Under Section 80D of the Income Tax Act, you can claim a deduction on the premiums paid for medical insurance. Here’s how it works:

1. Who Is Eligible?

• Self, Spouse, and Dependent Children:

  • For individuals below 60 years, you can claim a deduction of up to ₹25,000 on the premium paid.
  • If you or any of these insured persons are senior citizens (60 years and above), the limit increases to ₹50,000.

• Parents:

  • If you pay the premium for your parents, you can claim an additional deduction:
    • Up to ₹25,000 if your parents are below 60 years.
    • Up to ₹50,000 if your parents are senior citizens.

• Preventive Health Check-Up:

  • You can also include expenses for preventive health check-ups (up to ₹5,000) within these limits.

2. Steps to Claim the Deduction

1. Keep All Premium Receipts:

   • Make sure to collect and safely store your premium payment receipts or bank statements as proof of payment.

2. Report in Your Income Tax Return (ITR):

   • When filing your ITR (using ITR-1, ITR-2, etc.), enter the details of the medical insurance premiums paid in the appropriate section (usually under “Deductions under Chapter VI-A”).
   • Include the amount paid for self, spouse, children, and parents separately, if applicable.

3. Verify Your Documentation:

   • Ensure that your insurance policy is active and that the premiums are actually paid in the relevant financial year.
   • Retain the documents in case of any future inquiries by the tax authorities.

3. Example Scenario

Let’s say you are below 60 years old and have paid the following in a financial year:

• Premium for Self, Spouse, and Children: ₹20,000
• Premium for Parents (who are senior citizens): ₹40,000
• Preventive Health Check-Up Expenses: ₹5,000 (included within the above limits)

Total Deduction Claimed:

• ₹20,000 (for self, spouse, and children) + ₹40,000 (for parents) = ₹60,000

This amount is fully deductible from your taxable income, thereby reducing your tax liability.

Final Thoughts

Claiming a deduction on your medical insurance premium is a straightforward way to reduce your tax liability. Ensure you have the proper documentation and correctly report these amounts when filing your ITR.

Read: Can we get deduction of medical expenditure incurred on the health of senior citizens under the income tax act?