Remember to avail of tax benefit on health check-up under Section 80D

If your health insurance premium is low, this provision can help you enjoy a higher deduction

It’s that time of the year when your employer asks you to submit proof of investment in income-tax (I-T) saving products, so that it can deduct the correct amount of tax deducted at source (TDS). If investment proof is not furnished, employers could deduct more TDS than necessary. Your March salary will bear the brunt and will be considerably lower than the usual amount. But one deduction many forget to avail of is expenses incurred on preventive health check-ups.

Taxpayers think only investing can help them save tax. However, the I-T Act allows deduction on expenses as well.

Naveen Wadhwa, deputy general manager, Taxmann, says, “Section 80C provides deduction on various expenses an assessee might incur, such as tuition fee, stamp duty, etc.”

Under Section 80D, you can avail of deduction on payment made towards preventive health check-ups.

What’s the deduction: The deduction on preventive health check-up falls within the overall Section 80D limit.

Suresh Surana, founder, RSM India, says, “The deduction of Rs 5,000 towards preventive health check-up is restricted to the threshold limit as applicable under Section 80D. The limit for individuals below 60 years is Rs 25,000. If a taxpayer aged 35 years pays medical insurance premium of Rs 22,000 and incurs expenditure on preventive health check-up of Rs 5,000, he will be eligible for a total deduction of Rs 25,000 only.”  

For those who are 60 years and above, the amount of deduction available is Rs 50,000.

Who qualifies: These deduction limits include the assessee himself, spouse, dependents — children and parents.

Vikas Mittal, partner, Vikas Mittal & Associates, a chartered accountancy firm, says, “The tax deduction on expenses incurred for preventive health care check-up can be availed of, irrespective of whether one has purchased a health insurance policy or not.”

Cash payment permitted: Deduction under Section 80D is admissible only if payment is made in a mode other than cash. But an exception has been made for preventive health check-up.

“Here, payment made in cash is also allowed as deduction,” says Wadhwa.

Smaller pathology laboratories sometimes don’t have the facility to accept cards. Even during home visits, many pay in cash.

“Keep documentary evidence like medical bills, prescriptions in case proof is required by the I-T department,” says Mittal.

How much tax will you save: The amount of tax the taxpayer saves depends on the slab rate that applies to him.

Kapil Rana, founder and chairman, HostBooks, says, “Someone in the tax bracket of 20 per cent can save Rs 1,000 by claiming a deduction of Rs 5,000 on preventive health check-ups.”

Those in the 5-per cent tax slab save Rs 250; for 10 per cent, it’s Rs 500; for 15 per cent, it’s Rs 750; for 20 per cent, it’s Rs 1,000; for 25 per cent, it’s Rs 1,250; and for 30 per cent, it’s Rs 1,500. These tax savings are exclusive of cess.

If the premium of your health insurance policy is lower than the deduction you can avail of under Section 80D, you will not be able to get the entire benefit this section offers. A preventive health care check-up can help you make the most of it.