How Senior Citizens Can Save Tax With Medical Bills Under 80D?
- Author :
- TATA AIG Team
- Published on :
Golden years of a person’s life are precious, and they should be spent without having to worry about the financial implications that can be caused by medical emergencies. A health insurance policy can benefit you immensely in this regard. With a medical insurance plan, the emergency medical costs will be taken care of by the insurer. Moreover, the government has also introduced tax benefits on the medical bills paid by individuals, including senior citizens, under Section 80D of the Indian Income Tax Act, 1961. Senior citizens refer to anyone who is aged 60 or above.
Thus, any medical bills or health insurance premium paid towards a medical insurance plan for senior citizens is eligible for tax deductions. Moreover, the tax deductions can be availed by the individual paying premium for their parents’ health insurance or by the senior citizen themselves.
However, before getting more information regarding the tax deductions, you need to understand that medical emergencies may arise at any point in time. And keeping in mind the exponentially growing medical costs in the country, it’s prudent to have a health insurance policy in place.
We at Tata AIG offer different types of health insurance plans such as critical illness insurance, family floater plans, covid insurance plans, etc. So, understand your needs and choose the right insurance policy for yourself and your family to avail of the benefits of health insurance. You can also use the health insurance premium calculator available on our website to know the premium that you have to pay for your health insurance plan. Let us understand how income tax for senior citizens’ medical expenses works and how you can save tax with medical bills under Section 80D.
What is the Tax Deduction Limit that Can Be Availed on Medical Bills of Senior Citizens?
According to the Income Tax Act, a deduction of upto ₹50,000 can be availed on the health care expenses of senior citizens in one financial year. So, if you are over 60 years of age, you will get a deduction of ₹50,000 on your medical expenses or any health insurance premium paid in a financial year.
The table below shows the maximum deduction that can be availed under Section 80D medical expenditure:
|Individual who is paying for the medical expenses or health insurance premium||Tax deduction for an individual||Tax deduction for non-senior citizen/ senior citizen||Total tax deduction that can be availed|
|If the senior citizen pays the premium or medical expenses||NA||₹50,000||₹50,000|
|If the premium or medical expenses are paid by the individual less than 60 years of age and whose parents are also less than 60 years of age||₹25,000||₹25,000||₹50,000|
|If the premium or medical expenses are paid by the individual less than 60 years of age and whose parents are senior citizens||₹25,000||₹50,000||₹75,000|
|If the premium or medical expenses are paid by the individual over 60 years of age and whose parents are also senior citizens||₹50,000||₹50,000||₹1,00,000|
There is also a tax deduction limit of ₹7000 for preventive health checkups during a financial year, but this limit is included in the overall tax deduction limit of ₹50,000 that senior citizens can avail. The deductions can be availed on expenses including health insurance policy premium, preventive health check-ups, and Central Government Health Scheme (CGHS) if you are a senior citizen.
Which Medical Expenses Are Eligible for the Tax Deduction Under Section 80D
Any medical expenditure or disease not included in the Income Tax Act is not eligible for a deduction under Section 80D medical expenditure, but medical expenses like doctor’s consultation fee, hospitalisation charges, costs of medical devices like pacemakers, and medicines are eligible for deductions under the Act as per the amendments. Along with Section 80D, there are some deductions that can be availed under Section 80DDB of the Income Tax Act. The expenditure on the treatment of diseases like Parkinson’s disease, cancer, and AIDS is eligible for tax deduction under this section.
For individuals under 60 years of age, the maximum limit of tax deduction is ₹40,000, whereas, for senior citizens, the maximum limit of tax deductions is ₹1,00,000. So, if the medical expenses are incurred for the diseases covered under this category, you can apply for tax deductions.
How to Pay for Medical Expenses to Avail Income Tax Rebate for Senior Citizens?
To be eligible for tax deductions, you must pay for the medical expenses for health insurance policy premiums using modes like debit or credit card, net banking, cheque payments, etc. You can also use various digital payment methods like mobile wallets, UPI, etc.
However, you are eligible for tax deductions for preventive health check-ups paid in cash. You must go for preventive health check-ups regularly to save yourself from getting exposed to illnesses and know your current health status.
Documents Required for Medical Expenses Deduction Under 80D
There is no specific list of documents mentioned for claiming tax deductions under Section 80D. However, you must ensure that you have essential documents like medical bills, reports of diagnostic tests, medical history-related documents, and doctor’s prescriptions in case it is required at the time of filing income tax for senior citizens.
When you file income tax returns, do not forget to include the income tax rebate for senior citizens that you can avail of under Section 80D of the Income Tax Act. You will get tax benefits for senior citizens on the medical bills that you have paid for and the health insurance policy premiums paid by you, whereas if you are an individual paying for the medical bills and health insurance premium of your parents, you can avail of the tax deductions accordingly.
Moreover, if you still have not purchased a health insurance policy, it is the right time to do so as the medical expenses are growing exponentially, and the health plan can act as a financial cushion if you face any medical emergencies, including treatment of COVID-19. Also, you can buy critical illness insurance to save yourself from the financial liabilities that arise due to the treatment of critical illnesses.