.
• Reduces healthcare costs: Pursuing treatment for a medical condition becomes easier and cheaper if the disease is diagnosed at an early stage.
• Control the risk of complications: Diagnosis of a medical condition at an early stage reduces the risk of complications as you can take necessary steps on time.
• Tax benefits: A part of the expenses incurred for preventive healthcare checkup limit is eligible for tax deduction under Section 80D of the Income Tax Act. Therefore, health check-ups help not only in monitoring your health but also support your financial planning.

Deduction under Section 80D for health insurance premiums paid for parents

Section 80D allows tax relief for the insurance premium paid for yourself, your spouse, children, and parents. Read the table below to understand how tax deduction works for each category:

Who can claim a deduction for preventive health check-ups under Section 80D?

Anybody with valid health insurance who undergoes preventive health check-ups can avail of a tax benefit of Rs 5,000. Note, this tax benefit for preventive healthcare comes under the overall limit of Rs 25,000 medical insurance tax benefit as per Section 80D of the Income Tax Act.

If you pay a premium for the health insurance of your spouse, children and dependent parents, and incur preventive health checkup expenses for them, even that is eligible for claim deduction under Section 80D. However, the preventive health check-up deduction limit is Rs 5000 only.

The unique feature of this preventive health check-up ITR relief is that even if you do not have a health insurance plan for your parents, you can still avail of the claim deduction of Rs 50,000 which is inclusive of the Rs 5,000 for preventive health check-up expenses.

What is the maximum amount you can claim?

Following the outlines of Section 80D of the Income Tax Act, you can get a maximum claim deduction of Rs 25,000 in your tax liability if your and your family are less than 60 years of age. You may avail of a claim deduction worth Rs 50,000 if the insured person’s age is more than 60 years. Now, if you, your spouse, and your children are less than 60 years old, but your parents are above 60 years, you can claim a deduction of Rs 25,000 for your family and Rs 50,000 for your parents.

Refer to the table above to understand the claim norms under Section 80D.

The maximum limit of Rs 25,000 or Rs 50,000 includes expenses incurred on preventive healthcare check-ups as well. Remember, the maximum amount that you can claim against preventive healthcare checkups is Rs 5,000.

So, how does this work? Let us use an example:

Suppose you are 35 years old and your parents are in the age bracket of 52-57 years. In this case, you are eligible for a maximum claim deduction for your medical insurance up to Rs 25,000. Suppose you paid Rs 20,000 toward your health insurance premium and incurred Rs 7,500 for preventive healthcare check-ups. Since your claim deduction limit is Rs 25,000 and you paid out Rs 20,000 for the premium limit, you are left with a balanced deduction limit of Rs 5,000. You can claim this Rs 5,000 for preventive health check-up limit for a deduction. The remaining Rs 2,500 (7500-5000) must be borne by you.

Tax benefits on cash payment

The Section 80D preventive health checkup tax benefits can be availed of even if the preventive healthcare payments are made in cash. Unlike the payment of the health insurance premium amount, which must be made through a proper banking process to make claims, there is no rigid financial process requirement for claims on preventive healthcare check-ups. This means when you go for a preventive healthcare test or diagnosis—be it a blood test or any other monitoring test—you can pay the charges in cash. Just keep a record of the bill payment to claim the deduction from your tax liability.

Deduction under Section 80DDB: Treatment of specified illness

Chapter VI A of the Income Tax Act specifically lays down the various provisions of deductions that can be availed of by a taxpayer. A wide range of tax claim deductions is explained in different sub-sections ranging from 80C to 80U.

Apart from Section 80D, some other sections and sub-sections offer tax claim benefits on expenses made on healthcare and healthcare insurance.

Under Section 80DDB, individuals and Hindu Undivided Families (HUFs) who are residents of India can claim a tax deduction against the expenses incurred for the treatment of specified diseases or ailments. They can claim an amount up to the actual expense or a maximum amount as capped under Section 80DDB.

• If you are less than 60 years of age, you will get a deduction amounting to Rs 40,000 or the actual expense, whichever is less.
• If you are more than 60 years of age, you will get a deduction amounting to Rs 100,000 or the actual expense, whichever is less.

