80D Tax Deduction Calculator

Section 80D under the Income Tax Act 1961 relates to health insurance premium deductions. It allows individuals and HUFs to claim a deduction for the health insurance premiums they pay. By claiming the deductions, one can reduce their tax liability to the extent of the expenses incurred.

Thus, the deduction under section 80D is an excellent incentive to the taxpayers, encouraging them to invest in health insurance for the health and wealth of the family.

Understanding Section 80D Deductions

The section also allows a deduction of expenses incurred towards preventive health checkups up to the limit mentioned by the Income Tax Act.
A very crucial point to be mentioned here is that the deductions under section 80D are over and above the deductions that one can claim under section 80C (deduction on investments).

Eligibility Criteria for Section 80D Deductions

Under section 80D, an individual or HUF can claim deductions for health premiums paid for themselves, their spouses, dependent children and parents. Additionally, one can also claim a deduction for the insurance premiums of parents who are senior citizens.

Individuals and HUFs who invest in health insurance plans can claim the deduction of the following under the provisions of section 80D:

Health Insurance Premium

Under section 80D, the eligible entities get a deduction of the health insurance premium that they pay. The deduction is available for the premium paid for insurance policies for self, spouse, parents and dependent children. The maximum limit of deduction under this head is ₹25,000. Note that the payment must be made in any mode but cash.

Medical Expenses of Senior Citizens

Any expense incurred for maintaining the health of a senior citizen who does not have any medical insurance is also a part of the deductions under section 80D. For senior citizens, the deduction amount is ₹50,000.

Expenses Towards Preventive Health Checkups

Any expense incurred towards preventive health checkups is also eligible for deduction under section 80D. Preventive health checkups include medical tests, consultations, etc., that alert an individual of any possible health issue. The limit for preventive health checkup expenses is up to ₹5,000.

Government Health Schemes

Any contribution made towards a government health scheme also falls under the scope of deductions under section 80D. Therefore, if one invests in a government health scheme for himself or his family, he can claim a tax deduction. One must know that payments towards government health schemes for parents are not eligible for deduction under section 80D.

Note: The deductions under section 80D are available to those taxpayers who have opted for the old tax regime.

Amount of Deductions Allowed Under Section 80D

Understanding the tax implications and calculations may be a daunting tax for individuals, especially if they do not have tax knowledge. An 80D calculator is an effective tool that makes the calculation process straightforward.

An 80D calculator is designed to help individuals who want to know the eligible deduction for insurance premiums. Calculating the deduction using the 80D calculator is a breeze as it breaks down the complex rules into simple figures for the policyholder.

All one has to do is fill in the required details and leave all the complex calculation tasks to the calculator. The 80D calculator is an efficient tool that helps in tax saving and planning even if one does not have in-depth tax knowledge.

To find out the exact deduction under section 80D, one must be aware of their status, whether they are an individual or HUF. -

• An individual is a normal person/taxpayer.

• A HUF is when many individuals of the same family are coparceners in the ancestral property and are considered as a single entity for the purpose of taxation.

Steps to Calculate 80D Deductions Using TATA AIG 80D Calculator

• Step 1: Select the financial year (assessment year).

• Step 2: Select the status as individual or HUF.

• Step 3: Fill in the expenses towards health insurance premiums for self and family members.

• Step 4: Provide the insurance premium amount for parents.

• Step 5: Enter the premium amount for senior citizens, if applicable.

• Step 6: Fill in expenses towards preventive health checkups,

• Step 7: Click on the “Submit“ button. The calculator will display the total amount eligible for deduction under section 80D.

Reduce the Complexity of Calculations

The foremost benefit of an 80D calculator is that it reduces the complexity of calculations for individuals with limited tax knowledge. Once you enter the figures under the respective expense head, the tool quickly calculates the deduction amount without you having to do any complex tax calculations.

Saves Time

Understanding complex tax concepts and calculating the deduction amount may be time-consuming for an individual. TATA AIG’s 80D calculator quickly carries out the calculation based on the figures you enter and saves one's precious time.

Enables Tax Planning

The 80D calculator gives an amount eligible for deduction under section 80D. Once the amount is calculated, taxpayers can do better tax planning and reduce their tax liability by making the required investments in health insurance plans.

A preventive health checkup is a proactive approach to healthcare wherein an individual undergoes regular consultations and medical examinations. Preventive health checkups allow early detection of an illness and reduce the risk factors involved. The government introduced the concept of preventive health checkups under the 80D deduction from the financial year 2013-14.

The main aim behind the introduction of the preventive health checkup was to encourage people to adopt a proactive approach towards their health. The deduction of preventive health checkups not only encourages people to pay attention to their health but also allows them to have a reduced tax liability.
Under the preventive health checkup, the following points are essential to note:

• Only individuals and HUFs can claim a deduction for expenses incurred on preventive health measures.
• As per section 80D, one can claim a deduction of up to ₹5,000 in a financial year.
• The deduction is available for expenses incurred towards the health checkup of self, spouse, parents and dependent children.
• To claim a deduction for preventive healthcare expenses, one can make the payment using any mode of payment, such as a debit card, cash, credit card, UPI, cheque, etc.

Example:

Let us consider an example to understand the deduction available for preventive health checkups clearly.

Sahil pays a premium of ₹22,000 towards health insurance for himself, his wife and children. Besides, he also incurs an expenditure of ₹5,000 towards preventive health checkups of himself and his family. In such a scenario, Sahil will be eligible for a deduction of ₹25,000 (22,000+3000).

According to the provisions of section 80D, the maximum deduction allowed for insurance premiums and preventive health checkups is restricted to ₹25000, irrespective of the expenditure incurred.

In many cases, an individual may pay a lump sum amount towards a multi-year insurance policy. Under a multi-year or long-term insurance policy, an individual may pay the premium of 2, 3, 4 or 5 years at once to avail of better discounts and benefits from the insurance company.

Policyholders can claim a proportionate discount under Section 80D in each financial year for the lump sum payment that they have made.

Example:

Let us explain with an example, the deductions under Section 80D when a person opts for a multi-year premium payment.

Let us suppose that Rohan (35 years old) purchases a health insurance plan for four years and makes a payment of ₹50,000 towards the premium. Since the maximum limit under Section 80D is ₹25,000, Rohan can claim a maximum deduction of ₹25,000 each in two years.

• It is advisable to check the policy carefully and learn about the tax exemptions that you are eligible to claim.

• One must make payments through modes other than cash although cash payment is allowed for preventive-health checkup expenses.

• One must know that any premium or medical expenses paid for siblings, grandparents, uncles and aunts, etc., are not eligible for deduction under Section 80D.

• Premium paid on behalf of independent or working children is not allowed.

• If you and your parents make a partial payment towards their insurance premium, both of you can claim the deduction.

• The deduction amount must be exclusive of any service tax and cess.

• The maximum deduction one can claim is ₹1,00,000.

• Under Section 80D only individuals and HUFs can claim the deduction. All other entities such as companies, firms, etc., are excluded.

• One can claim a deduction under sections 80D and 80C simultaneously.

A health insurance plan is a must if you want to stay prepared for medical emergencies. It offers financial protection when you are faced with any health issue. While health insurance secures your health, it also provides tax benefits in the form of deductions.

When you invest in any health insurance plan, you can get a deduction on the insurance premium under section 80D of the Income Tax Act. Therefore, it reduces your tax burden while also offering health security.