Budget 2025 And Income Tax: Section 80D And The Deductions Covered For Health Insurance
Section 80D of the Income Tax Act provides taxpayers an opportunity to save taxes as they can claim a deduction on premiums paid for health insurance policies.
With the Union Budget 2025 approaching fast, industries are submitting their demands to Finance Minister Nirmala Sitharaman to push growth in the sectors. The insurance industry is among those relying on the Union Budget 2025 to give a boost to the sector. Among the top demands of the industry is a hike in Section 80D deduction limit for health insurance premiums given the rise in healthcare inflation.
What Is Section 80D?
Section 80D of the Income Tax Act provides taxpayers an opportunity to save taxes as they can claim a deduction on premiums paid for health insurance policies. The deductions can be claimed on premiums paid for self, family which includes spouse and children and parents. The Section allows a deduction of up to Rs 25,000 annually on health insurance policy for those below 60 years of age, while for senior citizens, the limit is Rs 50,000 a year. This includes a deduction of Rs 5,000 on expenses made on preventative health check-ups. Premiums for critical illness riders or policies are also covered under 80D.
Why The Tax Benefit?
The government introduced the deductions under Section 80D of the Income Tax Act, 1961, to encourage more people to opt for health insurance policies, as individuals still rely on savings to pay for medical expenses. With the healthcare expenses increasing and inflation on the rise, often savings get exhausted for many, leading to bad loans.
Eligibility
Individuals as well as Hindu Undivided Families (HUFs) are covered under Section 80D for deductions. Also, NRIs paying tax in India are covered in case they have health insurance policies with insurers in India. Organisations or other entities are not covered for these tax deductions.
Deductions Allowed
Premium paid for self, spouse, children or parents
Medical expenses for maintaining senior citizens' health in case of no medical insurance
Payment towards a health insurance scheme run by the government
Preventive health check-up expense