Remember, the deduction is based on the age of the person undergoing treatment and not the one bearing the expenses. Also, the deduction is not related to health insurance or premium payment or preventive health check-up. This is an additional provision crafted to help people get tax relief if they or their dependents suffer from some specified diseases as mentioned in Rule 11DD of the Income Tax Act. The specified diseases include:

• Neurological disorders where the damage is at least 40% or more. The same has to be corroborated by a designated specialist.
• Chronic renal failure
• Malignant cancer
• Critical haematological disorders
• AIDS

The deduction can be availed of only by the person who is actually bearing the expenses. However, you could be paying for yourself and/or your dependents such as spouse, children, parents, and/or siblings. In the case of HUFs, the deduction can be claimed if expenses are incurred for the treatment of any family member of the HUF.

Deduction under Section 80DD of the Income Tax Act: Treatment of a dependent with a disability

Under Section 80DD of the Income Tax Act, individuals or HUFs who take care of disabled dependents can claim a tax benefit. The tax relief deductions are essentially based on the expenses of the disabled dependent. However, this deduction cannot be claimed by the dependent but by the one who takes care of the disabled dependent.

Disabilities include conditions such as blindness, loco-motor disability, mental disability, hearing impairment and leprosy affected.

Under this section, deductions can be claimed for the insurance premium paid for the disabled dependent. However, this benefit is restricted to some insurers. You will have to check if your insurance company offers this benefit or not. If the disability of the dependent is 40% or more or there is more than one disability, then you can claim a deduction of up to Rs 75,000. If the disability of the dependent is 80% or more, then as a caretaker you are entitled to a deduction of Rs 125,000 per annum.

FAQs

How much tax exemption can I avail of under Section 80D?

Under Section 80D, you can avail of a tax exemption of Rs 25,000 if the insured’s age is less than 60 years and Rs 50,000 if the insured person’s age is more than 60 years.  This tax exemption also includes a preventive healthcare checkup limit of Rs 5,000. If your parents are above 60 years of age, then you can claim tax exemption of up to Rs 50,000 even if they do not have health insurance.

Am I eligible to avail of tax exemption for my group health insurance?

In the case of group health insurance, the eligibility for tax exemption depends on the fact whether you are paying any premium or not. If you are the employer and paying premiums for your employees then you can claim a tax exemption.

If I received medical treatment outside the country, can I avail of tax exemptions for my overseas health insurance under Section 80D?

Yes, you can avail of tax exemptions under Section 80D for receiving medical treatment outside the country using your overseas health insurance. However, please make sure that the insurance company is registered with the Insurance Regulatory and Development Authority of India (IRDAI).

If I paid a premium of Rs 10, 500 on health insurance for myself and my wife in a financial year, can I avail of a tax exemption of Rs 15,000 under Section 80D?

You have paid a premium amount of Rs 10,500 which is under the limit of Rs 25,000 (for individuals less than 60 years) and Rs 50,000 (for individuals over 60 years). You can avail of a tax deduction of Rs 10,500. Over and above this, if you spend an additional amount on preventive health check-ups, you will get deductions for an amount of up to Rs 5,000. It means you can avail of a total tax exemption of Rs 15,000 under Section 80D. If you haven’t incurred any such expenses, then you will get a tax relief of Rs 10,500 only.

What happens if I pay more than the maximum tax deduction limit towards the health insurance premium under Section 80D?

The maximum tax deduction limit towards health insurance premiums under Section 80D is fixed. It is Rs 25,000 for people aged less than 60 years, and Rs 50,000 for those above 60 years of age. Now, if you incur health insurance premium expenses more than the maximum limit, you can avail of exemption up to the maximum limit only.

Can I avail of tax benefits for more than one health insurance policy?

Yes, you can avail of tax benefits for more than one health insurance policy. However, note, the maximum tax exemption limit will not change. Under Section 80D, it remains fixed at Rs 25,000 for individuals below 60 years of age, and Rs 50,000 for those above 60 years of age irrespective of the number of health insurance policies you buy and pay the premium for.